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Malaysia rejects IMF deal
Copyright ) 1998 Nando.net
Copyright ) 1998 The Associated Press
KUALA LUMPUR, Malaysia (January 10, 1998 3:36 p.m. EST
http://www.nando.net) -- Determined to avoid an international financial
bailout, Malaysia has cut government spending and salaries and its
people may be giving up magazines -- or using a bit less sugar in their
tea.
A regional currency crisis has forced other Asian nations to seek
economic help, but independent-minded Malaysia has sworn off such aid
and residents are trimming spending in big ways and small ones.
Prime Minister Mahathir Mohamad, an outspoken critic of the conditions
that the International Monetary Fund imposes as part of its rescue
programs, said Friday that accepting such help would amount to "economic
colonialism."
"We would not be able to control our economy and would throw it open to
foreign domination whereby they would come in and buy our banks and
companies at cheap prices," Mahathir said.
The ringgit has lost 16 percent of its value over the past week and hit
new lows four consecutive days before stabilizing somewhat Thursday. It
has fallen nearly 50 percent against the dollar since the region's
currency crisis began in July.
Stocks have shed 60 percent of their value since February, when
Malaysian markets posted their best performance.
The government is trying to defeat the crisis with austerity measures
that include shelving millions of dollars in public works projects --
from a huge, partly built hydroelectric dam in Borneo to airports and
highways.
Deputy Prime Minister Anwar Ibrahim said last month that Cabinet
ministers and senior government officials will get a 10 percent pay cut.
Raises for lower bureaucrats will be frozen this year.
At the grassroots level, Mahathir has urged people to use locally made
margarine and less sugar -- to cut costly imports -- while growing their
own vegetables.
Even well-heeled professionals are hurting.
"No more frivolous spending," said Jessica Goh, a lawyer at one of Kuala
Lumpur's Big Three legal firms. "I used to subscribe to tons of
magazines, but now I only read magazines on board the plane, during
business trips."
Six months ago, Malaysians had to pay booking fees and wait five months
to buy cars from national automaker Proton. But with consumer confidence
down and a credit squeeze on, Proton had 15,000 unsold cars in December.
It projects sales will fall 30 percent this year.
Cash-strapped financial companies, which have been repossessing cars
from clients defaulting on loan payments, have been auctioning them off
at cut-rate prices.
Many analysts and market observers contend that running to the IMF for
help won't help to restore confidence among spooked investors.
"If you shut down banks, imagine the panic that's going to come out of
that," said Joanne Song, a regional economist at PhileoAllied
Securities, a Kuala Lumpur-based brokerage.
Thailand and Indonesia, which acceded to the IMF's austerity measures
and liquidated numerous banks, have seen their financial markets
clobbered worse than Malaysia's in recent weeks, she pointed out.
Meanwhile, Malaysian Finance Minister Anwar Ibrahim has welcomed
President Clinton's decision to dispatch a high U.S. official to assess
the economic turmoil in the region.
"There is a general perception that the U.S. wasn't enthusiastic (about
helping the Southeast Asian countries), but that's changing," Anwar told
reporters Friday.
U.S. Deputy Treasury Secretary Lawrence Summers, along with top IMF
officials, will visit Malaysia next week as part of a regional tour.
By ALVIN UNG, The Associated Press
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Japan's opposition regroups, hopes to unseat Hashimoto
Copyright ) 1998 Nando.net
Copyright ) 1998 The Associated Press
TOKYO (January 10, 1998 11:36 a.m. EST http://www.nando.net) -- Hoping
to regain dwindling voter support, Japan's scattered and increasingly
marginalized opposition forces have regrouped into a six-party alliance
that includes the biggest party outside Prime Minister Ryutaro
Hashimoto's current ruling coalition.
When the granite pyramid that houses Japan's legislature opens its doors
Monday, Hashimoto will be facing one of the broadest opposition
alliances in years. And for that, he might well consider himself lucky.
While the new opposition bloc -- harboring political elements from
across the ideological spectrum -- will control a considerable chunk of
seats in the Parliament, analysts say it may be too disjointed to topple
the status quo.
"It's easy to see how the new alliance members could get tripped up over
its ambiguous identity," said Susumu Takahashi, a political science
professor at Tokyo University.
The coming five-month session of Parliament will offer lots of chances
for heated debate.
Hashimoto, who celebrates his second anniversary as premier Sunday, has
a full agenda planned -- including bills aimed at boosting Japan's
anemic economy, a controversial revision of Japan's military alliance
with the United States and a sweeping reorganization of the central
bureaucracy.
The nascent alliance is trying to focus attention on tax cuts.
Shortly after taking shape late Tuesday, the group called for $46.2
billion in tax relief, tweaking Hashimoto's famed fiscal prudence.
They also criticized a government-sponsored, $231 billion rescue effort
for banks struggling under a huge load of bad loans.
While the alliance has been quick to attack Hashimoto's proposals, its
own policies remain sketchy.
Members, who chose to keep their parties intact within an umbrella
grouping, even had trouble agreeing on a name. After a noisy and
embarrassing debate, they settled on "Minyuren," an abbreviation of all
their party names strung together.
The alliance came together after the collapse of the New Frontier Party,
which was once viewed as a vanguard for political reform but fell apart
last month amid incessant infighting over the tactics of Ichiro Ozawa,
its outspoken leader.
Ozawa's behind-the-scenes overtures to elements within the governing
Liberal Democratic Party upset some of his allies and blurred the New
Frontier's distinction as an opposition force.
A steady trickle of defectors from the party allowed Hashimoto's Liberal
Democrats to pick up enough seats last year to regain its majority in
the lower house of Parliament.
That was the latest in a series of painful setbacks for non-communist
opponents of the LDP, who had managed to wrest power briefly from the
long-dominant conservative party back in 1993.
Half of the six parties in the new union come from the New Frontier
Party. Two others are headed by conservative-leaning former prime
ministers who severed ties to Ozawa well before the New Frontier Party
disintegrated.
The biggest alliance member is the Democratic Party of Japan, a group of
lawmakers once affiliated with various leftist parties and that is
headed by charismatic lawmaker Naoto Kan.
Kan, 51, is consistently ranked near Hashimoto in popularity polls. He
earned praise as health minister for taking on major drug companies and
his own bureaucracy to win compensation for hemophiliacs who received
blood products tainted with the AIDS virus.
But Kan's liberal views don't sit well with many alliance members, since
three of the six allied parties are strongly conservative.
If the alliance is going to seriously oppose the administration, it also
will have to build on its current foundation of 97 seats in the lower
house of parliament.
Hashimoto's Liberal Democrats command 259 of the 500 seats in the
powerful lower chamber, which submits the budget and can override the
upper house. His party also has the support of two minority partners
outside the Cabinet which have a total of 17 lower house seats.
The governing party does not hold the majority in the less powerful
upper house, but half of that chamber's 252 seats will be up for grabs
in July.
Hashimoto is hardly invulnerable. His Cabinet's public support ratings
have nose-dived as a budding economic recovery earlier last year lost
steam, thanks in no small part to Hashimoto's decision to push through a
sales tax hike that took effect last April.
The heads of Japan's four leading big business lobbies recently urged
the government to enact deeper tax cuts -- which would force Hashimoto
to backtrack on a public commitment to fiscal austerity made at the
outset of his administration.
Tabloids, meanwhile, are humming with speculation that Hashimoto could
be on his way out if the economy doesn't bounce back by early spring.
"The political scene remains very fluid," said Tetsuro Kato, political
science professor at Hitotsubashi University in Tokyo.
-- By CHESTER DAWSON, The Associated Press
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