Matters of opinion that enables me to understand or make some sense of my country- Malaysia

Archive for September, 2013

The Asian Financial Crisis in 1997 and Mahathir’s handling of it

The Asian Financial Crisis in 1997 came as a surprise and caught most people off guard not only by the speed but also the severity of the crisis. At that time the Asian Economic Miracle was the buzzword.

The Asian Tiger economies were at their peak not only in the performance of their export oriented economies but also in their stocks and property markets. And to counter the shortage of funds needed to boost their economies, they embarked on a ‘loose money’ or loose monetary policy regime. 

Loose Money Policy

To expand credit, rules governing the inflow and outflow of foreign funds were relaxed and so were the terms of borrowing by banks and corporations. Instead of the traditional ‘borrow long, lend short’, banks did the opposite where they ‘borrowed short and lent long’.

Such practice will put banks in an awkward position because if they borrow short say 3 years and lend long for 10 years, then there will exist a ‘window of interest rate risk of 7 years’, i.e. from the fourth year to the 10th year.

Banks would then be in a risky position because during a financial crisis, a country’s currency is most vulnerable to attacks by speculators and hence the use of interest rates to defend the currency’s value.

Currency devaluation

Traditionally there are two tools available for authorities to fend off currency speculators. One is to use Monetary Policy tool to raise the domestic interest rates and the other is the Exchange Rate Policy of Open Market Operations to defend the exchange rate by selling its foreign reserves (in US$) to artificially prop up the local currencies. However such policy will always fail due to the size of the foreign exchange market that is just too big for any government to manipulate. The foreign exchange market currently trades more than US$ 5 trillion a day. Hence intervening in the foreign exchange market will only buy more time for the authorities and not solving the problem.

If authorities choose to raise interest rates then it will increase the ‘cost of funds’ for the banks and corporations. As a result, it will be very prohibitive for them not only to do business but also to service their debts. If left unchecked, it will send many of them into financial difficulties.

During the height of the Financial Crisis in 1998, the interest rates in Malaysia went up to as high as 18%. Coupled with the currency devaluation (USD/MYR 1 to 4.80) it provided a double whammy to many individuals and businesses in Malaysia. Doing business in Malaysia then was very difficult then due to the volatility of the Ringgit and many businesses lost money due to the fluctuation of the Ringgit and hence misquoted their customers. As for the individuals they suddenly found that their mortgage repayments have doubled due to the interest rate hike.

Below is a write-up on the Asian Financial Crisis in 1997 and also the various solutions implemented by our Government. It also highlights some of the similarities between then and the current Global Financial Crisis. Again this is a long article (28 pages) and I hope that by the time you finish this article you will learn the following:

What is a Financial Crisis and how it started?

How it affects laymen like us?

How Governments attempt to solve it?

How to spot a crisis?

Why current efforts will not provide a solution?

How Quantitative Easing works?

What is Fractional Reserve Banking?

How to cripple our Banking System?

Initiation of the Crisis

Below, I present to you below a table that chronicles of events leading up to the crisis.

The 1997 Asian Financial Crisis
Chronicle of Events during the Asian Financial Crisis
2nd July 1997
After exhausted of funds defending the Baht. Thailand decides to float it
18th July
Philippine and Indonesia devalues their currencies
18th July
IMF extends $1.1 billion loan to Philippines
24th July
Asian currencies under severe pressure especially the rupiah
20th August
IMF extends $17 billion loan to Thailand
28th August
Asian Stock Markets plunging to multi year lows
23rd October
Hong Kong dollar and stocks under heavy selling pressure. Hang Seng lost 10%
28th October
Currency Speculators moving to Korea. Korean won hits new low
5th November
Indonesia seeks IMF assistance with $40 billion approved
24th November
Collapse of Sanyo and Yamaici Securities and Hokkaido Takushoku Bank
3th December
Korea seeks IMF assistance. A total of $57 billion approved
5th December
Malaysia imposes tough market reforms in order to stem foreign funds outflow

There are many factors caused the Asian Financial Crisis of 1997-98. Listed below are some of the most debated reasons for the onset of the Asian Financial Crisis.

> Deteriorating economic conditions

> Moral Hazards by banks and corporations

> Too much inflow of foreign funds

> Stock market and Real Estate Bubble

> Lack of regulatory control on funds

> Massive disinvestment by the Japanese during the early 1990s due to their misadventure in the U.S coupled with their stock market crash. This resulted in the recalling of funds in the region by Japanese banks.

