Speech by Parliamentary Opposition Leader, DAP Secretary- General and MP for Tanjong, Lim Kit Siang, in the Dewan Rakyat during the debate on the Royal Address on Tuesday, 27th April 1993
DAP calls for Royal Commission of Inquiry into the Bank Negara foreign exchange losses ranging from RM10.1 billion to RM12.8 billion
When the Yang di Pertuan Agong said in his Royal Address yesterday that the country’s commendable economic performance is the result of “pragmatic economic management”, I am sure Members of Parliament from all parties thought of one common subject – the so–called ‘paper losses’ of Bank Negara from its foreign exchange transactions ranging from RM10.1 billion to RM12.8 billion.
From the 1992 Bank Negara Annual Report, Bank Negara’s ‘Other reserved’ in the liabilities side of its balance sheet suffered a RM10.1 billion loss. This is because its 1991 ‘Other Reserves” of RM10.052 billion was completely wiped out, and RM 800 million had to be transferred to ‘Other Reserves’ from the General Reserves Fund. As a result of the RM800 million transfer, ‘Other reserves’ in 1992 stands at RM752 million – giving the total loss incurred by ‘Other Reserves’ at RM10.1 billion instead of the RM9.3 billion that has been commonly mentioned.
In fact, Bank Negara had deliberately misled the public about the RM10.1 billion losses from the Other reserves by claiming that it is only a RM$9.3 billion loss. Thus, in page 286 of the 1992 Bank Negara Report on ‘Annual Accounts’, it said:”Other reserves, which comprise the Exchange Rate Fluctuation Reserve, the Investment Fluctuation Reserve, the Insurance Reserve and the Contingency Reserve, decreased RM9,300 million to RM752.6 million at the end of 1992.”
There is then the item of RM2.7 billion contingent liability – as Note 10 of the Bank Negara 1992 Accounts put it:”being net liability on forward exchange transactions.” Both these items added up together comes to RM12.8 billion.
Bank Negara governor, Tan Sri Jaffar Hussein, said that the RM10.1 billion losses in ‘Other Reserves’ were just ‘paper losses’. As for the RM2.7 billion contingent liability, he said that they merely indicate the size of forward contracts which the bank had committed beyond the end of 1992, and that their outcome will depend on the exchange rates prevailing at the time of the maturity of contracts.
I agree that the RM2.7 billion contingent liability are not “definite losses”, and that “eventually, the bank can end up with a profit or a loss, or it just squares.” However, this item indicate that Bank Negara forex losses could range from RM10.1 billion to RM12.8 billion.
These are colossal sums, which are equivalent to the entire year’s government development expenditures or four to five times the losses incurred in the Bumiputra Malaysia Finance scandal.
RM10 billion are so colossal that it is impossible for the man in the street to grasp its magnitude. If this sum is divided equally among the population, the 18 million Malaysians – adults, children and babies – will each get RM555. Or to put it in another way- this will mean a person striking a RM2 million lottery ticket every day for 5,000days – or for every day for 13.7 years!
For RM12.8 billion, this will mean giving 18 million Malaysians $711 each, or a person striking a RM2 million lottery every day for 6,400 days or 17.5 years.
Call on Anwar Ibrahim to release the breakdown of the Bank Negara foreign exchange losses from the fight against inflation, the appreciation of the ringgit and from forex speculation
As Finance Minister, Anwar Ibrahim must accept full and personal responsibility for these Bank Negara forex losses, and it is most strange that he has not issued any statement or made any comment on this in the past four weeks, especially as the two Bank Negara explanations describing them as ‘paper losses’ have been neither satisfactory nor acceptable.
Bank Negara had been less than open and frank on this matter, as it had tried to gloss over its foreign exchange losses when the 1992 Bank Negara Annual Report was made public on March 30.
In this statement of April 19, Tan Sri Jaffar said that he could not reveal the “size and details” of Bank Negara’s forex losses because he would have to “show his hand to the market”, as he would have to release certain details in the bank’s foreign exchange transactions, the composition of its reserves, aspects of its intervention operations, the strategy for reserves management, and its forward commitments on the various currencies.
This is unacceptable as nobody is asking Bank Negara to reveal details of the bank’s foreign exchange transactions or the composition of its reserves, but the people are clearly entitled to know the cause and size of the various foreign exchange losses suffered by Bank Negara, as the amount of losses caused by the fight against inflation in mopping up liquidity, the revaluation of foreign currency holdings and the appreciation of the ringgit and those stemming from foreign currency trading and speculation.
I call on the Finance Minister to uphold the principle of accountability and transparency to make public these figures.
Firstly, how much was the foreign exchange loss suffered by Bank Negara as a result of the fight against inflation?
Tan Sri Jaffar said that fighting inflation does not come cheap and that there is a cost in the conduct of monetary policy.
He said that in 1992, the bank’s tight monetary policy was made more difficult by the large inflows of foreign capital, mainly in the form of US dollars.
The bank, as the buyer of last resort for foreign currency inflows, was obliged to purchase the US dollars. This purchase expanded domestic liquidity well beyond the normal capacity of the banking system. The bank, therefore, had to mop up this source of excess funds at the prevailing ringgit interest rate, namely about 8.0 per cent per annum.
Given that the US dollars purchased (and invested) earned only 2.5 per cent per annum and the cost of mopping-up the ringgit was 8.0 per annum, there was a negative margin (loss) of about 5.5 per cent per annum for the bank throughout the year.
