Mahathir Seeks Views of Fund Managers 
International Herald Tribune
December 12, 1998
Thomas Fuller

Prime Minister Mahathir bin Mohamad met Friday with a group of foreign fund managers — the people he has criticized for helping trigger Southeast Asia's economic turmoil — in a move that analysts said was intended to smooth relations with the international financial community.

An aide to Mr. Mahathir said the prime minister listened to the fund managers' views on Malaysia's currency controls and other issues during the hour-long meeting but made no comment on whether the government was planning to change its controversial policies anytime soon.

"It's an exercise of sending some messages," said Mohamed Ariff, executive director of the Malaysian Institute of Economic Research. "I think it's quite obvious that Malaysia has suffered from bad PR in recent times. This is in an indication that they want to build bridges, to keep good connections with the fund managers."

The country's national news agency, Bernama, said that Mr. Mahathir told the fund managers that the currency controls would remain in place "for the time being" but that the government was considering measures to "fine-tune them."

What could have been an awkward meeting — fund managers facing the man who has demonized them on several occasions — is said to have gone smoothly. Diplomats and politicians here have long pointed out that Mr. Mahathir's acid-tongued rhetoric usually contrasts sharply to his practical policy decisions.

Mr. Mahathir and his aides have met several times with fund managers since economic turmoil spread throughout the region last year but this is the first such meeting since Malaysia imposed controls on its currency in September. As part of the controls, foreign investors were banned from withdrawing their money from the stock market for one year.

The rule, which angered many foreign portfolio investors who had money in the market, was central to the hour-long discussions, according to news agencies.

The aide to Mr. Mahathir said the idea of an "exit tax" for foreign stock market investors that would replace the one-year ruling came up during the talks, but that Mr. Mahathir made no specific comment on the government's plans.

"The government hasn't decided anything yet," the aide said. "We will look into all the suggestions."

The Malaysian stock market seemed to react favorably to the meeting, with the main index closing up 1.6 percent at 533.88 points.

The gathering was organized by Salomon Smith Barney, the U.S. investment bank that took on the role of official adviser to the Malaysian government this year. A total of 13 fund managers from Hong Kong and Singapore attended.

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