In the following, I shall provide an account on the few most likely factors that caused the 1997 crisis.

Liberalization of the Financial Sector

The credit boom in the international market coupled with the relaxation on foreign capital inflows by authorities has led to an increase in the foreign capital inflow. Normally the FDIs will find its way into either the real economy in terms of loans to businesses or the unproductive stock and property market. However during that time the FDIs are going into the stock and property market. The following table shows the percentages of the loans given to the property sector and also the NPL during 1997.

Bank Lending to Property Sector as % in 1997.  Source BIS
% of loan to property
NPL – Non Performing Loan
Hong Kong
South Korea

Source : Bank of International Settlement

As can be seen from the above the four countries (Thailand, Malaysia, Indonesia and South Korea) that are most affected by the crisis, coincidently also with having the highest NPLs in their respected banking sector.

The following chart is the effect of the Financial Crisis on the respective GDP growth of those countries.

Asian GDP growth
from 1996-97 (%),IMF
South Korea
Hong Kong

Source : International Monetary Fund (IMF)

As indicated from the above table, the GDP growth rates that dropped the most between 1997 to 1998, are from the four most affected countries. First we have Indonesia -12% (from 7.1% to – 5.3%), Thailand -10.1% (from 7% to -3.1%), South Korea -7.1% (from 6.3% to -0.8%) and Malaysia -5.4% (from 7.9% to 2.5%). Hence the number one causality is that over-liberalize economies tend to have deeper repercussions from capital flight.

Fiscal Imbalances

Fiscal imbalance refers to the difference between the negative balance of payment and the ability of a country to pay its debts.

Current A/C
Annual (%)
South Korea

Source : IMF

The above table shows the relationship between the deterioration of the Exports and Current accounts. The Current account can be defined as follows,

Current Account = (X-Y) + NY + NCT

Where X = exports, Y = imports, NY = net investment income from abroad and NCT = net cash transfer. Since the X and Y constitute the largest component in the equation, they are the most important components in determining the Current Account situation. If Y>X then a country is said to be in Current Account deficit and vice versa.

While the current account deficit remains high but at the same time these countries are experiencing a big downturn in their export receipts. For example in 1996, South Korea and Thailand experienced a sharp fall in their exports, dropping from 30.3% and 23.1% to 3.7 and 0.5% respectively from a year earlier. Hence this represents what is called a fiscal imbalance where countries experiencing reducing exports with current account deficits. With such a big drop in exports, eventually is receipts will not be enough to pay for its current account deficits.

During periods of boom in exports there is a need for funds to finance its exports industry and other increase economic activity. At that time the liberalization of the Global Financial market provided a perfect avenue to source for external funds. However, eventually such borrowing will widen the current account deficits.

When a country’s current account deficits widened coupled with the drop in exports and an overvaluation of the currency due to the inflow of foreign funds, it will attract the attention of currency speculators. Currency speculators will eventually short the domestic currency and will cause the currency to depreciate.

Eventually there will be a ‘reverse flow of funds’ from an inflow to outflow of foreign funds. This outflow of funds will result in a ‘credit crunch’ and coupled with the high interest rate will eventually bring down the real estate and banking sector.

The relationship between the balance of payment crisis and the banking crisis is much more evident nowadays due to the globalization of the financial industry. The following table shows the frequency of the crisis between banking and balance of payments.

Frequency of Crisis
Types of Crisis
Balance of payments

As can be seen from the above table, before the year 1980, the occurrence of crisis is more biased towards the Balance of Payments. Out of the total of 29 Crisis only 3 are banking crisis. However since the 1980s the total banking crisis rose to 23 out of 73. So we can deduce that somehow the modern day financial crisis may be caused by the relationship of both balance of payments and banking.

In other words a Banking crisis may predate a Balance of payment crisis and vice versa.

Deterioration of Bank Balance Sheets

Since the factors affecting the Crisis are inter-related and when currency speculators found there is a weak link between the various components of the economy like an over-valued currency, persistent high negative balance of payments and falling exports then there will be an opportunity to make big money by betting on a depreciation of the currency.