Surely, it is not difficult nor would it compromise the integrity of the Government or Bank Negara for Anwar Ibrahim to announce the cost to Bank Negara in mopping up the large inflows of foreign capital in 1992 to fight inflation.
It should not cost Bank Negara more than $600 million in mopping up large inflow of foreign funds in 1992
I do not have the figures in the possession of Anwar Ibrahim and Bank Negara, but I would hazard an estimate and I am prepared to stand corrected if the Finance Minister can come out with the correct figures.
As external reserves had increased by RM 17 billion in 1992, assuming that the Bank Negara had mopped up the entire increase, what was the cost to bank Negara?
From the Bank Negara’s Monthly Statistical Bulletin for December 1992, the bulk of the increase of the inflow of foreign funds as reflected in the ‘Gold and Foreign Exchange’ column for Bank Negara’s external reserves came in after June, as follows:
January RM 29,748.7
(No figures have been given for November and December 1992)
Looking at Siaran Perangkaan Bulanan Oleh Jabatan Perangkaan Negara Disember 192, we can work out the cost of the mopping-up of the large inflow of foreign funds, on the basis of the negative margin of about 5.5 percent per annum as explained by Tan Sri Jaffar from the following:
Cost of mopping up the first $6 Billion from January to December 1992: $302.5 million (or 5.5% X $6 billion)
Cost of mopping up another $11 billion in the second half of 1992: $302.5 million (or 2.75% X $11 billion increase in foreign reserves)
This gives a total of $632.5 million, which is definitely on the high side as we are assuming that the first $6 billion came in January 1992 and the balance of RM 11 billion flowed in July 1992 – when this is not the case. We can therefore postulate that it should not cost Bank Negara more than $600 million in foreign exchange losses in this mopping up of excess liquidity arising from the large inflow of foreign funds.
I understand that the Parliamentary Secretary to the minister for Finance, Mustapha Mohamed, has mentioned in a newspaper article that Bank Negara mopped up RM21.2 billion of foreign funds in 1992. Perhaps the Minister of Finance can give the correct figures and the actual foreign exchange loss as a result of the Bank Negara operation to fight inflation by mopping up the inflow of foreign funds.
A high valuation of RM2.6 billion for the Bank Negara forex loss because of ringgit appreciation
Next what is the cost to Bank Negara in the revaluation of the foreign currency holdings and the appreciation of the ringgit.
According Bank Negara Report, during 1992 the ringgit appreciated across the board against all major currencies in the foreign exchange market. In term of the composite basket, comprising the currencies of Malaysia’s major trading partners, the ringgit appreciated by 5.6 per cent in 1992 from its end-1991 level.
If the Bank Negara had conducted itself in a prudent manner as required of a central bank concerned about the economy, it would not deviate too far away from its composite basket of currencies and its International Monetary Fund commitment to maintain the exchange rate of ringgit within a band of two-and-a-quarter per cent either way of its chosen basket of currencies.
Using the Bank Negara’s external reserves of RM 47 billion, this would mean that the revaluation of the foreign reserves at end-1992 would involve a cost of RM 2.6 billion (or RM 47 billion x 5.6%). This is again a figure on the very high side. It would be more correct to compute the figure based on RM 30 billion external reserves end-1991, as the balance of RM 17 billion acquired in 1992 would have been more related to the currency movements.
However even taking this high value of RM2.6 billion as the Bank Negara forex loss because of ringgit appreciation plus the RM600 million from fighting inflation gives a total loss of RM3.2 billion – which is a far cry from the RM10.1 billion foreign exchange loss suffered by Bank Negara.
Did Bank Negara lose RM6.9 billion to RM 9.7 billion because of forex speculation activities?
What is the cause of the difference between the RM3.2 billion and RM10.1 billion Bank Negara foreign exchange losses last year? Did Bank Negara lose Rm6.9 billion because of irresponsible speculative activity in the forex market? Together with the RM2.7 billion contingency loss due to forward forex transactions, did Bank Negara lose RM 6.9 billion to RM 9.7 billion because of forex speculative activities?
The Finance Minister, in his famous Wawancara interview recently over TV 2, denied that Bank Negara was engaged in speculative activity in the foreign exchange market.
This, however, does not seem to tally with the facts. In 1989, it was reported that Bank Negara had been criticized by Western monetary officials for speculating in the yen and the US dollar at a time when the Group of Seven industrialized countries were trying to stabilize the currency markets.
In April 1991, a Reuter news agency report from London described Bank Negara as ‘a dominant force on the foreign exchange scene for some years’ and even accused by some forex operators as ‘a market bully’.
The report quoted London dealers as saying that Bank Negara “was by far the biggest market player, trading foreign exchange volume vastly in excess of any other in the market”.
The Reuter report continued:
“Over the past two years it has stepped up its trading volume, and this year it has started dealing in what dealer described as ‘really massive amounts’’….
“Typically, Bank Negara Operates in US$50 million lots, compared with the market norm of US$5 million or US$10 million and deals with maybe six major banks in Europe and six in New York, dealers said.
“One trader said the only dealers rivaling bank Negara would be Japanese funds.
“But while these funds enter the market no more than once or twice a year, Bank Negara is coming in and doing yards (billions) of dollars in a day.
“Its recent technique has been to nit major banks for US$50 million each, then hit them 10 minutes later, dealers said.
“Then it changes centre and does it all over again.”
Is there any truth in these allegations that Bank Negara had become an active forex – a role which no prudent Central Bank would assume?
