Free Media and Democracy Crucial to Fight Corruption
Former Malaysian deputy prime minister Anwar Ibrahim praised Tuesday the progress of the anticorruption drive in Indonesia, while criticizing similar moves in his country.
Speaking to local journalists on the sidelines of a conference held by the Habibie Center and the London-based think tank AccountAbility, Anwar said that in spite of the middling results of the anticorruption drive, Indonesian leaders had at least shown their commitment to fighting graft.
He also said that nurturing democracy and promoting free media had positively affected the anti-graft campaign.
“Openness in a democracy makes possible the exposure of corruption cases by the media, something that is not happening in Malaysia now,” said Anwar, who is also the honorary president of AccountAbility, adding that such media freedom was not readily available in Malaysia.
Anwar spent six years in prison on sodomy and corruption charges, which were regarded as false by many and triggered widespread protests. In 2005, an appeals court reversed the sodomy conviction and he was released. He recently announced his intention to run for Malaysian prime minister in the 2008 elections.
He said that it took five years for the Malaysian media to uncover a multimillion-dollar corruption scandal that involved a well-connected political analyst.
“The scandal was exposed after five years and it was first covered up as a murder case,” Anwar said, referring to the grisly murder of Mongolian model Altantuya Shariibuu. The case later led to the revelation of the role of her alleged murderer, political commentator Abdul Razak Baginda, in securing a deal with a European submarine manufacturer.
Baginda is said to have received US$100 million as commission in the deal.
“The scandal was exposed only after five years and the government later said that the commission was legal. It just made me sick,” said Anwar.
Anwar also used the press conference to attack his former mentor Mahathir Muhammad, whom he accused of committing corruption.
He said that at the height of the Asian financial crisis, Mahathir “spun a tale” about American financial speculator George Soros being the mastermind behind the breakdown, while in fact the former prime minister was only trying to hide his own corrupt practices.
“But recently we learnt that Mahathir has said that Soros was not responsible for the crisis, something that I have believed for so long,” he said.
Will Currency Speculators Attack Malaysia Next?
The Malaysian ringgit hit its highest level against the dollar in nearly nine years today, Friday 22-Dec-2006, helped by this week's turmoil in Thai markets that has led some investors to switch funds to other Asian countries, according to dealers in Singapore.
According to Reuters data, the ringgit (MYR) rose as far as 3.5280 per dollar, a level last seen around March 1998. Malaysia ended the ringgit's peg to the U.S. currency in July 2005 under current Badawi administration who took over from Mahathir.
Despite rising in recent weeks, second Finance Minister Nor Mohamed Yakcop maintained that the authorities were not worried it was too strong against the dollar. I hope this minister knows and serious about what he said because according to dealers the currency was likely to head higher towards 3.5 per dollar in coming weeks.
Nor also said the Malaysian government has no intention to allow the ringgit to be traded offshore.
``There's no plan to internationalize the ringgit,'' he said. ``We are a small country. Why should we internationalize the ringgit like the euro.''
Ringgit May Appreciate To RM3.50 Against US Dollar
(By Christine Lim- Bernama)
The ringgit is forecast to appreciate to RM3.50 against the US dollar by end 2007, primarily driven by stronger yuan and the movement of the yen, economists said.
According to latest news reports, the yen has been staying weak, however, the overall bearish dollar on concerns over the slowing US economy could lift the yen in the long term.
TA Securities economist, Wong Lai Yee, said that the appreciation of the ringgit was due to the strengthening of Asian currencies mainly the yuan, coupled with Malaysia's strong economic fundamentals and heightened portfolio inflow into the country.
"The narrowing interest rate gap will also help to propel the appreciation of the local currency," Wong said, referring to TA Securities' expectation of a 25 basis points cut in US interest rates to five percent by first half of 2006, with no change in the domestic overnight policy rate of 3.5 per cent.
"With this, we expect the ringgit to touch RM3.50 against the dollar by end 2007," she told Bernama in an interview recently.
Alliance Banking Group's group chief executive officer Bridget Lai attributed the weak US dollar to the ringgit's strong performance this year.