During the 1990s era most of the Central Banks in ASEAN pegged their currencies against the dollar. The short term benefits of such a move are creating a stable environment for the inflow of foreign investments and also less headaches on daily fluctuation of exchange rates. The disadvantage is that Central Banks will have to maintain the peg even at the expense of over-valuing their currencies.

Again when currency speculators found that central banks are maintaining an over-valued currency then they will likely be subjected to a speculative attack. Soon they will flood the market with massive sales of the currency and this will create a condition where supply outstrips demand and finally lead to the collapse of the currency.

To counter this move, the Central Bank will first try selling the Dollar to purchase the local currency. However due to the massive sales of the local currencies by the speculators, central banks will soon use up the holdings of their foreign reserves. Once their foreign reserve is exhausted then the local currency will be devalued.

Another avenue is to raise the domestic interest rates. By increasing the interest rates it not only helped to prevent further capital outflow but also encourage capital inflow. However such a move will have an effect on the bank’s balance sheet because of the higher cost of funds to obtain funds.

If left unchecked it will eventually lead to the collapse of the weakened banking sector. If they don’t increase the interest rates then they will not be able to maintain the currency peg which will eventually collapse. In other words the Government and Central Banks are in between a rock and a hard place.

So how do Central Banks counter such a situation?

Before we proceed further, let me present below a flowchart that will illustrate the dynamics of the Asian Financial Crisis.

Vicious Cycle of a Financial Crisis

Why no alarm Bells before the crisis?

What surprises everybody is that there are no warning signs on the impending crisis because economic indicators show no signs of rapid deterioration. The only signs are falling stocks and property prices.

In January 1996, Thailand’s stock market felled 40% as with Korea’s bourse which also felled sharply at the end of 1996. Malaysia’s stock market also dived during the early 1997.

I present to you below the timeline of events that occurred in Malaysia’s during the 1997 Financial Crisis.

Timeline of Malaysia’s response to the 1997 Financial Crisis
Chronicle of Events during the Asian Financial Crisis
2nd July 1997
After exhausted of funds defending the Baht. Thailand decides to float it
10th July
Bank Negara Malaysia intervene in the Forex market to defend the Ringgit
13th August
Mahathir attack rouge speculators and point finger at Soros
27th August
Malaysia designate the 100 Index linked counters and banned Short Selling
4th Sept
Malaysian Ringgit continue to plunge
20th Sept
Mahathir called for currency trading immoral and be banned in HK
21st Sept 1997
Soros calling Mahathir ‘a menace to his country’
2nd Oct 1997
Meeting in Argentina. Mahathir and Nor Yaakop finalising the Capital Control
5th Dec 1997
Malaysia impose tough market measures by Anwar Ibrahim
7th Jan 1998
NEAC was formed
16th Feb 1998
BNM reduce SRR from 13.5% to 10% in banks. Boosting liquidity in banks.
20th May 1998
Asian currencies continue to plunge
20th June 1998
Formation of Danaharta as an asset management company to handle NPLs
10th August 1998
Danamodal was formed to recapitalise the Banking Sector
16th August 1998
KLCI plunge to the lowest at 260 points
1st Sept 1998
Imposition of Capital Control

In view of the deterioration of Malaysia’s internal and external sectors, time is of essence. To tackle the problem Malaysia established the NEAC (National Economic Action Council) in 7th January 1998, which was based on ideas and policies of NOC (national Operation Council).

NOC was formed as a result of the 1969 racial riots. The NOC was given executive power so it can override all the red tapes and jurisdiction of different ministries to ensure the smooth implementation of policies.

The main objectives of the NEAC are as follow:

> Restoring both public and investor confidence.

> Make sure it will be a soft landing for the economy.

> Reposition and revive the economy to enhance competitiveness and also its attractiveness to foreign investors again.

> Strengthen the economic fundamentals to ensure vision 2020 will be achieved.

Below, I present to you the flowchart of the NEAC Committee.

The NEAC consist of 26 members with the Prime Minister (Dr Mahathir) and Deputy Prime Minister (Anwar Ibrahim) as the Chairman and Deputy Chairman respectively. While the remaining consists of representatives from various Ministries , Governor of Bank Negara Malaysia, EPU, NEAC EXCO, Executive Director, Secretariat, Working Group and the NEAC Communications Team.

