Nasty but True

The Singapore Straits Times reported that former premier Tun Dr Mahathir Mohamad has pooh-poohed the efforts of PM Najib to liberalise the economy,saying the moves were populist in nature, benefiting no one.

Najib's steps to open up the economy to make it more attractive for foreign investors included rolling back on foreign investment, particularly a policy requiring businesses to be partly owned by Malays.

To be specific, companies intending to list on the BSKL no longer need to allocate 30 per cent of their stake to Malays. All they need to do now is to ensure that 50% of the public issue of the 20% float be given for bumiputra subscription.

As such, stock brokers and unit trust management companies can now own 70 per cent foreign ownership, up from the current level of 49 per cent.

According to Mahathir, the current lack of growth is due more to external reasons. He also cautioned that foreign investors keen on total ownership of fund management companies do not have any loyalty to the country;citing that they are here just to make money. Once they exit, we will have to pay a dear price.

He asserted the potential hazard of capital flight should investors no longer find the Malaysian market lucrative saying: “In some instances, they come to build factories and produce things for export. Well, that's fine. But when they can openly go into the market, well, that's not good,” he said.

Isn't there a check and balance in place to ensure a regulated market if enormous capital flight should take place? Or is there a fallacy in Mahathir's perspective in the light of intensive globalisation,especially after the sub-prime fall-out?