"The greenback has been depreciating since mid-October as the US deficit continues to exert downward pressure on the currency.
"The US trade deficit hits an all-time high of US$69 billion in August while net foreign holdings of foreign investors slipped down to US$54 billion in September," she said.
The ringgit had risen to 3.54 against the US dollar on Dec 20, 2006 compared with 3.78 on Jan 3, 2006. It had risen to an eight-year high of 3.5460 on Dec 6.
Lai said the key risk to the ringgit upward movement to 3.50 against the US dollar next year could be regulatory authorities intervening in the market to prevent a too rapid escalation of the local currency which might erode the competitiveness of Malaysia's exports.
Malaysia, she said, needed a stable and not a strong ringgit as international investors, in particular, are concerned when there was a volatile movement in the currency.
"We believe the stability of the ringgit will contribute towards promoting the country's position as a hub in the financial industry with a niche in the Islamic segment," she said.
On inflation, Lai said it was likely to ease to 3.1 per cent in 2007 from an average 3.7 per cent this year.
"As the 'cost' pressure has yet to subside, we may see another round of price revision in price-controlled items, although we are more confident that fuel prices will not undergo another price hike similar to the one in February this year," she said.
Wong of TA Securities said that on expectation of no hike in petrol prices and stabilisation of global crude oil prices within the US$60-65 per barrel, a lower inflation rate of 2.6 per cent was expected.
As for the outlook of the interest rates next year, she said no changes in the rates are likely with the overnight policy rate remaining at 3.50 per cent.
"Local interest rates have peaked. We believe Bank Negara Malaysia (BNM) will maintain a stable interest rates in 2007. Even if the US lowers its interest rates in 2007, history has shown that BNM has always lagged behind the curve by an average six months," Lai added.
Don’t Blame Thailand for This Mess
(AsiaSentinel.com)
Asia’s central bankers are having to deal with the consequences of global financial imbalances at the hands of the US, China and Japan
Although the Thai government spectacularly botched its effort to rein in the baht over the last two days, the fact that the government felt obliged to try to halt the currency’s appreciation says more about financial global imbalances than about Thailand and its military-appointed government.
Just as the 1997 Asia financial crisis was kicked off by a falling baht that led to the unraveling of foreign-debt-driven Asian economies, this year’s baht crisis could be the precursor of dramatic currency market turmoil throughout Asia as the consequences of the global dollar surfeit and grossly misaligned exchange rates hit home.
To find the real culprits for Thailand’s problems, which are not unique, it is necessary to look no further than the United States, which appears to assume that it can go on dumping dollars on the rest of the world. Then glance over at China and Japan, which both refuse to allow the major currency adjustments that economic fundamentals demand.
As a result, the pressure for currency realignment in Asia is falling most heavily on the small and medium-sized economies that have sought to do the right thing and not impose currency controls. Thailand is one of those, having seen the baht rise 20 percent against the US dollar in two years and 7 percent in three months. Korea is another, with a rise of nearly 30 percent against the dollar in three years. Calls for measures to halt currency appreciation have also been growing louder.
Instead of currency coordination around Asia, the region is witnessing widening gaps. On the one hand are the currencies of Thailand, Korea, Singapore, Philippines and Indonesia, which have all appreciated significantly over the past year or more. Others have had none (the yen) or very little – 5.5 percent in the case of China and 6 percent for Malaysia, while the Taiwan dollar is actually 1 percent lower than two years ago.
This makes no sense at all given the interdependence of the region’s export economies and the fact that every one of them has a large current-account surplus and in most cases vastly excessive foreign exchange reserves accumulated in the effort to keep currencies cheap.
Thailand has experienced a steep rise in its currency despite the relatively modest size of its current-account surplus because it has an open market and attractive interest rates. Ditto Korea. The stock answer from the world’s leading speculator banks, such as Goldman Sachs, is that countries should cut interest rates. In other words they should abandon sound money policies and anti-inflation measures and join the US/China push for cheap money to further inflate asset prices and keep Wall Street in the money-printing business.