The NEAC EXCO was chaired by the Prime Minister while the Executive Director was chaired by ex-Finance Minister Tun Daim Zainuddin. The Secretariat was staff by EPU officials and the Working Group members consist of Tan Sri Wan Azmi (Land and General), Datuk Dr Zainal Aznam Yusof (ISIS), Tan Sri Thong Yaw Hong (Public Bank Chairman) and Professor Mahani Zainal.

From the above timeline it is clear that even after a series of measures adopted, the Ringgit and stock market is still plunging. Hence as a result, desperate situations needed desperate measures and capital control follows next.

King gamblers: Nor Mohamad and Mahathir

It seems that the idea of capital control was originated during Mahathir’s trip to Argentina. The chief architect of Malaysia’s capital control was Nor Yakcop. Formerly he was running the foreign exchange trading desk in Bank Negara and the same bloke that caused Bank Negara Malaysia to lose about RM 30 billion about 20 years ago. Later he became the Finance Minister of Malaysia.

Other members of the group that caused the forex scandal includes ex-Prime Minister Dr Mahathir, ex-Finance Minister Daim Zainuddin and ex-Bank Negara Governor Datuk Jaffar Hussein. According to ex-Bank Negara Deputy Manager, Dr Rosli Yaakop the main culprits are Nor Yakcop and Datuk Jaffar who are responsible in speculating and gambling away Bank Negara funds. To create an impression that Bank Negara had ‘a team of forex traders’ Nor Yackop used both his and the staff’s computer to do the buying and selling.

The reason for the RM30 billion losses from foreign exchange trading is mainly due to Nor Mohamed Yackop’s bet that the Bank of England would float the Sterling during the 1992 European Financial Crisis. Mahathir ordered Bank Negara to purchase large amount of the Sterling in the hope that it will appreciate once it is floated. Meanwhile his rival, George Soros through his Quantum Fund established short positions using currency forward contracts and options to the tune of US10 billion. Other currency speculators sensed the kill and soon joined the fray and together they drove the pound down.

Soros the man who broke the Bank of England and Malaysia!

Soros walked away with US1 billion for a day’s work while leaving Mahathir with more than RM30 billion losses. Later Soros is known as ‘the man who broke The Bank of England’. This was the main reason why Soros was so unpopular with the Malaysian media. He and Mahathir have gone into many heated arguments and name calling later on during the Asian Financial Crisis.

While in Argentina Mahathir called upon Nor Mohamed Yackop (since he was the only dude that has the most experience with foreign exchange) to enlighten him on the inner workings of the foreign exchange market.

At the same time Mahathir also asked Nor Mohamed to design the country’s capital control policy. Practically what he (Nor Mohamed) did was to go  through the Country’s Balance of Payments report line by line looking for any leakages to prevent any capital outflow from the country.

Needless to say this strategy proved to be too complicated to comprehend and also caused a lot of confusion later on. The border control forms and other forms that designed to track the movement of the ringgit proved to be very confusing.

Due to the lack of time and to fast track the process these forms are copied from other countries, presumably from Argentina and other Latin American countries since they are the experts in capital control. For example one of the conditions for funds that are raised from the sale of equities and other investments had to be remained in the country for a minimum of 12 months. However it is not specified whether the residents and the locals are required to do so and consequently it created a lot of confusion. As a result the NEAC Communications Team was formed to deal with the problem and also in educating the people.

Capital Control implementation

The NEAC had been toying with the idea of Capital control many times in the past. Bank Negara Malaysia has been the most ardent opposition to the use of capital control knowing its repercussions or after effects. From empirical analysis of other countries that have adopted capital control, any future capital fund raising in the international markets will be shunned by investors and hence the costs of funds will be high.

Before we go further into Malaysia’s foray into implementing its capital control, I think it’s best for us to understand what is Capital Control. When a country exhausts itself of Monetary and other Policy tools to stabilize the economy, then the last resort will be to implement capital control. Normally it will only be implemented when funds are leaving the country in a big manner.

Capital control is an attempt by a Government to introduce policies to control the free flow of funds not only in and out of the country but also within its borders. Below are some of the more common types of capital control.

> Controlling the foreign exchange transactions.

> Controlling the international bank transfers

> Confiscation of Precious metals like gold and silver

> Fixing the Exchange rate

> Controlling the amount for bank withdrawals

On the 1st day of September 1998, Prime Minister Dr Mahathir Mohammad announced the capital controls to be installed. Malaysia’s capital controls were a mix of the above measures and nothing new although the press claimed it was unique because Malaysia did not embrace the IMF.

