Speech (Part 2) by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, at the Tanjong 3 DAP dinner in Jelutong at Batu Lancang, Penang on Friday. 30th April 1993 at 8 p.m.
DAP calls on Anwar Ibrahim to give a full and satisfactory statement on Bank Negara’s foreign exchange losses ranging from RM10.1 billion to RM12.8 billion as his Parliamentary speech on it last Tuesday was most unsatisfactory
DAP calls on the Finance Minister, Datuk Seri Anwar Ibrahim, to give a full and satisfactory statement on Bank Negara’s foreign exchange losses ranging from RM10.1 billion to RM12.8 billion as his Parliamentary speech on it was most unsatisfactory.
I had expected Anwar Ibrahim to give to the country all the relevant facts and figures about Bank Negara’s colossal foreign exchange losses when he made his first statement on Bank Negara’s colossal foreign exchange losses in Parliament last Tuesday during the debate on my motion, and I am very disappointed that he had failed to do so.
From Bank Negara’s 1992 Accounts, it suffered forex losses ranging from RM10.1 billion to RM12.8 billion for two reasons:
Its ‘Other Reserves’ suffered a drop of RM10.1 billion in 1992;
It had to make provision for RM2.7 billion contingency liability being “net liability on forward exchange transactions”, which means it could lose another RM2.7 billion when the Bank Negara’s forward contracts on foreign exchange mature.
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.
RM12.8 billion is equivalent to a person striking a RM2 million lottery every day for 17.5 years
RM12.8 billion are so colossal a figure that it is impossible for the man in the street to grasp its magnitude. If this sum is divided equally mong the population, the 18 million Malaysians – adults, children and babies – will each get RM711 each. Or to put it in another way – this will mean a person striking a RM2 million lottery ticket every day for 6,400 days, or for every day for 17.5 years!
Up to now, Anwar Ibrahim and the Bank Negara Governor, Tan Sri Jaffar Hussein, had given general explanations for Bank Negara’s foreign exchange losses ranging from RM10.1 billion to RM12.8 billion but they had failed to provide facts and figures to show how such colossal losses could be incurred in one year.
There could only be three reasons for the Bank Negara’s colossal foreign exchange losses last year, namely:
*the cost of Bank Negara’s fight against inflation in mopping up the large inflow of foreign funds;
*the revaluation of Bank Negara’s foreign currency holdings at the end of the year, particularly because of the appreciation of the ringgit; and
*losses from foreign exchange trading and speculation
The bulk of the Bank Negara’s foreign exchange losses come from the third factor, i.e. foreign exchange trading and speculation, and not the first two factors.
Bank Negara incurred the bulk of its foreign exchange losses as a result of its forex speculative activities in the British pound, which fell by some 30 per cent last year
I have calculated that it should not cost Bank Negara more than RM600 million in its fight against inflation last year and that the losses arising from the foreign currency revaluation at the end of the year should be in the region of RM2.6 billion.
This means that Bank Negara would have incurred losses ranging from RM6.9 billion to RM9.7 billion because of foreign exchange trading and speculation activities.
I believe that the main cause for the RM6.9 billion to RM9.7 billion foreign exchange losses of Bank Negara last year was because of its foreign exchange speculation in the British pound in the third quarter of last year.
At that time, there was a European currency and British pound crisis, and the British pound fell by some 30 per cent against the Malaysian ringgit.
It has been reported that the Bank of England spent billions of pounds to defend the British pound. This is of course understandable, but what is incomprehensible is why should Bank Negara of Malaysia pour billions or even tens of billions of Malaysian ringgit into the British pound at the time.
The Malaysian Government and Bank Negara could not have changed their ‘Buy British Last’ Policy to ‘Defend British First’ with the billions of ringgit of Malaysian taxypayers. Clearly, Bank Negara had expected to ‘go for a killing’ of the recovery of the pound – and in the process, got its fingers and several billions of ringgit of the people’s money burnt!
Anwar Ibrahim has been a strong advocate of the principles of accountability, responsibility and transparency for public officials, and he should set the example now by giving a detailed breakdown of the foreign exchange losses suffered by Bank Negara from the fight against inflation, the revaluation of foreign currency holdings at the end of the year and most importantly, from foreign exchange trading and speculation.