The best answer has been given by none other than the Prime Minister, Datuk Seri Dr. Mahathir Mohamed, last Tuesday. Commenting on Bank Negara’s active participation in the foreign exchange markets, Dr. Mahathir said that although not all central banks are active players, Bank Negara had dabbled in the foreign exchange markets because of the country’s strong economy and large reserves as well as because Bank Negara has the ability and the knowledge.
As a result, Bank Negara and the country have been burnt to the tune of RM6.9 billion to RM9.7 billion – and this is clearly a very expensive way for Malaysia to learn the lessons as to what happens when the central bank stray from its charter to manage and protect the currency to become a forex trader and make money!
Did Bank Negara wipe out the profits it had made from speculative forex activities since 1985 by the losses last year?
Stating that there was no need for him to take action against any Bank Negara Official, he said that it would not be fair as no one made any compliment when Bank Negara made large profits from its foray into the markets earlier.
Who is to compliment Bank Negara when the Government had all this while strenuously denied that it had become an active foreign exchange speculators? This is why the DAP had asked the Finance Minister to present a White Paper on Bank Negara’s forex operations since it began to trade currencies in the mid-1980s, stating the profits each year from such forex speculative activities.
I would not be surprised if all the gains which had been made by Bank Negara all these years such forex speculative activities were wiped out by the phenomenal losses suffered by Bank Negara last year, ranging from RM6.9 billion to RM$9.7 billion.
Tan Sri Jafffar Hussein has said that all the Bank Negara forex losses were ’paper losses’. Will he also say that all the forex profits made by Bank Negara since he became Bank Negara Governor in June 1985 were also ‘paper profits’?
In justifying his contention that Bank Negara forex losses are “paper losses’, Tan Sri Jaffar said that “Like Stocks and shares, the value of the foreign exchange holdings of Bank Negara changes as market value changes.”
By this argument, there would be nothing wrong of Bank Negara become an active speculator in the local and international stock exchanges, as such losses could always be described as “paper losses”.
I do not believe that a person who has lost RM$200,000 because the shared he holds in the stockmarket has fallen in value would regard theses as paper losses even though they have not been realized. I am sure that such a person holding shares would agree that such paper losses are as important as if he has already suffered such losses.
If Bank Negara has suffered RM 6.9 billion to RM 9.7 billion because of speculative activities in the international foreign exchange markets, then Malaysians are entitled to a full accounting, for Bank Negara has clearly violated its central bank charter in failfing to act with the prudence which is required of it.
Until the Finance Minister comes clean and tell the true story for the colossal forex losses by Bank Negara last year, the people can only speculate as to the scenario which had caused them.
The commonest scenario was that Bank Negara incurred huge forex losses during the currency crisis in the European exchange rate mechanism following the defeat of the Maastricht Treaty on European Monetary Union in the Danish referendum on June 2, 1992, forcing the suspension of the pound sterling from the Exchange Rate Mechanism (ERM) of the European Monetary System (EMS). As a result, the ringgit recorded the largest appreciation against the pound sterling – 29.1 per cent.
It has been reported that the Bank of England could have spent billions of pounds to defend the British pound, which is understandable. But why did Bank Negara also pour billions or cent of billions of ringgit into the pound sterling to help defend the British pound – or has the Malaysian Government changed its ‘Buy British Last Policy’ to one of ‘Defend British First’ with the Malaysian ringgit?
I do not believe that Bank Negara’s disastrous forays into the pound during the sterling currency crisis last year was because Mahathir was going to the defence of John Major, the British Prime Minister, and the British pound, but because Bank Negara hoped to do a killing of the British pound by taking the position of buying long- expecting the recovery of the pound with the support of the British government.
In view of the magnitude of the Bank Negara forex losses, a Royal commission of Inquiry is clearly called for to establish the full facts and circumstances of the forex transactions, as well as the proper role and conduct of Bank Negara.
I agree with Tan Sri Jaffar that a stronger ringgit would appreciation, such as the drop in external debt which are denominated in foreign currencies, does not match the losses suffered. According to the 1992 BNM Report P.196 there was a revaluation gain of RM2.2 billion in our total external debt resulting from the rise in the ringgit.
It is a very poor exchange indeed that the country loses RM10.1 billion to gain RM2.2 billion! I challenge the Finance Minister to present a Cost-Benefit Analysis following this exercise and how it has benefited the nation.
Besides, how can Datuk Anwar justify the fact that RM10.1 billion that has been painstakingly built up in Other Reserves over a period of over 8 years can be wiped out in a short spell of one year? Is not that incompetence or unprofessionalism par excellence?
The losses in Other Reserves may also be higher because of the revaluation in gold to a mark-to-market basis as at 31.12.92. In any revaluation of assets to current cost, there should be a corresponding amount in the Liabilities Section of the Balance Sheet which is usually called the Asset Revaluation Account (ARA). This is a generally accepted accounting practice not only in Malaysian but also internationally.
It is necessary for Datuk Anwar to state what was this asset revaluation gain for gold so that Malaysians can know the true extent of losses. For example, if there has been an increase in value for gold following the revaluation exercise of $4 billion, this means that Malaysians have lost this $4 billion which is not reflected in the Balance Sheet.
It is unusual that BNM did not include such an Asset Revaluation Account ARA) or was this ARA included in the Other Reserves Account. If so, then this would mean that the losses in the Other Reserves Account would be higher than the $10.1 billion. Such failure would lay BNM open to charges of practicing creative accounting, an irony in view that BNM Governor Tan Sri Jaffar himself is a charted accountant.