The following measures were taken to ensure that the objectives of stabilizing the Ringgit and control the capital flows could be accomplished.

> Overseas bound local travellers were only allowed to take up to RM1,000.

> Remittance of funds by residents to overseas were capped at RM10,000.

> Ringgit is pegged to the dollar at the rate of RM3.80 to US1 to facilitate trade in the domestic sector.

> Any ringgit remaining outside of Malaysia was not considered legal tender. This was to prevent speculators from borrowing the ringgit offshore to sell it in the domestic market for dollars. In other words, to stop speculators from short selling the ringgit and when the ringgit depreciated, buy back to repay their offshore ringgit loans.

> Any credit facilities obtained overseas needed prior approval and only companies that earned foreign exchange were allowed to obtain offshore credit.

> Funds raised from the sale of equities or other forms of investments had to stay in the country for 12 months. This was to prevent short-term capital flight.

> Clearing of Stocks listed on the KLSE could only be done on the KLSE or its approved exchanges.

> RM500 and RM1000 currency notes were made non-legal tender to prevent smuggling of Ringgit to neighboring countries.

> Dealing of shares in CLOB was made illegal to prevent the flow of funds to Singapore and also to discourage the arbitraging of shares between the two exchanges.

Reasons for Malaysia’s success

The capital control does bring some stability into the economy because it helped not only stabilize the Ringgit but also prevent a black market for it. The following are some of the reasons that may help explain Malaysia’s success in its Capital Control.

> Its authoritarian government

Asian values such as maintaining good relationships, respect the elders, upholding harmony and family closeness are some of the reasons that enabled the existence of an Authoritarian Government. Authoritarian Government is one of the main elements for the rapid economic growth in ASEAN. Singapore’s government under Lee Kuan Yew is often criticized for being too authoritarian and so did Dr Mahathir Mohammad and Indonesia’s Suharto.

Being an authoritarian government, it enabled Mahathir to push both state-led and private corporations into cohesion so as to achieve its objective. The pursuit of autonomy on its economy started since the May 13th 1969 racial riots.

It was ‘agreed’ that the main reason for the racial riots was due to the inequality of income distribution between and Chinese and the Malays. The Chinese seemed to be predominantly controlling most businesses and hence at the expense of the Malays. In order to ensure more ‘equitable’ distribution of income The New Economic Policy was born in 1971.

To close the gap between the Malays and the Chinese, business licenses, monetary assistance, employment in public enterprises, property purchase discount (10%), ownership quota (minimum 30%), universities intake (more than 90%) and a myriad of other discriminatory policies were enacted.

It would be a dream for Western politicians to exert such autonomy on their economy and people. So the 1997-1998 Crisis provided another platform for Mahathir to seek autonomy and this time from the international investors. At that time (end of June 1998), the Ringgit was plunging towards the RM4.80 mark, capital flight was increasing and interest rates were sky rocketing.

> An urban crisis

Due to the structural transformation of the Malaysian economy since the 1980s after the Crash of the tin price which was brought about by Mahathir’s effort to corner the tin market in 1980 and which caused the Malaysian taxpayers more than RM 1.6 billion.

In December 1980, Malaysian Mining Corporation through its subsidiary Maminco (short form for Malaysian Mining Corp) secretly made large purchases of tin futures in the LME to the tune of 50,000 tones. As expected the tin price went up furiously. It not only attracted the attention of other tin producers from Brazil and Indonesia to increase their capacity by 69% but also the US to release its strategic stockpile.

Needless to say eventually the tin price crashed. The crash not only left Malaysia with more than RM 1 billion in losses but also devastated many mining towns in Malaysia. It not only cost Malaysia another source of income from tin mining but also its reputation as ‘The largest tin producer in the world’.

I am from Ipoh and during the 1970s it was the most prosperous town in Malaysia and it was also known as the ‘Tin City’. Eventually most tin miners closed shop and went into other business and Ipoh has now been transformed into ‘Eat City’ with specialties such as bean sprouts chicken, salted steam chicken, char kueh teow, white coffee, beef noodles, fish ball noodles and many more.

Malaysia has since become more diversified by transforming itself from an agrarian economy to a manufacturing economy. Import substitution and export-led industries such as electronics are the main activities and contributed much as the engine of growth.

