Datuk Seri Anwar Ibrahim believes among the reasons Malaysia’s economy was now stagnating was due to the “permanent scar left on the economy” as a result of measures taken over two decades ago.
Anwar Ibrahim has claimed that Malaysia’s handling of the 1997 Asian financial crisis had, in fact, paved the way for a system which allowed the 1MDB scandal to occur.
In a lengthy and fiery Facebook posting, the PKR president who was the finance minister at the time, said he had never fully accepted the recommendations by the International Monetary Fund, contrary to allegations frequently raised against him.
“I never accepted the IMF’s recommendations outright, despite what has been alleged,” he said.
Instead, Anwar alleged that as a senior minister at the time, he “did the best he could” in balancing expectation to support the then-prime minister’s position while saying “things which were right, even if they were unpopular”.
Anwar said he saw the IMF’s policy proposals as an opening to carry out the structural and institutional reforms needed to correct an economy that thrived on patronage and graft.
“What I believed to be correct in the IMF’s assessment was that Malaysia faced a crisis of confidence which could only be rectified by real structural changes that increased transparency, accountability and ensured the independence of institutions.”
Anwar acknowledged that Malaysia had recovered well in 1999. But, so had other countries in the region “none of whom imposed controls”, he said, in a reference to the controversial measures taken by prime minister Dr Mahathir Mohamad’s government in opposition to the IMF recommendations.
“But during that critical period, what did the government do to rectify the underlying structural problems? Hardly anything,” Anwar said.
At the time of the crisis, Anwar was also serving as deputy prime minister during Dr Mahathir’s first tenure as premier under the BN government.
The events took place just prior to the infamous falling out between the two leaders which resulted in Anwar’s sacking from the cabinet and ultimate jailing in 1999.
Anwar, who is currently Opposition leader, said among the reasons Malaysia’s economy was now stagnating was due to the “permanent scar left on the economy” as a result of measures taken over two decades ago.
Citing the Boston Consulting Group’s Socio-Economic Development Assessment (Seda) from 2009 to 2019, Anwar said Malaysia’s economy appeared to be stagnant in comparison to the performances of other countries such as Indonesia and Vietnam.
“Some have argued the timing of controls made no sense since by late 1998 much of the contagion had already worked its way through the system,” he wrote.
“Most of the region was beginning to recover,” he wrote.
The PKR president also suggested that pegging the ringgit came at a heavy cost — investor confidence in Malaysia tumbled.
The Malaysian ringgit crashed to RM4.90 to the US dollar, the stock market collapsed, and massive corporate defaults took place, leading to a banking crisis.
Although the posting was part of a lecture he delivered at Harvard University during his stay in the United States, the timing would likely arouse speculation.
The notes were published amid talks of a widening rift between Anwar and Dr Mahathir, ostensibly over the right to lead the Opposition coalition and ultimately the prime ministership as talks of snap polls grow.
The former deputy prime minister had also been vocal as a backbencher when Pakatan Harapan ruled, often issuing stern statements that suggest the fledgling government was drifting away from its reform agenda, criticisms observers say were likely directed at Dr Mahathir.
“Ultimately the reforms which I proposed at the time were never adopted, and to this day remain one of the key policies which Pakatan Harapan seeks to implement. Instead, Malaysia took a different course,” he said.
Training his guns at the administration of the current Perikatan Nasional government, which comprises BN and former Umno leaders, he alleged: “The manner in which the PN government is rolling back reforms and blatantly condoning corruption is planting the seeds for the next ten 1MDBs.
“May God protect Malaysia from that.”
“In the last five years, there was not a single meeting I attended with economists and investors anywhere in the world in which the 1MDB scandal was not raised… If you ask me how the system allowed 1MDB to happen – I would point us back to 1997.
“Kleptocracy is symptomatic of the failure to adopt structural reforms that prevent and expose abuse of power and corruption,” said the Port Dicksom Member of Parliament.
Former prime minister Datuk Seri Najib Abdul Razak is currently facing a slew of criminal charges in relation to alleged abuse of power and money laundering in the multi-billion ringgit 1MDB scandal.
Despite their falling out, Anwar and Dr Mahathir joined forces to take down BN in 2018’s GE14. However, the Harapan administration was plagued with uncertainty over the premiership, with speculation that Dr Mahathir, in his second tenure as prime minister, would not honour the pact to hand over the role to Anwar.
The two former rivals are now said to have gone back to the negotiation table following Harapan’s collapse after Dr Mahathir’s new party Bersatu pulled out of the coalition to form the PN government with BN and PAS against the latter’s wishes.