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A purely analytical perception...

The Japanese banks are at it again – this time in Asia

Updated 5-30-01


What is the country that has the tallest building in the world, the third longest bridge, the fifth tallest tower and the world’s first city totally dedicated to high-tech? The answer is Malaysia and the tallest building is the Petronas Twin Towers, the Penang Bridge is the third longest bridge, Kuala Lumpur Tower is the 5th tallest tower and Putrajaya is the first city dedicated solely to high-tech.  Malaysia is one of the more interesting countries on earth and is only slightly larger than New Mexico. Their flag was copied from the American Flag and has fourteen equal horizontal stripes of red alternating with white. The country has grown an astounding 9% a year since 1988. Hardly more than a decade from a country that was almost totally agrarian, this small country of twenty-two million people has latched onto technology as their manifest destiny. Malaysia has as its leader, a man that literally invented the meaning of paranoia, he is vicious to his enemies, runs a democratic country as though he were a fascist and believes in forcing Malaysia to progress, churning out world class projects in much the same way you would make the determination about which movie to see on a Saturday night.   

Dr. Mahathir Mohamad, twenty years as the Prime Minister of Malaysia, could not be accused of sitting on the sidelines as Thailand economically went down the tube.  He was one of the prime architects of Thailand’s catastrophic defense of the currency, but in spite of that fact, he remains as the region’s number one cheerleader.  In listening to the good Doctor’s pontifications, one could easily be convinced that an evil empire is conspiring against the entire region.  In a more restrained moment, he offered the following for the world’s consideration when discussing speculators: 

“I say openly, these people are racists.  They are not happy to see us prosper.  They say we grow too fast, and they plan to make us poor.  We are not making enemies with other people, but other people are making enemies with us.” 

Neither was Dr. Mohamad enamored with U. S. Secretary of State Madeleine Albright when, after he espoused his conspiracy theory, she treated him as though he had just flunked Economics (101): “She got angry and accused me of being extreme.  This shows that they are not tolerant. It is not fair for a big nation to defend a rogue currency speculator.” (he is referring to George Soros). 

He has found fault with such venerable organizations such as the World Bank and the IMF for determining that bribery begins at home (he terms it, “Cultural Imperialism”).  He has found fault with “racist” foreign speculators, because they always seem to be selling stocks and currencies short, thus impoverishing the country.  Additionally, he has found fault with the rest of the world for allowing this all to happen. ([1])  Dr. Mohamad has chosen not to assess any of the blame on those ludicrous policies advanced by both his government and others in the region. 

Maybe Dr. Mohamad should look more introspectively at some of his own country’s escapades before he sends voodoo signals in a Westerly direction.  In 1981, the Malaysian government ratcheted up a company they called Maminco in an effort to corner the London tin market. They guessed very wrong and tin collapsed leaving the government with a $150 million hole. Has he already forgotten that in 1992 the Malaysian Central Bank through their vehicle, Bank Negara, lost almost $4 billion betting on whether the English pound would remain within Europe’s exchange rate mechanism?   

Tan Sri A. P. Arumugam, described as a close associate of Mohamad's, not only has purportedly been partners with the Prime Minister's children, but has profited greatly from the fall of the ringgit (his own currency) and other Southeast Asia currencies through his little known investments in CAM Catamaran Fund Inc., a currency hedge fund in Luxembourg.  It seems strange that the Prime Minister has such bedfellows, when he so strongly believes that the West is subverting his country through these types of dealings. Worse yet, Cam Catamaran Fund often finds itself on exactly the same side of transaction, as is Soros.  

While the Prime Minister would have us believe that Malaysian and all other nations are all created equal, it seems that some are more equal than others are.  An example of this would be the fact the when he determined to privatize the countries blue chip assets in the 80s, including power plants and expressways, it was always those in his inner-circle that were awarded the bounty.  Mahathir’s son was also taken excellent care of by his very paternal father.  The boy got into the shipping business with some help from various government agencies, and for a while, he was very successful.  When the downturn came in Malaysia, the boy’s company suffered like those of everyone else.   