In the absence of satisfactory and acceptable explanations for the Bank Negara forex losses ranging from RM10.1 billion to RM12.8 billion, public confidence in the Bank Negara and the Government would be greatly shaken.
The Finance Minister has made clear his espousal and support for the principles of accountability, responsibility and transparency for public officials, and this is a test case as to whether he really believes in these principles by asking the Cabinet to establish a Royal Commission of Inquiry into the Bank Negara forex losses.
This is why the statement by the Prime Minister, Datuk Seri Dr. Mahathir Mohamad, in Kelantan on 19th March 1993 that the Kelantan throne claim by Tengku Datuk Ibrahim Petra Indra Petra could be adjudicated by the Special Court for Rulers is so shocking.
As Prime Minister, Dr. Mahathir cannot be unaware of the laws, the Federal Constitution and the Various State Constitutions. The Deputy Prime Minister, Ghafar Baba, had earlier said that the validity of the appointment of the Sultan of Kelantan should be left to the State Succession Council.
It is unthinkable that Dr. Mahathir does not know what the Deputy Prime Minister knows. The only explanation for his Kelantan statement is simple. The Prime Minister is prepared to disregard the solemn constitutional guarantee to the Rulers and the States in Article 71(1) in the Federal Constitution in order to challenge the Sultan of Kelantan.
This is not only another case where the Prime Minister, for his political reasons, has reversed his relationship vis0a0vis the Attorney-General by advising the Attorney-General’s legal advice, but where the Prime Minister has usurped the powers of the Attorney-General.
Does the Prime Minister has the final say as to whether the Attorney-General decides to give his ‘personal consent’ for a Ruler to be brought to the Special Court for Rulers?
The 1993 Constitution Amendment Act made it clear that “no action, civil or criminal, shall be instituted against the Yang di Pertuan Agong or the Ruler of a State in respect of anything done or omitted to be done by him in his personal capacity expect with the consent of the Attorney-General personally.”
Recent events have compelled us to raise the following questions: Is the Attorney-General’s power to decide whether to give his ‘personal consent’ for a Ruler to be brought to the Special Court for Rulers to be exercised solely on his own discretion, or has he to act on the direction of the Prime Minister?
Has the 1993 Constitution Amendment Act in fact given the Prime Minister the real and final power to decide whether a Ruler is to be brought to the Special Court for Rulers?
Does the Prime Minister has the final say as to whether the Attorney-General decides to give his ‘ personal consent’ for a Ruler to be brought to the Special Court for Rulers?
The Prime Minister’s statement and those of the other Federal Government and UMNO leaders that the Kelantan throne dispute issue could be adjudicated by the Special Court for Rulers are therefore most unwarranted and uncalled for, for they constitute undue influence and improper pressure on the Attorney-General on the decision he had to take on the matter.
Call on Attorney-General to publicly declare his stand as to whether the Special Court for Rulers can adjudicate on claims to the throne in the various states with power to install or dethrone Rulers
This is why the Attorney-General’s subsequent statement that Tengku Datuk Ibrahim Petra should submit his claims to the Kelantan throne to him for consideration as to whether it could be referred to the Special Court for Rulers is very disturbing, as he seems to be acting in accordance with the wishes of the Prime Minister.
Tan Sri Abu Talib should have publicly declared his stand on whether the Special Court for Rulers can adjudicate on issues affecting claims to the thrones in the carious states with power to install or dethrone Rulers, before he is swamped by a flood of state succession claims as UMNO leaders have recently said that the legitimacy of all the Rulers could be challenged.
Tan Sri Abu Talib was virtually the sole Federal Government representative in the discussions with the Rulers at the Conference of Rulers on February 10 and 11 which resulted in the Conference of Rulers – with the exception of the Sultan of Kelantan – giving its consent to the 1993 Constitution Amendment Bill with modifications.
Tan Sri Abu Talib should explicitly state whether in his explanations and clarifications to the Rulers on the 1992 Constitution Amendment Bill and the modifications, he had explained that the Special Court for Rulers would be able to adjudicate issues affecting claims to the throne for any state and has powers to dethrone or install Rulers, and whether the Conference of Rulers had specifically agreed to them.
Federal Government and UMNO leaders surely know that another constitutional amendment had to be brought to Parliament if the Special Court for Rulers is to have the powers and jurisdiction adjudicate in issues concerning claims to the throne in the states and override the constitutional guarantee in Article 71(1). Such a constitutional amendment to repeal the Federal Government guarantee to Rulers and States in Article 71 (1) would require the consent of the Conference of Rulers as provided for in Article 159 (5).
As the constitutional position of the Special Court for Rulers is very clear, the Federal Government and UMNO leaders should stop using it to harass and threaten to dethrone Rulers they dislike. The Federal Government should honour its constitutional guarantee in Article 71 (1) to the Rulers and States that throne disputes in the various states would be determined solely in accordance with the provisions in the respective State Constitutions.
Federal leaders support demonstrations against Rulers but clamp down on people fighting for their environmental rights as against the Bukit Nanas central toxic waste disposal centre
The Federal Government had hailed the 1993 Constitution Amendment Act to remove the Rulers’ immunity as a great victory for democracy, but the people’s hope that this would be a historic political development which would usher in a new democratization process in Malaysia has proven illusory.
