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Showing posts with label Mahathir Mohamad. Show all posts
Showing posts with label Mahathir Mohamad. Show all posts

Thursday 15 September 2011

Malaysia's history, sovereignty violated, semantics need truly national!





Of history and semantics

ALONG THE WATCHTOWER By M.VEERA PANDIYAN
veera@thestar.com.my

According to the country’s history buffs, we were not legally a colony of Britain, but only in effect.
Tunku Abdul Rahman Putra Al-Haj announced the ...Image via Wikipedia
IT was meant to be good break in Thailand, especially after weeks of scouring stories from dusty, bound copies of The Star for the paper’s 40th anniversary.

The mood in the kingdom, however, has been somewhat sombre, no thanks to the exceptionally bad weather this rainy season.

Floods and landslides have swept across 16 provinces in the country, killing more than 80 people and the death toll is set to rise further.

Even the resort town of Pattaya, which is usually spared from heavy torrents, was flooded over the weekend, along with Krabi, another tourist destination.

The rising waters have also set free potentially man-eating salt water crocodiles from a popular reptile farm, adding to the fears of locals and tourists.

So, there was little choice but to bum it out in Bangkok and keep abreast of the news, especially from back home.

And like always, the wonders never cease.

There was no escape from history and bizarre opinions from people who really should know better.

It was certainly news to read that Malaysia, or to be more precise, Malaya, was never a British colony but only a “protectorate”, as declared by Prof Dr Zainal Kling, a member of the 1,500-strong National Professors’ Council.



He argued that Britain held administrative powers, controlled the money and exploited the country’s natural resources but did not infringe Malay sovereignty in the states – except in the Straits Settlements of Malacca, Penang and Singapore.

Since then, there has been a deluge of comments against his views, along with the usual gnawing doubts about the state of our education system and more so the people who are supposed to be leading it.

But even the country’s most notable historian, Prof Emeritus Tan Sri Dr Khoo Kay Khim supported Dr Zainal, stressing that from a legal point of view, Malaya was never colonised.

The British, he said, took part in the administration of the Malay states as a result of treaties with the Rulers.
Dr Khoo said only those born in the Straits Settlements – yours truly from Malacca included – were considered British subjects, while those born in the Malay states were not. (Take note, Hindraf).

So, according to our presumably sage professors, it seems that in the legal sense we were not colonised but, sadly, in effect we were.

As former Prime Minister Tun Dr Mahathir Mohmad said sarcastically:
“The British did not advise, they gave orders.

“The English language is such that the advisers rule and rulers advise.”

Ahmad Fuad Rahmat, a research fellow at the Islamic Renaissance Front explained it vividly in his article in Harakah last week.

“Colonialism involves the exploitation of wealth of a nation – where one country becomes subjugated by the power and authority of another.

“If a country is browbeaten in such a manner, its sovereignty is already violated in effect, no matter what the legal documents say.

“So, Malay sovereignty was not protected under the Pangkor Treaty of 1874 because it gave the British a legal mandate to advise and interfere in local matters.”

As Ahmad Fuad rightly pointed out, sovereignty basically means power; and before independence, it was the British who held absolute power and control of the country.

The debate over the semantics of “colonisation” is of course, a spin-off from the controversy sparked by PAS deputy president Mohamad Sabu, better known as Mat Sabu.

The Pokok Sena MP was reported to have said during a ceramah in Penang recently that a group of guerillas led by Mat Indera, who killed 25 policemen and their families in the Bukit Kepong tragedy in 1950, were the real heroes because they were fighting against the British.

He was also alleged to have said that Umno founder Datuk Onn Jaafar and the country’s first Prime Minister Tunku Abdul Rahman do not deserve to be called independence leaders because they were British officers.
In Thailand, colonisation, or rather the absence of it, is indeed a big deal.

Among the things that the Thais are very proud of is that they have never been a colony of any Western power.

I suppose one should ignore the fact that Thailand did not exist until 1939. Before that it was Siam, which in its long history, was sacked by the Burmese and Khmers.

But as for recent times past, its kings are credited as being smart – by being neutral instead of taking sides with any European colonial power.

King Chulalongkorn, for example, offered the country as a geographical buffer for the competing colonial interests and, through this, effectively protected the kingdom from foreign meddling.

Earlier this year, the Thai government planned to make English the country’s second language.

But the plan was stymied midway by former education minister Chinnaworn Boonyakiat.

The committee reviewing the education system shot down the proposal for a peculiar reason: Making English a second official language might lead to misunderstanding that Thailand had been colonised in the past.

The minister justified his decision by saying that all countries in the region where English is the second language were viewed as former colonies.
While making comparisons between silly news makers in both countries, a Malaysian friend who is a long-time Bangkok resident summed it up with a common phrase:

“Same, same but different.”