However, his Dad just couldn’t bear to see the lad go under and arranged for an oil company owned by the state to take over the business, debts and all.  In addition of getting the kid out of hock in one fell swoop, the Prime Minister also stiff-armed that government agency into paying fantastic price for the failed business.  This kid is probably running around telling everyone what a genius he is, and if he is anything like the Suharto offspring, will probably be headed for trouble again in the near future. In this crony capitalist country, Mohamad just believed that some are created more equal than others: “…Some Malays say the premier has perverted the vision behind the “New Economic Policy” (a plan that was designed to improve everyone’s lot in Malaysia) turned it into a welfare fund for a few politically well-connected - and largely successful businessmen.  

Among them is tycoon Tajudin Ramli, who bought the government’s controlling stake in Malaysian Airlines in 1994. A farmer’s son, Tajudin was praised in official circles as precisely the kind of person who could create Malay wealth. However, after three years of losses, the debt-laden airline was bought back last month on extraordinarily generous terms for Tajudin. The government purchased his 29% stake for over $470 million -more than twice its market value says P. Ramasamy, a political scientist at the National University of Malaysia: “It took the financial crisis of 1997 to lay bare the true nature of how (the government) has sought to assist individuals and groups with connections to the top leadership.”[2]  

 And talk about currencies: Muhammad Taib, one of three vice presidents of the governing United Malays National Organization (“UMNO”) and easily one of the most senior people in the country, was wandering through the Brisbane, Australia, airport with over $1 million Australian in his pockets that had not been declared.  When arrested and asked what it was all about, he indicated that he had purchased millions of dollars worth of properties in Australia in his wife’s name.  After checking what had happened, an investigation was launched by Mohtar Abdullah, Malaysia’s Attorney General.  It was found that this was far from an isolated occurrence and that the vice president had been making nocturnal trips to Australia on a regular basis, always with his pockets stuffed with money to invest for his loving wife.  This is either one of the great love affairs of all times, or one of the great rip-offs in the history of the country. We are convinced that it is the later. We will see how seriously Prime Minister Mahathir Mohamad treats a matter where his own political party is involved.  

As in the much of the rest of the Pacific Rim, ethnic Chinese make up a minority of the population, but they control a substantial amount of Malaysia’s wealth.  The Prime Minister was not happy with that and soon embarked on a program to separate the Chinese from their money.  Fundamentally, native Malaysians have been agriculturally oriented and for that reason, they have been called bumiputras (“sons of the soil”).  Almost from the very beginning, the Prime Minister saw to it that these sons of the soil were financially subsidized and had been given most favored nation treatment.  Effectively he created subsidies that were only to be awarded to native Malaysians. Government contracts were freely rewarded to keep businesses run by the buiputras alive that otherwise should have been long gone.  

The Chinese easily got around the discrimination by creating companies and having native Malays run them to order to qualify for the government’s largesse.  (Called “Ali Baba Companies”).  Thus, nothing really changed, except a lot of poorly managed; government-subsidized companies existed when the currency collapsed.  These companies quickly went bankrupt, and the entire financial, ethnic-cleansing process collapsed.  Malay-controlled banks took stock in businesses they had financed and realized they were left with a banking system that was close to defunct, with nothing but scraps of paper to show for their troubles.   However, the government seeing that this ploy did not work determined to try something different. This time they engaged in a war of words such as the statement by Deputy Health Minister Suleiman Mohamed who told 3,000 people at a rally that the Malay race was seen to be weak. He went on to say that “We must strengthen our position so that we would not be belittled. I urge you all to unite to boost Malay political supremacy.    

He was followed to the podium by Deputy Information Minister Khalid Yunus who started off his tirade by revisiting the May 1969 riots with the Chinese and attempted to explain them with the statement that Malay dignity had been challenged. He rapped up his diatribe with “Today our dignity is being challenged again…our faces have been spat at, can we still continue smiling? We want the Malays to continue to be masters of this country.”  Mazian Harun, another speaker caped off a bad hair day by saying that Chinese extremists and foreigners were taking advantage of Malay disunity and said the community would lose out if it were continually weakened. This is awfully strong rhetoric in a situation where the Chinese have only been substantially more industrious than the Malays, however, this may be a crime when you are listening to Doctor Mohamad and his conspiracy theories.   