The removal of the immunity of Rulers has been accompanied by the acquisition of greater immunity by the political elite in government to evade the principles of accountability, responsibility and transparency – as illustrated by the Bank Negara foreign exchange losses ranging from RM10.1 billion to RM12.8 billion, the impotence of the Anti-Corruption Agency in its year-long investigations into the MAIKA Telekom shares hijacking scandal, the gross Ministerial incompetence as illustrated by the Minister for Transport who had certainly exceeded his Ministerial quota of scandals with half-a-dozen security scandals at the Subang International Airport ( including two fires within six months ), the national energy crisis, and whole list of others.
The Government claim in the Royal Address that it “has and will always uphold the freedom of speech” is outrageous. When, as revealed in the famous Anwar Ibrahim Wawancara interview over TV2 last week, the other UMNO Vice Presidents cannot find fair treatment in the UMNO-owned and controlled mass media – to the extent that one UMNO Vice President is telling reporters that there is no point of asking for his comments as they would not be published – how could the Opposition and the ordinary people expect their ‘freedom of speech’ to be respected.
Freedom of speech and expression in Malaysia are permissible only when it serve the vested political and personal interest of the leadership in government.
The latest development in the threshold of permissible freedom of expression in Malaysia is that Federal Government leaders support public demonstrations against the Rulers, as for instance, the public rally and demonstration clearly planned by UMNO in Kota Bahru early this month to protest against the Sultan of Kelantan but clamp down on people peacefully and lawfully fighting for their environmental rights and their very livelihood.
Call on Mahathir to disclose who is responsible for the Home Ministry directive to newspaper to ban reports on objections of the local people to Bukit Nanas toxic waste centre
On Sunday, the Police refused to grant a permit for a public gathering and demonstration against the Bukit Nanas central toxic waste treatment plant, denying the people in the Bukit Merah and Bukit Pelanduk areas in Negri Sembilan the fundamental right to express their fears and objections against environmental pollution, damage to their health and life and destruction of their livelihood posed by the toxic waste centre.
Even the DAPSY Negri Sembilan dinner to be held in Bukit Pelandok last Saturday night was prohibited by the police on security grounds.
The Unite Engineers Malaysia (UEM) – with its UMNO connections – is the key component in the consortium, Kualiti Alam Sdn. Bhd, which is undertaking the RM200 million Bukit Nanas toxic waste centre.
Is this the reason why the local people of Bukit Pelandok and Bukit Merah are facing such an uneven fight in their battle against environmental pollution and threat to their health, life and livelihood – because the UEM has the ‘freedom of expression’ in reaching directly to the highest levels of government, while the local people are denied even the right to be heard?
I want to ask the Prime Minister who is also the Minister of Home Affairs why the Home Ministry had issued a directive to the local newspapers to black out all news reports on the Bukit Nanas toxic waste centre – and in particular with regard to the objections and protests of the local people to the project.
This makes a mockery of Malaysia’s claim in international forums that the government respect human rights and support environmental causes – when in Malaysia, both these rights are blatantly violated as objections and protests against the Bukit Nanas toxic waste centre are regarded as ‘security threats’ and a total ban is imposed on the printed media from reporting on the fight of the local people to protest their environment, health, life and livelihood.
I do not believe such a Home Ministry directive could have come from Dr. Mahathir himself, but he should investigate and disclose who is responsible for it and why such a ban had been imposed on the local newspapers.
Did the ban order come from the Deputy Minister, Datuk Megat Junid or the Parliamentary Secretary, Ong Kah Ting?
Is the Home Ministry ban extended even to Parliament, where all speeches and references to the Bukit Nanas central toxic waste issue are also forbidden to be published in the local newspapers?
Is what I have just said about the Bukit Nanas toxic waste centre are completely blacked out by the local newspapers, then such a Home Ministry ban extends to Parliament – and Parliament should refer whoever is responsible for issuing such a ban order to the newspapers to the Committee of Privileges to explain his contempt and breach of parliamentary privileges.
All MPs must take a very serious view of such abuses of power, which violate the rights and privileges of MPs as well as dishomour Malaysia’s record on human rights, and I hope all MPs will jointly support a motion to refer to the Committee of Privileges whoever is responsible for issuing such a directive to newspaper.
Let us not reach a situation where it is all right for newspaper to give full coverage to Parliamentary proceedings concerning royalty-bashing, but where the voice of the people to defend their environmental rights are blacked out in the mass media.
DAP calls on the Government to democratize the whole decision-making process with regard to environmental issues, and to heed the following five demands of local residents and Malaysians concerned about the Bukit Nanas central toxic waste centre:
*The Bukit Nanas toxic waste centre for industrial wastes must not be allowed to go ahead unless the local people have given full voluntary consent to the project in recognition to their rights to be consulted;
* Review of the Industrialization Master Plan to reduce industries producing hazardous wastes, and to prevent waste dumping from industries in the industrialized nations;
*Draft and implement laws requiring local industries to treat their waste on site, i.e. in the factories and to impose strict regulations on the storage, transportation and handling of wastes to prevent leakage;
*Site central waste treatment plants far away from human habitation; and
*To review Environmental Impact Assessment (EIA) procedure to make the whole process more open and accountable to the public, especially in the preparation and publication of the final EIA report.
Malaysia should free all Internal Security Act detainees in conjunction with the United Nations Human Rights Conference in Vienna in June
This year is an important year for human rights, with the United Nations Human Rights Conference scheduled in Vienna in June.
DAP calls on the Government to ratify the International Covenant of Civil and Political Rights and the International Covenant of Economic, Social and Cultural Rights before the World Human Rights Conference, especially as the Communique of the Commonwealth Heads of Governments Meeting (CHOGM) in Kuala Lumpur 1989 called on all Commonwealth nations to immediately ratify these two basic international human rights documents.
