TWN Global Economy Series No. 6

The Malaysian Experience in Financial-Economic Crisis Management An Alternative to the IMF-Style Approach By Martin Khor Publisher: TWN (ISBN: 983-2729-40-8) Year: 2005: No. of pages: 44 PRICE US$9.00 for First World countries US$6.00 for Third World countries RM8.00 for Malaysia Prices are inclusive of postage costs by airmail.

About the Book

TWN Global Economy Series is a series of papers published by the Third World Network on current developments and trends in the global economy, such as those involving output, income, finance and investment. It complements the TWN Trade and Development Series which focuses on multilateral trade issues. It aims to generate discussion on and contribute to development policies oriented towards fulfilling human needs, social equity and environmental sustainability.

About the Author                            

MARTIN KHOR is the Director of the Third World Network. He is an economist trained in Cambridge University and has authored several books and articles on trade, development and environment issues. 

Contents

1. GENERAL BACKGROUND TO THE ISSUE

(a)    The Onset of Financial Crisis: Some Elements

(b)   Orthodox IMF-Style Policy Response

(c)    Needs and Goals of a Country Facing Crisis

2. BACKGROUND TO THE MALAYSIAN CRISIS AND RESPONSE

(a)    The Malaysian Crisis: The Start

(b)   Initial Response: Orthodox Policy

(c)    Developing the Malaysian Alternative Strategy

3. ELEMENTS OF THE MALAYSIAN ALTERNATIVE STRATEGY

(a)    General

(b)   The Core Macroeconomic Elements:

(i)                  Reduction in interest rates

(ii)                Expansionary monetary / credit policy

(iii)               Expansionary fiscal policy

(c)    Stabilising the Currency

(i)                  Fixing the exchange rate

(ii)                Measures to prevent overseas speculation and trade in the ringgit

(d)   Selective Capital Controls

(i)                  The initial measures in September 1998

(ii)                Subsequent amendments and relaxation

(e)    Stock Market Measures and Closure of Overseas Trade in Malaysia Securities

(f)     Restructuring the Financial System and Corporate Debt

(i)                  General

(ii)                Government guarantee of depositors’ funds

(iii)               Decision not to close financial institutions in trouble

(iv)              Establishment of Danaharta

(v)                Establishment of Danamodal

(vi)              Establishment of the CDRC

     (g) Maintaining Some Basic National Policies and Socio-Economic Goals

4. SOME LESSONS AND CONCLUSIONS

(a)    Lessons from the Malaysian Experience

(b)   Other Conclusions

    REFERENCES