On January 21, 2001, the Malaysians put their money where their mouths were. The Malaysian government began closing Chinese-language primary schools. It appears that this move is only a small douse of psychological warfare in a more bizarre plan that the government has in mind.  It appears that the Malaysian Government intends to set up what they call “vision schools” the three main races, the Malay’s, the Native Indians and the Chinese will all go to school together but be taught in different languages. The logic of this move escapes us but it may have something to do with propinquity. The Malay Government may believe that if their under-performing students share a common environment with the Chinese, something will rub off. However, who knows?  

Once closed the government determined that all of the temporary teachers that worked in Chinese schools had been overpaid. If this wasn’t bad enough, they determined that the overages had occurred literally every month since 1985. So when the announcement came out that the Government was expecting the teachers who were not particularly getting rich in their jobs anyway to return what amounted to a very substantial amount of money, and worse yet, there weren’t going to be an terms, this money would be due the government as of March 13, 2001 and must be paid on or before June 30 of that year. 

The penalties for non-compliance were severe, if the teachers were late in paying up, any number of very bad things would happen to this group of mostly Chinese teachers. They could either lose their jobs, be forced to pay an enormous interest rate on the unpaid amount, their assets could be confiscated or all of these afflictive methods could be used simultaneously to force the unsuspecting teachers to pay up. This move serves to create chaos in a Chinese community educational already short, almost 4,000 teachers and already requiring 2,818 temporaries to keep above water. This form of discrimination serves the purpose of causing any temporary teachers to avoid working in Chinese schools and has the effect of literally forcing the closure of these understaffed educational establishments.  If these folks don’t get you one-way, they get you another. ([3]

A the Malaysian Government sought to strip the Chinese of an ever increasing number of their rights, they fought back with a demand for equal rights However, Malaysia’s Defense Minister Najib Razak told the Chinese that their actions could Malay outrage and firmly pointed out that the rights being given to the Malays were constitutional in nature. “It was the foundation in the formation of Malaysia, a quid pro quo understanding reached as a package concerning citizenship for the Chinese and special privileges for the Malays to safeguard their position. Any attempt to change this status will be strongly resisted by the Malays. My advice to these Chinese association is not to play with fire.” ([4]) I guess that some citizens are created more equal than others.  

And should an Indian, Chinese or foreign company go bankrupt in Malaysia, they would find that the Marshal had sealed the property and an auction was held in spite of the fact that it had only happened the previous day. However, should the failure befall a company owned by a Malay national, instead of the Marshal appearing suddenly appearing suddenly, a local banking materializes with his pockets filled with money to bail out the business. Sometimes this type of selective bailout is extremely unhealthy for the banking industry. Often the company going under has little or no tangible assets, and if it is minority owned (Not Malay), there is no saving the company while at the same time, there are little or no assets to recover for the lender. However, if the same fate befalls a Malay owned company, the banking situation becomes in more dreadful, more money has to be given to a business that has proven to have bad management and does not generate assets.  

Because of these forced bailouts, if the company is owned by Malay’s, there is no particular insensitive to run the business well, because no matter what happened more money will be supplied to bail the company out. In addition, this creates a lot of unethical maneuvering and just plain bankruptcy fraud. If a Malay sees his business going under, he can declare himself a substantial salary, pocket the money and then go back to the well once again. This process also is the government way of redistributing the country's wealth. If a non-Malay company fails, the assets are auctioned off to the highest bidder, with Malays getting a number of bidding advantages including a lower price and financing to purchase the non-Malay business out of bankruptcy. In the meantime, often these are public companies, the major investors in which are primarily Chinese, thus when these assets are transferred to Malays, it penalizes shareholders and assures the fact that the assets will fail into more ethnically acceptable hands.  

It is now three years since the dark days of 1998. If Malaysia does not take immediate steps to correct the irregularities in the economic foundations in the market, there is little prospect that a similar fate (to which America suffered in 1929) can be avoided. The untruth and secrecy that is the present policy of the party in power, exemplified by its prime minister, if pursued, portends a protracted period of picking apart pieces of a pulverized plaster pottery pinch by pinch.” ([5]) 

He has also been the architect of some of the strangest infrastructure developments on record, most of which have shown no economically redeeming features.  His espousal of building the twin towers in Kuala Lumpur have made them both the tallest buildings in the world and simultaneously the most underutilized.  He was also the champion of the unaffordable and uneconomic $4.9 billion Bakun Dam, one of the biggest on earth and containing the world’s longest undersea power-transmission cable (the “longest building in the world”).  Linear City is a 1.2 mile, 10-story high building complete with a monorail scheme located in the heart of Kuala Lumpur built over a river; and its nearby sister project is the creation of two new cities, a $1 billion airport to be created over a series of man-made islands in close proximity to his home state (which has no particular need for an airport this size). 