It is most regrettable that after four years, Malaysia as host country of the 1989 CHOGM, had not taken any action to ratify the two international human rights declarations although they had been adopted by the United Nations for nearly three decades.
Malaysia should be in the forefront in the international arena to press support for regional and international mechanisms to promote and protect human rights, such as to save the Muslims in Bosnia-Herzegovina from Serbian aggression and genocide. It is most deplorable that the Malaysian Government had opposed the proposal for a regional inter-governmental mechanism for the promotion and protection of human rights.
DAP also calls on the Government to release all detainees under the Internal Security Act in conjunction with the UN Human Rights Conference in Vienna, so that the Malaysian Government can participate in the Vienna conference without a single ISA detainee in the country.
Japan should apologise and pay compensation for the ‘comfort women and brothels’ in Malaysia during the Japanese Occupation
Here, I wish to refer to the grave violation of human rights and dignity against Malaysian womanhood by the former Japanese Imperial Army during the Japanese Occuption.
Documents in Japanese Defence Agency archives compiled by the former Japanese Imperial Army which showed the existence of ‘ comfort women and brothels ‘ in Malaysia during world War Two had been recently unearthed in Japan, and surviving victims of the Japanese regime of ‘comfort women and brothels’ during the Japanese Occupation are being located.
This is the first time that documents had been discovered providing the existence of comfort women and brothels in Malaysia during Japanese Occupation – which could not be denied by the Japanese Government.
The Malaysian Government should officially take up this issue with the Japanese Government, to press for an apology and proper compensation from the Japanese Government for the heinous crime of operating ‘comfort women’ camps and brothels in Malaysia.
The previous compensation paid by the Japanese Government in connection with war atrocities during the Japanese Occupation could not have covered the crimes of making these victims of the ‘comfort women camps’ and brothels the sex-slaves of Japanese soldiers.
Repeal 1992 Constitution Amendment Act to cancel the increase of 12 new Parliamentary seats
The Election Commission is waiting for an amendment to the 1992 Constitution Amendment Act which increased 12 Parliamentary constituencies before it resumed its electoral constituency redelineation exercise.
The DAP is not convinced that there is any provision in the 1992 Constitution Amendment Act which justified the cancellation of the constituency redelineation exercise by the Election Commission in February.
The reason why the Election Commission had to cancel its constituency redelineation exercise was because it was caught ‘red-handed’ in acting unconstitutionally in redrawing electoral constituencies before the expiry of the minimum eight-year period from the previous redelineation, compromising its independence as stipulated by the Constitution by taking political directives from the Barisan Nasional and in particular UMNO, and violating the democratic principles of one-man, one-vote.
The Election Commission would have been able to brazen through with its illegal and unconstitutional constituency redelineation exercise if the DAP had not taken it to court, and this is the real reason for cancellation of the redelineation exercise of the eve of the Kuala Lumpur High Court hearing of the DAP suit against the Election Commission.
However, the Law Minister, Datuk Syed Hamid Albar seems to agree with the Election Commission that section 3 of the 1992 Constitution Amendment Act had been badly drafted and should be amended before the Election Commission could embark on a new constituency redelineation exercise.
I do not agree, as Section 3 is in fact an enabling provision allowing the Election Commission to proceed with the constituency redelineation exercise started last November after the gazette of the 1992 Constitution Amendment Act.
However, if Syed Hamid agrees that Section 3 had rendered the Election Commission’s redelineation exercise illegal, this is a most adverse reflection on his Ministerial record and performance.
He should explain why he had introduced such a ‘defective’ 1992 Constitution Amendment Bill to Parliament, and why the Attorney-General’s Chambers, his Ministry and the Cabinet could make such a colossal constitutional blunder.
Before Datuk Syed Hamid introduces another ‘defective’ constitution amendment bill at the present meeting of Parliament, he should give serious personal study to this question, as he must remember that he must assume full Ministerial responsibility for any ‘defective’ Bill that he introduces, and cannot just pass the buck to the civil service.
I would recommend that if there is going to be any amendment to the 1992 Constitution Amendment Bill, it should be one to repeal it altogether, cancelling the increase of 12 new Parliamentary seats.
It should be left to the Election Commission to recommend how many parliamentary seats should be increased based on its review of the constituency redelineation – and the Dewan Rakyat would decide whether to accept the Election Commission’s recommendations when its report is presented to Parliament.
What had been done – to increase parliamentary seats before the constituency redelineation exercise by the Election Commission – is most improper and is like putting the cart before the horse.
In this speech, Anwar Ibrahim also accused me of not understanding the RM 2.7 billion contingency liability in the Bank Negara 1992 Accounts “being net liability on forward exchange transactions” and made great play of the issue. He would not do this if he had understood that in my speech, I had conceded that this RM 2.7 billion contingent liability are not “definite losses” and that the bank could end up with a profit or a loss or it just squares. However, the existence of this item shows that there is reason to believe that Bank Negara forex losses could increase by another RM 2.7 billion from the RM10.1 billion in 1992 to give a total of RM12.8 billion.
Is Anwar suggesting that Bank Negara could have announced that it had only lost RM6.3 billion in 1992 in ‘Other Reserves’ by the simple stratagem of transferring another RM3 billion from the General Reserves Fund to Other Reserves?
I am surprised by Anwar Ibrahim’s argument that Bank Negara ‘Other Reserves’ losses in 1992 was RM9.3 billion and not RM10.1 billion and he accused me of double counting.