At the same time the high price of agricultural commodities such as palm oil and rubber also helped cushion the impact of the crisis in the rural areas. This is because the rural economy depended much on rubber and palm oil plantations and helped not only insulated it from the onslaught of the crisis but also contributed to the vibrancy of the rural economy. Hence, Malaysia has one less problem to tackle and can concentrate its fight in the urban economy.

Malaysia’s Debt/GDP was smaller

Due to Bank Negara Malaysia’s stringent control on offshore borrowing by local corporations, Malaysia’s external debt did not pose any danger to its Debt/GDP ratio. This was in response to its earlier experience during the 1987-1988 Crisis. Only Malaysian companies that were earning foreign receipts are only allowed to raise capital overseas. Hence this helped it to control its external debts especially the short-term ones.

The following table shows the Debt/GDP of the most affected countries during the crisis.


Hence with a relatively lower Debt/GDP compared to its neighbours, Malaysia was able to escape much of the brunt of the crisis.

Delayed response to the crisis.

There are many arguments on why Malaysia was slow in responding to the crisis or ‘kicking the can down the road’. Below are some of the reasons.

By the time Malaysia imposed the capital control (1st September 1998), the crisis had already devastated other countries by more than a year. Much of the foreign capital that had already left was coming back to ‘bottom fish’ since much of the equities and asset prices were offering at rock bottom prices.

Further to that, those IMF-3 economies that embraced IMF aid were on their way to recovery. Hence, this provided a less risky approach to implement capital controls and spared Malaysia much of the catastrophic effects of imposing capital controls, such as currency black market.

Absence of black market currencies

One of the associated side effects of capital control is the creation of a black market for currencies. Due to the increased demand for US$ more people will be willing to pay more Ringgit for the dollar. Hence in the black market instead of the stipulated US$1 to RM 3.80 people are willing to pay more say RM 4.00.

This did not happen in Malaysia because due to the authoritarian nature of our government, Bank Negara Malaysia was able to exert full control on commercial bank operations. Commercial banks then were warned not to mess around with the currency black market.

The government through the NEAC also liaised with Bank Negara and the Customs Department so as to control the smuggling of the Ringgit and dollars between the Malaysian borders with Singapore and Thailand.

Since capital controls meant that the dollar’s movement in and out of Malaysia would be curtailed, this would create an impression that supply is limited. Hence this will led people to hoard the currency. Added to this people were afraid about when the Ringgit would devalue again, so they were willing to pay more for the dollar to stash in their vaults or under the pillows. Such a move also meant that the value of the Ringgit had gone down and hence if the falls were not curbed, it would lead to inflation.

Another effect would be the loss of confidence on the Ringgit and traders refusing to accept Ringgit for fear it might lose its value soon. During the crisis I still remember there was a ‘capital flight to safety’ of deposits from local banks to foreign banks.

People were withdrawing their savings desperately from local banks because they were afraid these would collapse. It went to the extent where Maybank had to offer free Astro installations for every RM 50,000 term deposit.

Why did it take so long?

Why did it take so long for the capital control to be implemented? It took more than one year since the crisis started on 2nd July in Thailand. The following may be the reasons for the delay.

Running out of options

The authorities have tried many selective capital controls and unorthodox economic approach to stabilize the Ringgit. This also served as a STOP GO measure for it to buy more time so that when other countries starts recovering, Malaysia will then participate in the recovery to turn around its economy.

One of moves involves the selling of dollars by Malaysian exporters with large Dollar receipts. The idea was to use the Malaysian companies to sell their Dollars for Ringgit which in turn will push up the value of the Ringgit. This will put more pressure for currency speculators to cover their shorts and at the same time make it more expensive. However due to the overwhelming sales of the Ringgit by the speculators the local companies were unable to cope and finally gave up their attempt. Since time was of essence and if capital control were not implemented then Malaysia would have been in deep trouble and forced to seek IMF aid.

Timing of the execution

A difference in approach between Dr Mahathir and his Deputy Anwar Ibrahim who was also the Finance Minister then. Anwar was the blue-eyed boy of Washington and even the Wall Street Journal called him the ‘calm voice of economic reason’ during the crisis.

Anwar preferred the orthodox approach of free market enterprise policies like increasing the interest rate to protect the ringgit and also a contractionary fiscal policy to balance the budget following the lines of the IMF austerity program. Their difference led to the sacking of Anwar on 2nd September, a day after the imposition of the Capital controls.