No one can accuse the Prime Minister of being anything but a world-class paranoiac, and he has psychosis that seems to have no bounds.  He has said so many controversial things in his speeches that he has been asked to shut up on many occasions, so of course, he took the opportunity of venting his anger at an early June 1998 meeting in Tokyo attended by regional leaders who were invited to discuss the area’s future.  He started his tirade by taking the IMF to task for delaying money for Indonesia, went after the European Union and the United States for criticizing Indian and Pakistani leaders who were setting off atomic bombs and predicted that non-Asian foreign corporations would take control of the Pacific Rim and subjugate their peoples.  But he was just warming up, for then he started talking about waging regional guerilla warfare to regain their economies from the despotic multinationals, because he indicated these foreign devils were able to take control of the region’s destiny by having control of the media.  

At times he has attacked kids with mod haircuts, homosexuals, Jews, the West in general and Western media in particular ([6]), New Zealand, Internet ([7]), Sunnis, Shi’ite’s, The Far East Economic Review and Asiaweek ([8]), for showing the Doctor looking awful ([9]), George Soros, Malaysian “girlie” magazines ([10]), The United States ([11]), England, Australia, which he will not let into ASEAN ([12]), and Singapore that had the nerve to reject his leadership. He has also attacked Thailand, the Ashaari cult in his own country, and a “third country” who in a conspiracy was aiding Sabah, a part of Malaysia, to break away from the country as well as Indian movies, Malaysian cabbies ([13]), “filthy” rap music ([14]) and Japanese firms exploiting Malaysian trainees ([15]).  It is obvious that his is using his professed, “love of his country “ to promote the bigger lie theory which Hitler originally expounded. He has even taken on Long Term Capital Management, the Connecticut hedge fund that eventually tanked when they ran out of liquidity.  

He then took on the IMF with the following diatribe, “Well, although we didn’t ask for any loans from the IMF, the IMF kept on coming here and telling us that we must do what they wanted us to do, which means that in order to stop the currency traders from getting hold of our currency, we must raise interest rates. We must squeeze credit. We must force companies to go bankrupt by shortening the period for non-performing loans, and because at that tie the IMF had a lot of Influence of the then-Minister of Finance (Ibrahim) and the central bank, they followed IMF conditions; and as a result, the economy just went into a tailspin. Our companies and banks were going bankrupt. …And as I said just now, we were going to go bankrupt—the whole country would go bankrupt—if we were to wait for the IMF to curb currency trading…and the IMF insisted we open up our country, then they can come in and pick up all the companies at rock-bottom prices. So we had to decide to do thing for ourselves, because we cannot expect the international community to do anything for us.” ([16]

The following illustrates his international conspiracy theory in a most telling fashion:  

“It seems to me that more people now are realizing that this is, in fact, a new kind of imperialism where the weapon used is capital - capital that can be used to impoverish countries to the point where they have to beg for help and when they beg, then you can impose conditions on them, and then one of the conditions, of course, is that you must open up the economy and allow all the foreign companies to come in a and operate freely. And these foreign companies are huge companies, huge banks. They will come and they will compete with the small firms and small banks, and these banks will eventually fail and be absorbed by the big foreign banks, and we will have no more banks of our own.” ([17]

Not finished he went after the World Bank after saying that they have more understanding than the IMF: 

“Unfortunately, the World Bank seems to link their loans with something that is happening internally in Malaysia, and they do this on the basis of their friendship with certain people, and not on the basis of what is right and what is wrong.” ([18])


[1] On September 4, 1997, Stanley Druckenmiller, chief investment strategist for the Soros Fund Management Company, in responding for the first time to Dr. Mahathir said, “The only thing we did during the crisis was buy his currency and cushion the decline.  I’m not presenting myself as an altruist, because if I’d known what it would have done; I would have sold in the decline.  But it was ironic that we played the role of central bank in the decline.