I cannot understand Anwar Ibrahim’s logic and I will be very surprised if the Bank Negara Governor maintains that ‘Other Reserves’ last year was RM9.3 billion and not RM10.1 billion.
In 1991, Bank Negara’s ‘Other Reserves’ stood at RM10.052. in 1992, Bank Negara’s ‘Other Reserves’ stood at RM752.6 million after a RM800 million transfer from the General Reserve Fund.
If there is no transfer from the General Reserve Fund to the ‘Other Reserves’, the total loss of RM10.05 billion would have been incurred – and the negative sum of – RM50 million would have to be entered.
Even a school student can see that Bank Negara’s ‘Other reserves’ has lost RM10.1 billion. How then can the Finance Minister and the Bank Negara Governor claim that ‘Other Reserves’ only lost RM9.3 billion in 1992?
Anwar Ibrahim argued that when the General Reserve Fund transferred RM800 million to ‘Other Reserves”, it was an internal transfer and Bank Negara did not suffer any losses.
If Anwar Ibrahim is right, is he suggesting that if Bank Negara had in fact transferred RM3.8 billion from the General Reserve Fund to the ‘Other Reserves’ in the 1992 Account, so that the figure of RM3.752 billion appears In the ‘Other Reserves’ column, Bank Negara could claim that ‘Other Reserves’ only lost RM6.3 billion in 1992?
Is this how billions of Malaysian ringgit can be made to appear or disappear in Government accounts? Why didn’t Bank Negara do this when the 1992 Bank Negara Accounts were prepared so as to announce a much-reduced foreign exchange loss in the ‘Other Reserves’?
The reason I think is simple. At that time, any such suggestion to cook the figures would have been regarded as unthinkable. Why then is the Finance Minister and Bank Negara claiming that its ‘Other Reserves’ loss in 1992 is RM9.3 billion when it should be RM10.1 billion.
This is a very serious question, and I ask Anwar to answer categorically without any equivocation whether he is suggesting that Bank Negara could have announced that it had only lost RM6.3 billion in 1992 in ‘Other Reserves’ by the simple stratagem of transferring another RM3 billion from the General reserves Fund to Other Reserves?
I also expect the Bank Negara Governor, Tan Sri Jaffar Hussein, to immediately give a public clarification and response on this issue as the integrity of Bank Negara Accounts have been thrown into question by the Finance Minister’s reply yesterday.
In this connection, I hope the newspapers would make correction of incorrect figures they had published this morning, in particular New Straits Times and Berita Harian.
For instance, New Straits Times said that my motion referred to Bank Negara’s RM9.3 billion to RM12.8 billion foreign exchange losses. This is incorrect, for my motion referred to RM10.1 billion to RM12.8 billion forex losses.
Secondly, both New Straits Times and Berita Harian also quoted me as questioning whether Bank Negara had lost RM9.6 billion to RM9.7 billion because of forex speculation activities. This is again incorrect, as the figures I used is RM6.9 billion to RM9.7 billion.
This is derived as follows: In 1992, Bank Negara incurred RM10.1 billion. Assuming that Bank Negara lost $600 million in its fight against inflation in having to mop up the large inflow of foreign funds, and lost $2.6 billion because of the revaluation of the foreign currency holdings at the end of 1992, RM6.9 billion would have been lost because Bank Negara’s foreign exchange trading and speculation in 1992.
Taking into account the RM2.7 billion contingent loss due to forward forex transactions, Bank Negara stands to lose RM6.9 billion to RM9.7 billion.
Anwar Ibrahim has put up quite an impressive parliamentary performance yesterday, but he has failed to answer any questions – giving the impression that it was more akin to a conjuror’s performance!
He had said that he would reply to my queries about the respective Bank Negara forex costs last year, but he has failed to provide any figures.
I hope he would specifically answer these questions about Bank Negara forex transactions in 1992 during the Ministerial replies in this debate:
Firstly, how much foreign exchange did Bank Negara lose from the fight against inflation;
Secondly, how much foreign exchange did Bank Negara lose from the appreciation of the ringgit and revaluation of foreign currency holdings;
Thirdly, how much foreign exchange did Bank Negara lose from forex trading and speculation; and
Fourthly, what was the asset revaluation gain for gold, where is it hidden in the accounts why there was no corresponding amount and an Asset Revaluation Account in the Liabilities Section of the Balance Sheet.
DAP rejects Anwar’s contention that because the economy is strong, we should not be concerned about Bank Negara’s RM10.1 billion to RM12.8 billion forex losses
Anwar Ibrahim said the Malaysian economy is strong and the latest indicators showed continued strong growth in the economy with inflation improving.
He said the country’s reserves rose to RM51.1 billion at the end of February 1993, and were very comfortable, that the stock market was booming and foreign investors continued to have confidence in the country’s economic management.
The bottom-line message in Anwar Ibrahim’s parliamentary statement yesterday is why worry about the RM10.1 billion to RM12.8 billion Bank Negara forex losses when the economy is doing so well!
Is it Anwar’s contention that just because the economy is healthy, it does not matter if Bank Negara is allowed to speculate in the forex market to the tune losing RM6.9 billion to RM9.7 billion?
It is significant that Anwar Ibrahim gave the February 1993 figures for external reserves as having risen up to RM51.1 billion. Why didn’t he give the February 1993 figures for Bank Negara’s ‘Other Reserves’ to show whether Bank Negara’s forex losses are mounting or falling? Is this because such disclosures would be embarassing to Bank Negara and the Minister for Finance.
