Ultra-rich out to impoverish developing nations

WHEN I was invited to speak at this World Bank and IMF gathering more than three months ago, things were going very smoothly indeed for Asia.

East Asian countries were at peace. There was much talk of Asian dragons and tigers and East Asian miracles. We were quite flattered.

We had forgotten the experience of Japan and Korea. When these two countries seemed about to catch up with the developed world, things began to happen to them.

The yen was yanked up in order to reduce the competitiveness of Japanese goods, while Korea was designated an NIC, a newly-industrialising country, which must be stopped in its track.

We even forgot the lesson of Mexico whose economy was blighted when foreign funds were suddenly withdrawn. Mexico was forced to borrow US$20 billion (S$30 billion) to restore its fractured economy. Someone made a packet from this loan.

We in Malaysia laughed at the suggestion that our country would follow the fate of Mexico. How could that happen when our economy was so sound?

But now we know better. We know that the economies of developing countries can be suddenly manipulated and forced to bow to the great fund managers who decide who should prosper and who should not. Malaysia prospered because we believed in being open when others seemed paranoid about foreigners and were ultra-nationalists. In South-east Asia, ultra-nationalism very quickly gave way to pragmatic open economies.

Asean and East Asia seem to subscribe to the prosper-thy-neighbour philosophy. But the old beggar-thy-neighbour instinct is still around, and is still the guiding principle of a group of ultra-rich people.

For them, wealth must come from impoverishing others. Their weapon is their wealth.

For almost half a century, the countries of East Asia have toiled day and night to better the lot of their people.

All along we tried to comply with the wishes of the rich and the mighty. We opened up our markets, including our share and capital markets.

On the other hand, most foreign companies operating in our country do not allow local participation. They are not open, but we have not complained.

We were told we must allow our money to be traded outside our country. We were told to permit short selling, even to let trading in borrowed shares be legalised. We must allow speculation. We did all that.

But that was not enough. We were told to slow down our growth. We were told it could not be sustained, that it would be bad for us, that we would overheat.

In particular, we should not venture into big projects, the so-called mega projects, even if only to provide the necessary infrastructure that we were told we needed. And we were told that if we do not provide the infrastructure then we will not be able to grow. Quite confusing, really.

Quite a few people in the media and in control of big money seem to want to see Southeast Asian countries, and in particular Malaysia, stop trying to catch up with their superiors and to know their place. If they do not then they will just have to be made to do so. These people have the means and the wherewithal to force their will on these upstarts.

We have always welcomed foreign investments, including speculation. They can come in to buy shares and to get out if they wish to, for whatever reason. But when the big funds use their massive weight to move shares up and down at will, and make huge profits by their manipulations, then it is too much to expect us to welcome them, especially when their profits result in massive losses for ourselves.

We are told the trade in currency is actually 20 times bigger than real trade in goods and services. Other than profits to the traders involved, there really is no tangible benefit for the world from this huge trade. No substantial jobs are created nor products or services enjoyed by average people.

The traders apparently make billions with each transaction. Unfortunately their profits come from impoverishing others. Southeast Asian countries have become their target simply because we have the money but not enough to defend ourselves.

In the case of Malaysia, the ringgit is devalued by 20 per cent. What this means is that we have lost 20 per cent of the purchasing power of whatever money we have. But the currency traders have become rich -- very, very rich. These are billionaires who do not really need any more money. Even the people who invest in the funds they operate are rich. We are told that the average return is about 35 per cent per annum. And we are told that we are not worldly if we do not appreciate the workings of the international financial market. Obviously we are not sophisticated enough.

I know I am taking a big risk to suggest it but I am saying that currency trading is unnecessary, unproductive and immoral. It should be stopped. It should be made illegal. We do not need currency trading. We need to buy money only when we want to finance real trade.

The countries of Southeast Asia have prospered because, by and large, they have managed their economies better than most other developing countries. We have helped to prosper many countries, including rich countries of the North.

Despite our bitterness over the attempts to push us back by a decade through forced devaluation of our currency, through the rape of our share market, we in Southeast Asia and in Asia are still keen to receive investments from Europe and America.

There has been a lot of talk about our scaring away foreign (meaning Western) capital. But you should also appreciate that we are now very scared of foreign capital. We conducted roadshows to encourage them to invest in our share and financial markets. We still continue to do so. But we will have to be more circumspect. We still believe there are sincere investors out there. But there are also quite a few rogues.

The media and the great financial experts may know how or what a country should do, but then if anything fails they are not going to be voted out of office. We are, and we do claim to know a few things about developing our countries.

Malaysia has become one of the so-called tiger economies not by listening to the media or the great financial wizards. We have in fact developed ourselves by actually doing the opposite of what the wizards told us we should do.

One of the unconventional things we did was to go big. Our 830-km North-South Highway, our 6-km wharf at the new West Port, our Penang Bridge, the Kuala Lumpur Telecommunications Tower, the Petronas Twin Towers and many, many more big projects. They are not monuments but basic infrastructure. We like to think big. We even have great ideas for bringing wealth to other developing countries. But we are not going to be allowed to do this because you do not like us to have big ideas.

You have nothing to fear from the prosperity and well-being of Asians. You have everything to gain, for our prosperity will contribute to your prosperity and the prosperity of the rest of the world.