Associate Editor M. Veera Pandiyan likes this Mark Twain quote: The very ink with which all history is written is merely fluid prejudice.

Sovereignty of Malay Rulers a legal fiction

IN the midst of the controversy over Mat Sabu and Bukit Kepong certain views have been expressed about British rule which may have the unintended effect of confusing rather than enlightening.

It is true that the Malay states – unlike Penang, Malacca and Singapore – were not British colonies in the formal sense. Nonetheless, they were under British rule. The sovereignty of the Malay Rulers was a legal fiction.

The Ruler was required in both the Federated and Unfederated Malay States to seek, and act upon, the advice of the British Resident or Adviser “on all questions other than those touching Malay Religion and Custom”.

In other words, decision-making powers were effectively in the hands of the British.

Apart from laws and treaties which established the actual locus of authority with the British, every important dimension of the economy was under their control. Issues pertaining to land, resources, labour, capital and market in the Malay states were all determined by British policy and British interests.

This made the situation in the Malay states no different from the three British colonies in their vicinity. Indeed, it was British control over both the internal and external economy of the Malay states that rendered them de facto colonies.

Economic control led to the exploitation of Chinese and Indian workers in the tin mining and plantation sectors and the marginalisation of the Malay masses in the peasant sector.

The creation of a dual economy with the commodity based, exported oriented sector directed towards the colonial metropolis was a common characteristic of most colonial economies. In reality, the Malay states bore all the iniquities and injustices associated with colonial rule.

It is mainly because there was de facto colonialism that Umno in the 50s and Parti Kebangsaan Melayu in the 40s championed the cause of merdeka (independence) from the British.

They were focussed upon the substance – rather than the form – of British rule.

DR CHANDRA MUZAFFAR,Kuala Lumpur.

We need a truly national history

the Sun Says

WHAT was Malaysia when imperial Britain was lording it over us, a colony or a protectorate? This seems to be the title of the public debate that is raging in the media and elsewhere ever since someone declared that the country was not a colony of Britain before 1957 and 1963.

It may perhaps help the debaters to be reminded that before the Japanese occupation Malaya was made up of a colony known as Straits Settlements of Penang, Malacca and Singapore, the Federated Malay States of Perak, Selangor, Pahang and Negri Sembilan and the Unfederated Malay States of Perlis, Kedah, Kelantan, Terengganu and Johor.

In 1946, Sabah (then British North Borneo) and Sarawak became colonies. Whatever their legal status – colony or protectorate, Britain was the de facto ruling power over them. In 1957, the states of Malaya became independent of that power, free finally to decide their own destiny. Sabah and Sarawak followed six years later.

Because it is not an academic debate some are clearly being emotional about it while others try, with whatever facts they have at their command, to claim that they are being objective. There is no doubt some valid points are being made but in the heat of the debate few seem to notice them.

It all arose as a result of a claim that someone is a hero because he was fighting his countrymen who were part of the colonial police force.

While it may not be easy to come out with a clear-cut answer and explanation acceptable to all as to whether the person is a hero or a terrorist, the debate has generated a lot of interest in the history of the country especially at a time when the contents of secondary school history textbooks are being scrutinised for errors and inaccuracies.

The special committee that is going through the history books and the complaints of one-sidedness regarding them is expected to come up with a report by the end of the year.

Local historians have been known to complain that the history books written by western writers or those influenced by them tended to play up the role of the British while ignoring or down playing the roles of local personalities.

To "correct" the situation local historians in their books tended to down play the roles of Britain and British officials in the history of the country. Some other local historians also tended to highlight the role of one community while down playing the roles and contributions of the other communities.

A common complaint of Sabahans and Sarawakians is that the history of the formation of Malaysia gives more prominence to the roles of West Malaysians in the effort while the natives seem to be mere passive assenters to the fait accompli.

Thus the report is eagerly awaited and if universally accepted it may be a guide or template for the writing of a history that is truly national.

Saturday 20 August 2011

Capital controls: From heresy to orthodoxy





THINK ASIAN By ANDREW SHENG

 Principles for formulating capital control policies must take local conditions into account.

ON Sept 1, 2011, it would be 13 years to the day when Malaysia first introduced capital controls to stem the effects of the Asian financial crisis on the domestic economy. In 1998, it was heresy to introduce capital controls on capital flows, since it was the International Monetary Fund (IMF) orthodoxy to liberalise the capital account.

From the perspective of history, one tends to forget that in 1945, when the IMF was first established, the consensus opinion among bankers and academics alike was for hot money to be controlled. Indeed, the intellectual father of the IMF, John Maynard Keynes, remarked that “what used to be heresy is now endorsed as orthodoxy.”