[2] Mahathir’s Dilemma, Peter Cordingley, Asiaweek, January 26, 2001

[3] Unfair of ministry to ask teachers to pay back “extras”, Ng Boon Hooi, Malaysiakini, March 13, 2001.

[4] “Malaysia instituted a New Economic Policy in 1971, two years after bloody anti-Chinese riots, to close the wealth gap between Malays and Chinese. It aims to put 30 percent of corporate wealth into Malay hands. There are share allocations restricted to Malays, who also get priority for higher education places and can buy new homes at a discount.”  Agence France-Presse, Malaysian Chinese groups told ‘not to play with fir’ over Malay rights, August 17, 2000

[5] The Ship sinks…but the band plays louder, Harun Rashid, Malaysia.CNET.Com, Worldview. March 14, 2001.

[6] “Malaysian Prime Minister tells Western media to be humble. “For the European journalists, learn to be humble, stop assuming that you know better than non-whites about how to run countries and administer justice. Let us hope that they can reform themselves. There are still a few good men among them.”  National New Agency of Bernama, September 21, 2000.

[7] Malaysians are using the Internet just to spread propaganda whereas other nations use it to acquire knowledge and wealth, Prime Minister Mahathir Mohamad says, BACA Jaring.my, September 4, 2000 in a speech to journalists in Chicago. In a story dated December 6, 2000 by Agence France-Presse, the energy, communications and multimedia ministry’s parliamentary secretary, Chia Kwang Chye said that Internet would not be curbed but, “However, there is a provision under Section 223 of the Act which allows legal action against defamatory and false information posted on the Internet and would promote discerning use of Internet services for the good of society” Hey, talk about free speech.

[8] “An international press freedom group Friday criticized Malaysia’s decision to delay sales of two foreign news magazines which carry articles on Prime Minister Mahathir Mohamad’s government…Lim Kit Siang, chairman of Malaysia’s opposition Democratic Action Party, said the home ministry should “stop making a fool of itself,” especially when the magazines could be read on the Internet.” Baca.jarring.my, March 2, 2001

[9] Prime Minister Mahathir Mohamad claimed that Asiaweek news magazine used a cover photograph of him that deliberately makes him look like an “idiot.”

[10] “Malaysia will take action against the publishers of local “girlie” magazines and ban importe../../d ones_ a minister said Wednesday.__8221.css; Agence France-Press July 26, 2000.

[11] Malaysia is good to their word and purchase most of their military weapons  products from Russia. They are now arming their air force with the brand new Russian Sukhoi-30MKM fighters. The air force now uses the MiG-29. In 1999, Malaysia signed an agreement for defense cooperation, which would include training and joint production.

[12] Malaysia’ Minister for International Trade and Industry, Rafidah Aziz, does not believe that Australia or New Zealand are part of East Asia and therefore should not have any part in ASEAN and its free trade area, AFTA.. “Trade liberalization does not mean happiness,” was Rafidah’s perceptive comment

[13] “Cabbies displaying stickers or flags of any political party or playing anti-government cassettes will have their permits revoked, Entrepreneur Development Minister Nazri Abdul Aziz. “They can listen to ceramahs (talks) of any politician as long as they do not indulge in politics when driving taxis.” Some taxi drivers display symbols of opposition parties and are not shy of giving their opinions to passengers.” Agence France-Press, July 29, 2000

[14] “There is even a rap singer who talks about strangling his girlfriend, locking her up in the car boot and doing unacceptable things to his own mother. That explains why many Malaysians commit rapes, murders and other crimes once unimaginable by people in the olden days. This is due to exposure for foreign cultures.” Prime Minister Mahathir Mohamad.

[15] Malaysia has charged Japanese firms with running phony training programs in Japan where effectively the Malaysian “trainees” become slave labor, working grueling hours without training and full pay. The Malaysians are not recognized as workers and therefore are given no benefits. Considering the fact that over 1000 Japanese companies operate in Malaysia, these are very strong words.

[16] Malaysian Prime Minister: ‘We had to decide things for ourselves’, Executive Intelligence Review February 19,1999

[17] Ibid

[18] Ibid






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