The controls were not Thailand’s mistake but the fact they were do poorly, applying restrictions to all financial capital flows, not just flows into risk-free bonds and bank accounts. (Indeed, in the first instance Asia Sentinel was told that the controls only applied to the latter, not to equity investments).
This stupidity is surprising. The current finance minister was the central bank governor under deposed Prime Minister Thaksin Shinawatra and had a reputation both for caution and belief in the benefits of open markets.
Though Thailand has been forced into a partial backtracking to rescue its stock market, the episode will likely leave its mark on other countries. The likes of Malaysia and Taiwan are now even less likely to remove currency controls, whether formal or informal. This will further slow the process of exchange rate adjustment unless China is willing to drastically speed up yuan appreciation and Japan to raise interest rates to the point where the carry trade merchants are forced to cover themselves, hopefully enduring mega losses as the yen powers to100 or less to the dollar.
The yen is now at an all time low against the euro and has fallen more than 25 percent against the won over the past two years. No wonder the Koreans are unhappy. Won appreciation has not done them much damage in the US or European markets, but it certainly does not help them compete against rivals from Japan, Taiwan and China.
Likewise, Southeast Asia in general was already suffering from the gravitational pull of manufacturing investment towards China. Being in receipt of financial capital which has driven the region’s currencies is seen to have further reduced their competitive edge.
Fears of over-rapid appreciation can be overdone. New Zealand and Australia have for years lived with very volatile currencies without seeming to suffer. However, the Asian region, still scarred from the 1997 crisis, is naturally wary of the disruptive effect that fast inflows and outflows can have.
Asian governments should be wary of a world made to suit Wall Street investment bank cowboys with their multi million dollar pay packets and ever more highly leveraged positions. If you want to know why the financial world is on a precipice don’t look at Thailand’s troubles but consider instead the mega bonuses being paid out by Wall Street this year. US Treasury Secretary Henry Paulson’s old firm, Goldman Sachs, alone made a net profit of US$9.5 billion after paying an average bonus of $622,000 per employee and $54 million to the boss who succeeded Paulson only five months ago – a total of US$26 billion in remuneration. No wonder the world wants baht, not greenbacks.
Malaysai AAB Bank Negara Ringgit
Speaking to local journalists on the sidelines of a conference held by the Habibie Center and the London-based think tank AccountAbility, Anwar said that in spite of the middling results of the anticorruption drive, Indonesian leaders had at least shown their commitment to fighting graft.
He also said that nurturing democracy and promoting free media had positively affected the anti-graft campaign.
“Openness in a democracy makes possible the exposure of corruption cases by the media, something that is not happening in Malaysia now,” said Anwar, who is also the honorary president of AccountAbility, adding that such media freedom was not readily available in Malaysia.
Anwar spent six years in prison on sodomy and corruption charges, which were regarded as false by many and triggered widespread protests. In 2005, an appeals court reversed the sodomy conviction and he was released. He recently announced his intention to run for Malaysian prime minister in the 2008 elections.
He said that it took five years for the Malaysian media to uncover a multimillion-dollar corruption scandal that involved a well-connected political analyst.
“The scandal was exposed after five years and it was first covered up as a murder case,” Anwar said, referring to the grisly murder of Mongolian model Altantuya Shariibuu. The case later led to the revelation of the role of her alleged murderer, political commentator Abdul Razak Baginda, in securing a deal with a European submarine manufacturer.
Baginda is said to have received US$100 million as commission in the deal.
“The scandal was exposed only after five years and the government later said that the commission was legal. It just made me sick,” said Anwar.
Anwar also used the press conference to attack his former mentor Mahathir Muhammad, whom he accused of committing corruption.
He said that at the height of the Asian financial crisis, Mahathir “spun a tale” about American financial speculator George Soros being the mastermind behind the breakdown, while in fact the former prime minister was only trying to hide his own corrupt practices.
“But recently we learnt that Mahathir has said that Soros was not responsible for the crisis, something that I have believed for so long,” he said.
Will Currency Speculators Attack Malaysia Next?
The Malaysian ringgit hit its highest level against the dollar in nearly nine years today, Friday 22-Dec-2006, helped by this week's turmoil in Thai markets that has led some investors to switch funds to other Asian countries, according to dealers in Singapore.
