[sangkancil] Anwar's policies could have avoided problems - Krugman (fwd)
---------- Forwarded message ----------
Date: Thu, 02 Sep 1999 14:35:58 GMT
From: Yap Yok Foo <yfyap@pop.jaring.my>
Newsgroups: jaring.general, soc.culture.singapore, soc.culture.malaysia
Subject: Anwar's policies could have avoided problems - Krugman
From The Harakah
September 1999
Anwar's policies could have avoided problems - Krugman
Krugman ... Anwar's policies on right track
Top US economist Paul Krugman said he was still unhappy over the
treatment meted out on former finance minister and deputy prime
minister Anwar Ibrahim.
In an interview with the Chinese-language Sin Chew Jit Poh on Sunday,
August 29, Krugman said Anwar's case still affected the confidence of
foreign investors.
He added that if Anwar's economic policies were followed, foreign
investors and financial market would have been more convinced, thus
avoiding many of the financial problems facing Malaysia.
Anwar had initiated reforms in the corporate sector which angered
prime minister Mahathir Mohamad. The Anwar-style reform advocated
higher interest rates as well as cutting back on huge expenditure on
the government's mega projects, including the controversial Bakun Dam
and Putrajaya which houses the newly completed official residence for
Mahathir.
The Anwar-Mahathir rift over economic policies culminated in Mahathir
branding Anwar a CIA agent, followed by his sacking, arrest and
assault under police custody.
Last week, Krugman, speaking at a business conference in Kuala Lumpur
dismissed allegations that larger powers were in a conspiracy to
undermine smaller countries as "too paranoid."
Prime minister Mahathir Mohamad blames foreign currency speculators
for sparking Asia's financial turmoil and imposed capital controls
when the economy plunged into its first recession in 13 years.
But Krugman, an advocate of capital controls even before Malaysia
imposed them last September, told reporters it was time for Malaysia
to lift them, warning of the long-term costs in keeping the curbs.
"The whole point about sustaining capital controls is that the harm
accumulates very, very gradually. It's the long-term difficulty of
maintaining a system of controls without allowing a system to
gradually go back," he said.
"Nothing terrible will happen in the near term. It's just that you
will look back 10 years later and say we stuck with it too long," said
Krugman, who teaches at the Massachusetts Institute of Technology.
Mahathir reacted by saying the government would stick with the the
capital controls until there was "reform" in the international
financial market.
"As a doctor, I have been taught to eliminate the cause in order to
cure the patient," boasted Mahathir.
Krugman said he was disturbed that the lifting of the controls had
been made conditional on international financial reforms.
"That essentially means we're never going to lift the controls. I
would think that this is about as favourable an environment as you're
going to get for at least making the controls completely non-binding,"
he said, suggesting that Malaysia replace the curbs with a capital
inflow tax which he said is much more market-friendly.
http://members.xoom.com/harakah2/semasa/1111b3e03.html
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