Bickering between Anwar and Dr M

Another main reason for the delayed response is the internal bickering between Mahathir and Anwar Ibrahim, who was the Finance Minister then. The imposition of the capital control was ‘purposely timed on the 1st September 1998’ because they knew that Anwar was going to be sacked the next day. If capital controls were imposed after Anwar was sacked, then heck, there would be another round of capital flight not only from Malaysia but also from the IMF-3. The situation would have turned worse and might further undermine the recovery efforts of their economies. And this time Malaysia might not be able to survive and thus turning to the IMF is the next option.

Mahathir knows that if the IMF is allowed to come in, then his legacy as well as the NEP’s (New Economic Policy) one-sided policies implemented over the past 20-odd years would  be dismantled. Not only public enterprises and private corporations that are not competitive will either be sold or merged as seen in Thailand, Indonesia and South Korea. Looking at what has been implemented in the IMF-3 since the Crisis, we may see the following changes in Malaysia.

Malaysia’s bloated civil service will also need to be trimmed. Loss making banks and other financial institutions will either be closed down or sold to foreign banks. Foreign banks will be allowed to own up to 100% equity in local banks like those in Indonesia. Malaysia’s national car project PROTON, Perwaja Steel, all the IPPs (Independent Power Producers), Light Rail Transport, PLUS, Indah Water, AMMB, RHB, Bank Bumiputra, Renong Group, Time Engineering, Bakun Dam and other remnants of crony capitalism will have to go. There will be no more ‘Bumiputra status’ because IMF believes in equal opportunity policies. In other words, Joseph Schumpeter’s ‘creative destruction’ where survival of the fittest will prevails.

Coming back to present

Fast forward to present in 2013, we should ask ourselves what is the difference between the Asian Financial Crisis in 1997 and the Global Financial Crisis in 2008? To begin with both crisis are caused by too much money in the economy which led to both companies and individuals to be over leveraged. Unable to withstand a credit crunch, over leveraged companies and individuals finally will have to succumb to the crisis.

Below, I present to you a graph on the full cycle of the current financial crisis and the various measures adopted to overcome it. I will go through each of the following Stages (1-4) to explain why current policies is not working and getting us nowhere.

1. Money Supply 

Malaysians forget easily

After the Asian Financial crisis we became complacent and forgot how it affected us all. We are again back to our old habits of getting into debts, consume more and saving less.

We forgot how the stock market crash wiped out our portfolio and high interest rates are causing havoc in our mortgage payments. We thought that the good times are back and got ourselves into debts again.

In part we also have to thank our Government for relaxing the rules governing consumer and corporate debts. As a result we got ourselves highly geared and when Lehman Brothers collapsed in 2008, it took the world economy down with it. Hence here we are again back to square one, as though it is now 1997 once again.

Printing money out of thin air

So to stimulate the economy out of the doldrums again the Fed and the Central Banks around the globe embark on a credit expansion program known as Quantitative Easing. What is Quantitative Easing and how it works?

A simple explanation of the Quantitative Easing will be credit expansion by the Central Banks. Through its Open Market Operations a Central Bank can increase the Money Supply in the economy by buying bonds or securities from banks, corporations or the public. For the banks, funds will be deposited into the accounts held by the banks in the Central Bank or issue cheques in the names of the corporations or the public. At the end of the day the Central Bank will flood the banks with excess liquidity which will promote lending. Hence it will put more money into people’s hands which they will then spend.

Another thing I reckon most people don’t realise is that Bank Negara does not print the money physically and it does not operate a printing press. Instead the money is created by digital entries in the computer screen. Banks will be credited by credit entries in their accounts held in Bank Negara. And this is why Quantitative Easing is also known as ‘printing money out of thin air.’

How successful the Quantitative Easing depends on the basis of the Keynesian Multiplier. To see how the Keynesian Multiplier works I shall illustrate with the following. As from above as a result of Quantitative Easing, people have more money to spend. This represents the first round of money from the Government to the people.

When people received the money in the form of loans or refinancing they do not spend everything. Instead they will only spend a portion of it and in economics it is known as the Marginal Propensity to Consume (MPC) or MPC dollar. This MPC dollar spent will then trickle down into the system to more people. Thus this will create a second round of spending by the people (fraction of the MPC dollar) and not the Government. As then there will be the third, fourth and many more rounds of spending. The sum of these effects as a result of the initial funds injected by the Government can be quantified with the following formula.