According to Reuters data, the ringgit (MYR) rose as far as 3.5280 per dollar, a level last seen around March 1998. Malaysia ended the ringgit's peg to the U.S. currency in July 2005 under current Badawi administration who took over from Mahathir.
Despite rising in recent weeks, second Finance Minister Nor Mohamed Yakcop maintained that the authorities were not worried it was too strong against the dollar. I hope this minister knows and serious about what he said because according to dealers the currency was likely to head higher towards 3.5 per dollar in coming weeks.
Nor also said the Malaysian government has no intention to allow the ringgit to be traded offshore.
``There's no plan to internationalize the ringgit,'' he said. ``We are a small country. Why should we internationalize the ringgit like the euro.''
Ringgit May Appreciate To RM3.50 Against US Dollar
(By Christine Lim- Bernama)
The ringgit is forecast to appreciate to RM3.50 against the US dollar by end 2007, primarily driven by stronger yuan and the movement of the yen, economists said.
According to latest news reports, the yen has been staying weak, however, the overall bearish dollar on concerns over the slowing US economy could lift the yen in the long term.
TA Securities economist, Wong Lai Yee, said that the appreciation of the ringgit was due to the strengthening of Asian currencies mainly the yuan, coupled with Malaysia's strong economic fundamentals and heightened portfolio inflow into the country.
"The narrowing interest rate gap will also help to propel the appreciation of the local currency," Wong said, referring to TA Securities' expectation of a 25 basis points cut in US interest rates to five percent by first half of 2006, with no change in the domestic overnight policy rate of 3.5 per cent.
"With this, we expect the ringgit to touch RM3.50 against the dollar by end 2007," she told Bernama in an interview recently.
Alliance Banking Group's group chief executive officer Bridget Lai attributed the weak US dollar to the ringgit's strong performance this year.
"The greenback has been depreciating since mid-October as the US deficit continues to exert downward pressure on the currency.
"The US trade deficit hits an all-time high of US$69 billion in August while net foreign holdings of foreign investors slipped down to US$54 billion in September," she said.
The ringgit had risen to 3.54 against the US dollar on Dec 20, 2006 compared with 3.78 on Jan 3, 2006. It had risen to an eight-year high of 3.5460 on Dec 6.
Lai said the key risk to the ringgit upward movement to 3.50 against the US dollar next year could be regulatory authorities intervening in the market to prevent a too rapid escalation of the local currency which might erode the competitiveness of Malaysia's exports.
Malaysia, she said, needed a stable and not a strong ringgit as international investors, in particular, are concerned when there was a volatile movement in the currency.
"We believe the stability of the ringgit will contribute towards promoting the country's position as a hub in the financial industry with a niche in the Islamic segment," she said.
On inflation, Lai said it was likely to ease to 3.1 per cent in 2007 from an average 3.7 per cent this year.
"As the 'cost' pressure has yet to subside, we may see another round of price revision in price-controlled items, although we are more confident that fuel prices will not undergo another price hike similar to the one in February this year," she said.
Wong of TA Securities said that on expectation of no hike in petrol prices and stabilisation of global crude oil prices within the US$60-65 per barrel, a lower inflation rate of 2.6 per cent was expected.
As for the outlook of the interest rates next year, she said no changes in the rates are likely with the overnight policy rate remaining at 3.50 per cent.
"Local interest rates have peaked. We believe Bank Negara Malaysia (BNM) will maintain a stable interest rates in 2007. Even if the US lowers its interest rates in 2007, history has shown that BNM has always lagged behind the curve by an average six months," Lai added.
Don’t Blame Thailand for This Mess
(AsiaSentinel.com)
Asia’s central bankers are having to deal with the consequences of global financial imbalances at the hands of the US, China and Japan
Although the Thai government spectacularly botched its effort to rein in the baht over the last two days, the fact that the government felt obliged to try to halt the currency’s appreciation says more about financial global imbalances than about Thailand and its military-appointed government.
