Mahathir rules out government intervention in CLOB issue

RELATED: Bilateral agreement: It's 'all or nothing' - Goh

MALAYSIAN Prime Minister Mahathir Mohamad ruled out Monday government intervention to unlock billions of dollars worth of frozen shares held by Singaporean investors in Malaysian firms.

"CLOB was not started by this government. We have never participated in it and neither have we been responsible for it," Mahathir was cited as saying by the official Bernama news agency.

"We do not see why we should be responsible for it now," he said.

Malaysia's imposition of capital controls last September led to the closure of an offshore market in Malaysian shares in Singapore, which Kuala Lumpur deemed illegal and blamed for extreme price fluctations.

Some 100 Malaysian issues were traded under Singapore's now-defunct Central Limit Order Book International (CLOB) when trading ceased, leaving in limbo more than 170,000 mostly Singaporeans investors holding shares worth an estimated M$10 billion ringgit (US$2.6 billion).

Two private groups have offered solutions, including a heavily discounted share repurchase plan which has enraged Singaporeans.

Mahathir reiterated that the CLOB impasse was not part of a package of bilateral problems to be resolved.

"We have agreed that CLOB is a separate issue. Only the problem of water (supply to Singapore) and railway is a government issue," he added.

He was commenting on remarks by Singapore Prime Minister Goh Chok Tong over the weekend that political intervention may be needed to settle the CLOB issue if private negotiations fail.

Singapore has pressed Malaysia to include the impasse along with other bilateral disputes such as water supply, and railway customs and immigration procedures, but Kuala Lumpur refused to do so.

Mahathir said the two governments were still negotiating on long-term water supply to Singapore after the current agreement expire on 2060.

Malaysia wants to continue supplying water to Singapore but the current contract, which was drawn up by the British before Malaysia's independence in 1957, was not fair to Kuala Lumpur, he said.

Malaysia currently sells raw water to Singapore at three sen (0.79 cents) for 1000 gallons (3800 litres) but buys back treated water at 50 sen for the same quanity.

"They are not paying for anything. They take the treated water and sell to us and take the money. We do not complain ... but, we say that by the year 2060, the supply of raw water must stop and from then on, we will supply them with treated water. It is a fair thing," he said.

The price of the raw water has not changed for a long time, he said, adding that "each time, we want to raise the three sen, they will raise the cost of treated water."