In the old days, courtesy to living persons and the statute of limitations would allow history to be written only after 60 years when official archives are opened to the public.

Today, we live in an age of unfettered information, when oral and documented history can be published rapidly, from authorised biographies issued shortly after a leader leaves office to unauthorised leakages from Wikileaks.

The publication of a new book by Datuk Wong Sulong, former group chief editor of The Star, called Notes to the Prime Minister: the Untold Story of How Malaysia Beat the Currency Speculators, only two months after the IMF announced in April 2011 new thinking on capital inflows, is a remarkable achievement.

Sixty-six years after the IMF was formed, capital controls have moved full circle from orthodoxy to heresy and back again to (qualified) orthodoxy.

The book comprises 45 Notes written by Tan Sri Nor Mohamed Yakcop, Minister in the Prime Minister's Department, between Oct 3, 1997 and Aug 21, 1998 to then Prime Minister Tun Dr Mahathir Mohamad.
In short, they were the key briefs that helped Dr Mahathir make up his mind on the key economic policies to help combat the Asian financial crisis.



Book offers deep insights

For both historians and practicing policymakers, this new book offers deep insights into the serendipity and the practice of successful policy decision-making. There is an element of serendipity, because Dr Mahathir recalled that he spotted Nor Mohamed walking down a street in Kuala Lumpur just before he left for Buenos Aires in September 1997 via Hong Kong, where he attended the World Bank Annual Meetings and clashed publicly with George Soros on currency trading.

On Sept 29, 1997, he summoned Nor Mohamed to meet him in Buenos Aires, because he needed someone who understood currency trading. It is a tribute to a politician trained as a doctor that he was willing to spend repeated sessions with an experienced currency trader to understand the intricacies of modern financial markets.

Reading the 45 Notes in historical sequence, one gets a far better appreciation of how the decision to impose capital controls was arrived at. The Notes not only have historical value, but also current-day applicability, as they explain not only offshore currency, the psychology of fear and greed that drive markets, but also market manipulation in thinly traded emerging market currencies.

The major problem of the proponents of the Washington Consensus in 1997 was that most of them were macro-economists who had little understanding or experience of how the markets actually worked. Free markets became a dogma and objective in their own right, rather than the means to an end for better livelihood for all.

The Notes also revealed that in complex decisions under uncertainty, it was vital to understand clearly the key parameters for action. Note 7 clearly pointed out that Malaysia was different from other countries under currency attack because it did not have large short-term external debt. Note 11, dated Oct 21, 1997, spelt out the factors that determined exchange rates, with a particularly illuminating explanation of market manipulation.

Market manipulation was seen as due to concerted effort by hedge funds, using large gearing and available tools and then triggering the element of fear among the long-term investors who have legitimate currency risk.

In other words, if the wolves can trigger the herd to move, then the fundamentals can move. The perception of fear changes the whole game.

Effect of CLOB

Note 39 dated July 9, 1998 is an important study of the effect on Malaysia of the central limit order book (CLOB) for trading of Malaysian shares in Singapore. The Note identified that the CLOB was a convenient way for capital outflows.

Hence, one of the most effective ways for exchange control was to impose the condition that Malaysian shares could only be traded on a Malaysian exchange, which came on Aug 31, 1998, with exchange controls imposed on the following day.

In Dr Mahathir's words, “during the financial crisis, we faced two parallel situations; the ringgit was falling rapidly and Malaysian shares were also falling rapidly. So we had to put an end to both.”
50th Mederka Malaysian National Day celebratio...Image via Wikipedi
The IMF has come out with six key principles for formulating capital control policies.

The first is that there is no “one-size-fits-all” policy mix. The second is that capital controls should fit long-term structural reforms. Third, capital controls are only one tool and not a substitute for the right macro policies. Fourth, capital controls can be used on a case-by-case basis, in appropriate circumstances. Fifth, the medicine should treat the ailment, and finally, the policy must consider its effect on other market participants.

It is hard to argue against these common sense “motherhood” principles. The trick in real life policy-making is how to apply them to local conditions.

On of the features of the current Chinese capital controls is that China also has a large amount of Chinese shares listed outside capital controls, such as Chinese shares listed in Hong Kong, Singapore and New York.

This is a book that is a must read for all emerging market policymakers interested in liberalising their capital accounts and for IMF experts to ponder emerging market experience.

I recommend that this new book be translated into Chinese, so that Chinese policymakers interested in internationalising the renminbi can look at the Malaysian experience.

Tan Sri Andrew Sheng is author of the book, From Asian to Global Financial Crisis.


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The untold story of Malaysia foreign exchange controls