Just as the 1997 Asia financial crisis was kicked off by a falling baht that led to the unraveling of foreign-debt-driven Asian economies, this year’s baht crisis could be the precursor of dramatic currency market turmoil throughout Asia as the consequences of the global dollar surfeit and grossly misaligned exchange rates hit home.
To find the real culprits for Thailand’s problems, which are not unique, it is necessary to look no further than the United States, which appears to assume that it can go on dumping dollars on the rest of the world. Then glance over at China and Japan, which both refuse to allow the major currency adjustments that economic fundamentals demand.
As a result, the pressure for currency realignment in Asia is falling most heavily on the small and medium-sized economies that have sought to do the right thing and not impose currency controls. Thailand is one of those, having seen the baht rise 20 percent against the US dollar in two years and 7 percent in three months. Korea is another, with a rise of nearly 30 percent against the dollar in three years. Calls for measures to halt currency appreciation have also been growing louder.
Instead of currency coordination around Asia, the region is witnessing widening gaps. On the one hand are the currencies of Thailand, Korea, Singapore, Philippines and Indonesia, which have all appreciated significantly over the past year or more. Others have had none (the yen) or very little – 5.5 percent in the case of China and 6 percent for Malaysia, while the Taiwan dollar is actually 1 percent lower than two years ago.
This makes no sense at all given the interdependence of the region’s export economies and the fact that every one of them has a large current-account surplus and in most cases vastly excessive foreign exchange reserves accumulated in the effort to keep currencies cheap.
Thailand has experienced a steep rise in its currency despite the relatively modest size of its current-account surplus because it has an open market and attractive interest rates. Ditto Korea. The stock answer from the world’s leading speculator banks, such as Goldman Sachs, is that countries should cut interest rates. In other words they should abandon sound money policies and anti-inflation measures and join the US/China push for cheap money to further inflate asset prices and keep Wall Street in the money-printing business.
The controls were not Thailand’s mistake but the fact they were do poorly, applying restrictions to all financial capital flows, not just flows into risk-free bonds and bank accounts. (Indeed, in the first instance Asia Sentinel was told that the controls only applied to the latter, not to equity investments).
This stupidity is surprising. The current finance minister was the central bank governor under deposed Prime Minister Thaksin Shinawatra and had a reputation both for caution and belief in the benefits of open markets.
Though Thailand has been forced into a partial backtracking to rescue its stock market, the episode will likely leave its mark on other countries. The likes of Malaysia and Taiwan are now even less likely to remove currency controls, whether formal or informal. This will further slow the process of exchange rate adjustment unless China is willing to drastically speed up yuan appreciation and Japan to raise interest rates to the point where the carry trade merchants are forced to cover themselves, hopefully enduring mega losses as the yen powers to100 or less to the dollar.
The yen is now at an all time low against the euro and has fallen more than 25 percent against the won over the past two years. No wonder the Koreans are unhappy. Won appreciation has not done them much damage in the US or European markets, but it certainly does not help them compete against rivals from Japan, Taiwan and China.
Likewise, Southeast Asia in general was already suffering from the gravitational pull of manufacturing investment towards China. Being in receipt of financial capital which has driven the region’s currencies is seen to have further reduced their competitive edge.
Fears of over-rapid appreciation can be overdone. New Zealand and Australia have for years lived with very volatile currencies without seeming to suffer. However, the Asian region, still scarred from the 1997 crisis, is naturally wary of the disruptive effect that fast inflows and outflows can have.
Asian governments should be wary of a world made to suit Wall Street investment bank cowboys with their multi million dollar pay packets and ever more highly leveraged positions. If you want to know why the financial world is on a precipice don’t look at Thailand’s troubles but consider instead the mega bonuses being paid out by Wall Street this year. US Treasury Secretary Henry Paulson’s old firm, Goldman Sachs, alone made a net profit of US$9.5 billion after paying an average bonus of $622,000 per employee and $54 million to the boss who succeeded Paulson only five months ago – a total of US$26 billion in remuneration. No wonder the world wants baht, not greenbacks.
Malaysai AAB Bank Negara Ringgit
Labels: Politic. Malaysia
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