Speech by Parliamentary Opposition leader, DAP Secretary-General and MP for Tanjong, Lim Kit Siang, at the DAP Teluk Intan Anniversary dinner held in Teluk Intan on Saturday, April 17, 1993 at 8 p.m.
Bank Negara should clarify whether it has incurred the colossal losses of RM $12 billion from foreign exchange and not just RM $9.3 billion
In the past two weeks, the country has been shaken by revelations that bank Negara had incurred the colossal losses of RM $9.3 billion from foreign exchange last year.
Although these figures were given in the 1992 Bank Negara Annual report made public at the end of last month, they were glossed over, and Bank Negara did not give any explanation until two days later which has proved to be unsatisfactory even to the Finance Minister, Datuk Seri Anwar Ibrahim.
Apart from this RM $9.3 billion foreign exchange loss, which was revealed when the 1992 Bank Negara Annual Report stated that its ‘Other Reserves’ fell from RM $10.1 billion to RM $753 million, there is another item which should be cause of grave concern.
This is the Bank Negara statement in its 1992 Annual Report that it had suffered a RM $2.7 billion contingent liability on forward foreign exchange transactions as of 31st December 1992. It has been explained that these are losses that have not been booked, but are carried over in the accounts from one year to the next.
This would mean that when both these items are taken into account, the RM $9.3 billon losses incurred in 1992 and the RM $2.7 billion losses which had been incurred but would appear only in the 1993 Bank Negara Annual Report, Bank Negara had in fact incurred a total loss of RM $12 billion from its foreign exchange operations.
Bank Negara should clarify whether it had incurred the colossal losses of RM $12 billion from foreign exchange and not just RM $9.3 billion.
Economists and money market analysts have attributed the bulk of the RM $12 billion losses to currency trading and foreign exchange speculation, and Bank Negara has been accused of a lack of prudence’ which is expected of a central bank.
One criticism which had been leveled against the Bank Negara with regard to its RM $ 12 billion foreign exchange losses said:”A central bank’s policy should be to manage its currency, not to make money in the market. They were doing what everybody knew they should’nt have done and now they have paid the price.”
In the public interest, Bank Negara should not wait until the Finance Minister, Datuk Seri Anwar Ibrahim, is called upon to answer DAP parliamentary questions at the end of the month to give a full, adequate, satisfactory and acceptable explanation for the colossal foreign exchange losses.
Bank Negara should confirm whether it is true that it had hired a number of Malaysian and foreign currency dealers trained at Western investment banks to take positions in foreign exchanges, and whether their services are still being retained or had been terminated.
Bank Negara should also give a full account of its currency trading and foreign exchange speculation right from the mid-1980s.
RM $12 billion foreign exchange losses are equal to 600 Langkawi projects of MCA
The RM $12 billion foreign exchange losses suffered by Bank Negara should be a matter of grave concern, not only to the Finance Minister, but to all Cabinet Minister and the whole country.
The RM $12 billion foreign exchange losses, for instance, are equal to 600 Langkawi projects of the MCA purportedly to raise $20 million to improve the low educational standards in the rural schools.
In actual fact, the whole concept of the MCA Langkawi project of capable of raising rural educational standards with RM $20 million is most laughable.
The 1993 Budget is spending RM $2.8 billion on primary education. If RM $20 million can raise rural educational standards, then Malaysia should not have such a problem by now.
The MCA Langkawi project is not an educational project, but a political one – stemming from the fear of the MCA Ministers and MPs who had depended on UMNO’s Malay votes to get elected into Parliament that UMNO’s rural support may not be so dependable in the next general elections as a result of the constitutional crisis and UMNO conflict with the Rulers.
Four income tax burdens’ on the Chinese community
The MCA Langkawi project is the fourth ‘income tax’ burden imposed on the Chinese community with regard to education.
Apart from the income tax which the Chinese community had to pay to the government, it has also to bear the financial responsibility for not only the 60 Chinese Independent Secondary Schools, but also the development of the over 1,000 Chinese primary schools – when these should have been fully borne by the Government.
When the MCA launched the Campaign to raise RM $25 million from the Chinese community for the explanation of Tunku Abdul Rahman College, it was the third ‘income tax’ burden.
Now the MCA is imposing a fourth ‘income tax’ burden on the Chinese community when it announces its Langkawi project, to raise $20 million.
If the MCA Ministers had been competent, responsible and efficient Ministers on Cabinet, they would have ensured adequate government funds for raising rural educational standards as well as for education as a whole – and not imposing four ‘income tax’ burdens on the Chinese community.
The RM $12 billion foreign exchange losses suffered by Bank Negara is itself more than the total annual budget for the Education Ministry, which is RM $7.3 billion for 1993.
In fact, the RM $12 billion foreign exchange represents about 30 per cent of the entire government operating and development expenditure for 1993.