CASE STUDY LEADERSHIP PROGRAMME MALAYSIA : CAPITAL & CONTROL

1. BY ZAINUL ABIDIN SAAD CASE STUDY LEADERSHIP PROGRAMMEMALAYSIA : CAPITAL & CONTROL

2. KAJIAN KES INI ADALAH BERDASARKAN : STRATEGI PEMBANGUNAN MALAYSIA – DASAR-DASAR DEP • 1970 Promote export growth of manufactured and high-tech – Intel & National Semiconductor • 1980 Heavy Industry Development – HICOM & PROTON • 1982 Privatisation Policy - * Private Sector Contribution to Economy e.g. North South Highway, PLUS * Reduce government spending

3. 1985 * Commodity prices plummet * Drastic cut public spending * Allow ringgit to depreciate * Restriction on foreign borrowing • 1990 * Economic growth had been rapid – 7% average * Poverty rate had fallen * Distribution of wealth as in NEP not achieved Bumiputra portion only 22% * Vision 2020 – to become fully developed country within 30 years * Labuan as offshore financial centre

4. Feb 1994 Bank Negara impose direct control on foreign capital inflow * Controversy and resolve the policy in August 1994 • 1997 * Bank can borrow and lend foreign exchange to resident and non-resident * Fee & unrestricted inflow and outflow of capital • * Economy booming * Massive capital inflow * Stable exchange rate Those are the scenario of Malaysian economy till 1997 before Asian Financial crisis

5. Malaysian Financial Crisis (1997-1998) Causes of Crisis • Massive outflow of capital • Currency speculators trading • External factor Effect • Depreciation of ringgit • Non-performing loan increase • Price of share and asset deflated • Bank and finance company weaken e.g. MBF Finance & Bank Bumiputra • Widespread corporate failures e.g. Renong

6. Solution/Objective • To regain monetary independence • Eliminate offshore trading and currency speculation • Restrict outflow of short term capital Courses of Action Taken • Identify resources available, expert – Daim, Nor Mohamed Yakup, NEAC i.e. National Economic Action Council – MTEN • Form • Set up National Economic Recovery Plan • Impose regulation by Bank Negara:- - All ringgit held offshore be repatriated within one month - Prohibit ringgit credit facilities to non-resident - 12 months waiting period for non-resident to withdraw ringgit proceed from sales of shares, assets - Export of good only paid in foreign currency only

7. - Resident/Non resident traveler can import/export RM1,000 only - Pegging ringgit at RM3.80/US dollar - Reduce interest rate from 8.9% to 5.5% - Establish Danaharta, Danamodal for NPL - Freezing CLOB – Singapore counter for Malaysian share Monitoring/Controlling • Setting up communication system, control measures • Website – updating and clarification • Bank Negara extensive education campaign • 24 hours hotline • Press release • Constant dialogue with foreign investors

8. Review • Constantly review the policy if necessary e.g. - Limitation on profit repatriation was reviewed - Sept. ’98, permission is given for traveler to import any amount of ringgit - Exit taxes on capital gain was reduced to 30% and finally abolished in 2001

9. Daripada kajian kes di atas dapatlah dirumuskan ciri-ciri/kualiti kepimpinan Tun Dr. Mahathir semasa beliau mentadbir urus ekonomi Negara Malaysia dengan strateginya melalui dasar-dasar DEB dan semasa mengendalikan Krisis Kewangan Malaysia (Pengurusan Krisis) Di antara ciri-ciri/kualiti kepimpinan yang ditampilkan beliau adalah • Decisiveness/Firmness • Leadership • Teamwork • Integrity • Willingness to work hard • Analytical ability • Ability to adapt to changes • Willingness to take risk • Ability to deals and negotiate

10. “I’ve been trained as a doctor. And unless you get your diagnosis right, you’re not going to cure the patient.” - DATO’ SERI DR. MAHATHIR BIN MOHAMMAD - Sekian, terima kasih.