Singapore has a moral responsibility to CLOB investors: Malaysian politician

A MALAYSIAN politician argued Thursday that Singapore's government had a moral responsibility toward investors in the city-state stuck with frozen Malaysian shares.

Singapore was forced to stop over-the-counter trading in the shares after eight years when Malaysia imposed capital controls in September, leaving in limbo tens of thousands of Singaporeans who still owned Malaysian shares.

Abdul Azim Mohd Zabidi, a member of the ruling UMNO party, argued the over-the-counter market called Central Limit Order Book International had been set up with the tacit approval of Singapore authorities.

"When Malaysia imposed selective capital controls on Sept 1, 1998 and announced other measures that made it impossible for CLOB to continue its operations, this would seem to be a case of market failure.

"Given Singapore authorities' pride in their efficiency, organisational skills and meticulous planning, it is difficult to believe the Singapore authorities made no plans nor did they allocate a budget for such contingencies," Abdul Azim was quoted as saying by the official Bernama news agency.

Abdul Azim also said the Malaysia had made known its displeasure regarding CLOB's existence, the Singapore authorities must have had a reasonable expectation that Kuala Lumpur would try to put an end to the market.

"It is therefore highly inappropriate for Singapore Deputy Prime Minister Lee Hsien Loong to try and disclaim moral responsibility for CLOB."

"Assuming all his arguments are valid -- that CLOB was an over-the-counter trading facility, that its shares were not listed on the Singapore stock exchange and the shares were not subject to Singapore's disclosure rules or corporate government standards -- the fact remains that Singapore was the mid-wife to CLOB's birth.

"The umblical cord may have been severed, but a mid-wife cannot deny her role in the delivery process," said Abdul Azim.

Some 100 Malaysian issues were traded under CLOB until September 15 last year, when trading ceased after Malaysia imposed the capital controls.