Dr M "Anwar Ibrahim does not know anything about the economy."
"He is a good speaker but not about economics. If you want to bankrupt Selangor, that's the good advisor.
"Of course, you pay him RM1, you'll get RM1 worth,"
Mahathir said that Anwar, when he was in the Cabinet as finance minister, almost brought down Malaysia to its knees during the financial crisis.
"He adopted the International Monetary Fund and made the matter worse. I don't think he knows anything about (the) economy," he said when commenting on Anwar's appointment as economic advisor to the Selangor Government.
Mahathir himself had his ambitions, initiatives, and plans, and launched his favored projects with flourishes of economic nationalism. Yet many of those pet projects entailed huge problems, flaws, and abuses. Moreover, Mahathir’s policies were inconsistent, and several of his major policy turns were in fact “U-turns” made in response to crises, some of which were created by him, albeit unwittingly.
Mahathir and Daim had Deputy Prime Minister and Finance Minister Anwar Ibrahim suspend KLSE rules to allow the leading crony UEM-Renong conglomerate to organize a bailout. That move caused the stock market capitalization to fall by RM70 billion, or 20 percent, in three days in November 1997.
Mahathir government had established Danaharta, Danamodal, and the Corporate Debt Restructuring Committee to restore banking liquidity, manage non-performing loans, re-capitalize banks, and restructure the banking system and major conglomerates. Now it has become clear that the efforts of these three agencies were variously biased and abused, in practice if not in intent.
When it took over billions of ringgit of corporate debt, the government hardly penalized the borrowers. Ostensibly this was because some of them were said to have been performing “national service” with their borrowings. Moreover, the government used public funds to “re-nationalize” privatized assets at prices far exceeding market levels. Critics charged that the regime’s cronies were doubly blessed – first by benefiting from privatization, and then by walking away unscathed from their debts and liabilities. Despite such abuses, Danaharta, Danamodal, and the Corporate Debt Restructuring Committee managed to restore essential liquidity.
Besides, the government’s absorption of corporate losses reached new heights under Mahathir. Perwaja, the steel-making corporation, is a spectacular failure, having lost more than RM10 billion by the mid-1990s. Bank Bumiputra Malaysia was scarcely better. Before it was acquired by Bank of Commerce, Bank Bumiputra had been re-capitalized several times with several billion ringgit of public funds.
As yet, there is no careful accounting of the losses associated with privatization followed by re-nationalization. Public assets were privatized at a discount, but re-nationalized at premiums that were enjoyed by their non-performing beneficiaries. In short, we have experienced 20 years of privatizing profits and profitable assets, and socializing losses and liabilities.