We categorically reject Anwar Ibrahim’s contention that just because the country’s economy is strong, we should not be concerned about Bank Negara’s losses from forex trading and speculation.
The stock market is very bullish with many counters associated with UMNO leaders heading the list of very active stocks, and there is talk that all these bullish stock market is related to a RM200 million campaign fund war chest of an UMNO leader for the upcoming UMNO party elections – but does this mean we should close our eye to what is unhealthy and wrong with the stock market?
Strength of International Reserves are the effort of 18 million Malaysians while the RM10.1 billion Other Reserves Losses are the result of Bank Negara performance
I wish to express shock at Datuk Anwar’s assertion that the country’s increase in international reserves for 1992 should be viewed to the $10.1 billion fall in the Other Reserves.
In Parliament yesterday Datuk Anwar went further by taking a fantastic leap to hocus-pocus accounting by stating that if we offset the $16.8 billion increase in the country’s international reserves with the fall in Other Reserves of $10.1 billion, the country will still have a surplus of $6.8 billion. Datuk Anwar concluded that if we take a complete and total view, the country is still better off by $6.8 billion.
This leap of imagination is most unacceptable because it is just like comparing a duck with a chicken. Datuk Anwar does not appear to understand that the international reserves is as s result of a positive balance of payments resulting of the country’s economis growth. Whereas the rise and fall of Other Reserves is dependant on BNM’s performance. Both have nothing to do with each other.
I wish to advice Datuk Anwar to take such lessons on international economics from his Parliamentary Secretary Senator Mustapha Mohamed who is a trained economist, and refer to his article in Berita Harian on 24.4.93. In his article Senator Mustapha correctly pointed out that the increase in international reserves depends on whether we have a positive balance of payments which is dependant on our economic growth.
There are three components of balance of payments, namely the merchandise account, services and transfers account and the capital account. So long as these three accounts and up in the country’s favour we have a positive balance of payments and increase in international reserves.
Clearly the increase in international reserves is dependant not on Bank Negara not on the country’s overall economic performance. And that economic performance is determined by the Government economic policy and efforts of all 18 million Malaysians including the Finance Minister, but not determined solely by Bank Negara.
It is shocking that Malaysian’s Finance Minister does not seem to understand such basic international economics that I begin to worry that there is no major financial disaster until now.
As for The Other Reserves Account this is determined and controlled by BNM. This can be seen by the BNM’s Report stating that Other Reserves comprises of Exchange Rate Fluctuation Reserve, the Investment Fluctuation Reserves and the Contingency Reserve.
This Other Reserves account was built up over a period of at least 8 years but as I have outlined yesterday has been wiped out in just one year as a result of speculation in foreign currency.
If Bank Negara Did Not Suffer Losses Why Is There A Drop Of $9,203 Million Drop In Nets Assets Value.
Further to highlight the point that Other Reserves is dependant on Bank Negara’s performance whilst international reserves has nothing to do with Bank Negara but with the overall economic performance, let us examine the Net Assets position of Bank Negara.
In accounting terms, the Net Assets is used as a rough indicator of a company long-term solvency, value and financial performance. Below are the net assets position calculated by determining the capital employed component or net assets value of Bank Negara:
1990 1991 1992
Paid-up Capital 100 100 100
General Reserves Fund 3,258 3,458 3.556
Other Reserves 8,749 10,053 752
Net Assets 12,107 13,611 4,408
It can be clearly seen that the net assets value of BNM was $12,107 million in 1990 and increased by $1,504 million to $13,611 in 1991. However there was a sharp drop of net assets value in 1992 of 9,203 million to only $4,408 million in 1992 or 68% drop.
In other words BNM as a unit, company or cost centre suffered a drop of RM 9,203 million in net assets value in 1992. And because Bank Negara belongs to the people such loss in net assets value is also the people’s loss. This loss in net assets value is even more unusual when we consider that the country’s growth is said by the Government to be doing well and BNM recorded a profit in 1992.
It is also untrue that BNM has to suffer such a loss because of the improvement in economy or the country’s international reserves. This can be seen by the economy’s good performance in 1991 as shown by the increase in international reserves by $3,311 million and the increase in net assets value of Bank Negara by $1,504 million.
For Bank Negara to suffer a drop in nets assets value of $9,203 million at a time, when the economy is doing well, Bank Negara made record profits of $1,398 million in 1992 and has made a profit every year with a healthy accumulated profits $3,556 million is unacceptable. The only reason that Bank Negara can suffer such a drop in net assets value of $9,203 million is because its other Reserves of$10.1 billion were wiped out in one year by forex speculation. If this is not the reason I challenge Datuk Anwar to state what is the cause for the drop in net assets value by $9,203 million suffered by BNM.
Datuk Anwar should therefore stop trying to mislead the public that the loss in Other Reserves of $10.1 billion by BNM does not matter because it is more than offset by the surplus of $16.9 billion in international reserves. Not only is this wrong in economics terms but such selective comparison is so basically wrong in accounting terms that any student in accounting would not make such a mistake.
No wonder Bank Negara Governor Tan Sri Jaffar Hussein who is a chartered accountant looked so unhappy when Datuk Anwar made this comparison in Parliament yesterday. It is not surprising for Datuk Seri Anwar to make such Basic mistakes because he is not an accountant. However it is poor reflection of his economic and accounting advisors if they cannot teach him and make him understand the basics properly and clearly. I would suggest that for the sake of the country that he change his economics and accounting advisors.
I would also hope that Datuk Anwar give a full public explanation by referring to all the technical points raised responsibly and not resort to political polemics.