This was reported by Bernama, the Malaysian news agency, on 30 October 2003. It was also published in the New Straits Times on 31 October 2003 (page 2).

ASIAN BOND MARKET GIVES POSITIVE IMPACT TO REGIONAL ECONOMY

KUALA LUMPUR, Oct 30 (Bernama) — Prime Minister Datuk Seri Dr Mahathir Mohamad said the Asian Bond Market Initiative (ABMI) will bring about positive impact to the economies of East Asia as it will help to strengthen domestic capital markets.

“With that, Asian reserves could be mobilised for development projects
implemented either by governments or the private sector,” he said in response to a question by Datuk Zulhasnan Rafique (BN-Wangsa Maju) at the Dewan Rakyat here today.

Dr Mahathir said through the bond mechanism, borrowers could avoid the problem of “mismatch” in financing as experienced during the financial crisis,
where short-term loans were used to finance long-term investments.

With the existence of an alternative channel besides the equity market, a
dynamic Asian bond market would ensure the domestic economy will be able to
withstand systemic risks in case of future shocks.

Dr Mahathir said Malaysia had the experience to help develop ABMI as it had
the basic amenities in developing the local bond market.

“Malaysia played an important role in the existence of Asian Bond markets,”
he said.

The sheer determination by Malaysia in ensuring the success of the ABMI is
because of its desire to expand the Islamic capital market in the region. –

Replying to a supplementary question by Abdul Rahman Yusof
(Keadilan-Kemaman) Dr Mahathir said that Asian countries have reserves to the
tune of trillions of dollars, most of which are kept in the developed countries.

Abdul Rahman questioned how the Asian Bond Market would revive Asian
economies as he claimed there was no visible market to purchase these bonds.

Dr Mahathir, who is also Minister of Finance, said: If we open our eyes, we
will see the market.”

The Prime Minister said it was unfortunate that countries in Asia were
giving away free profits to developed countries which imposed an interest of
five percent if Asian countries wanted to borrow from them.

“Actually, until now, Asian countries kept their reserves in developed
countries, with that, when Asian countries need loans (from developed
countries), we are actually borrowing our own money kept in other countries.”

“They (developed countries) who keep the money are the ones indebted to
Asian countries as we (actually) pay interest on our savings and they (developed
countries) are actually bankrupt. They live by spending our money,” Dr Mahathir,
said.

The Prime Minister said that Asian countries actually undertake investments
which are miscalculated by keeping reserves in developed countries in the form
of foreign curencies and giving free interest to developed countries.

He said that with the initiative to set up the Asian Bond Market, countries
in the region would be able to bring back their reserves kept in developed
countries and disburse them to countries in need in Asia.

“What is wrong with countries which have surpluses, to have their funds
placed under one fund, and thereafter lent to other Asian countries through
these Asian bonds,” he said.

“It is not true to say that Asian countries are not developed. Actually, the
bulk of the global economic growth comes from East Asia.

He said that this was a fact in view that many investors were coming to
invest in Malaysia as well as other Asian countries. — BERNAMA

  

Posted on October 31st, 2003 by jl
Filed under: Regional Financial Concerns: Asia