Keynesian Multiplier = 1/(1-MPC)

Remember earlier, the MPC is the fraction of the money people spend on the amount of income they receive. Hence say if someone receives a loan of $1000 and spends $800 then the MPC = 0.8 ($800/$1000). If the MPC is 0.8 then the multiplier effect generated from the expenditure can be calculated with the Keynesian Multiplier.

Multiplier = 1/(1-0.8) = 5 times

Also be noted that if people are willing to spend more from their income or their MPC = 0.9 then the Multiplier will be 10 times.

Another thing to be noted is that this Multiplier effect works two ways. In times of recession there will be a decline in consumption based on the fact that people are more cautious due to the uncertainty going forward. For every dollar cut in expenditure in round one, it will result in further cuts in expenditure in round two then round three and round four and so on. As a result there will be a much larger decline in the overall consumer expenditure and this will lead to a recession later. Businesses will also going deeper into the red due to the negative multiplier effects of consumer spending. So now you know why Governments prefer spending and increasing debts than saving and reducing debts.

2. Negative Interest Rates

With the huge influx of money generated as a result of the Central Bank purchase of financial assets from the banking sector (in Stage 1), it will put pressure on the interest rate in the banking system. Interest rates will have to decline in the short term in order to get rid of this excess liquidity or what can be term as ‘Liquidity Effect’.

The profitability of a bank depends on Bank Negara’s Monetary Policy and in this case easing the Money Supply will certainly affects a bank’s balance sheet. The more liquidity or money it has then the more loans it can make and hence more profit. In a way bank’s balance sheets depend on a lot on Government Policy. Hence the banks will have to find ways to lend out the excess money by offering better terms or relaxing lending rules.

3. Inflation

With the excess liquidity created in Stage 2, consumers will have more money to spend and hence the demand for goods and services. Economic activity will be sizzling at this moment. Due to this short term excess demand over supply it will create what known as a ‘Demand-Pull’ inflation. This lag or deferred impact of excess liquidity on the increase in prices (inflation) is also known as the Fisher Effect. This is what we are experiencing for the last couple of years as a result of Bank Negara’s Monetary Easing after the Global Financial Crisis in 2008.

4. Positive Interest Rates

Due to the increased economic activity, businesses and consumer will be demanding for more loans. Coupled with inflation created in Stage 3, the excess demand for loans will automatically push up the interest rates. Once lenders sense an increase in the inflation rate, they will have to cover their backs by increasing the interest or lending rates. Otherwise, the expected future increase in inflation rate will erode their profits. Hence an ‘inflationary premium’ has to be priced into the interest rates.

So how will our Government or Bank Negara address the problem of increasing interest rates? Well, you don’t need to be a rocket scientist to figure it out.

Yes, the solution is to prevent the interest rate from getting higher. One method is to reduce the demand of money by way of ‘Credit Crunch’ as we have already experienced since July this year. Bank Negara ‘shortened the maturities’ of both housing and personal loans then. However this method will have the effect of collapsing the consumption and certainly it won’t bode well for the economy in the short term.

Another method is to increase the money supply. So, Bank Negara will do another round of Quantitative Easing and inject more money into the system again, so as to remove some pressure off the interest rates.

HOLD ON FOLKS !! By increasing the Money Supply, are we going back to Stage 1 again or where we started in 2009? Damn it !!! We haven’t solved a single problem.

You see by injecting more money into the system, it will not solve our problem. No doubt, it will help revive and sizzle the economy while preventing further hikes in interest rates. But on the other side of the coin it creates a situation where inflation begets inflation and the final outcome will be an even more inflationary situation.

Wrapping Up

In wrapping up, I reckon that we have yet to solve even a tiny bit of the current Global Financial Crisis as indicated by the multiple Quantitative Easing implemented by the various Central Banks around the world.

The latest evidence of the inability of Central Banks to quit Quantitative Easing is the Fed’s decision to delay its tapering activity. Anyhow if the Fed does go ahead with the tapering of $10 billion a month, it will not make much difference. This is because the Fed currently pumps in about $85 billion a month into the economy so a $10 billion reduction per month doesn’t seem to be much.

What is interesting about the effects of past Quantitative Easing is that it not only helped build up the debt load of the public sector but also the private sector.

Below I present to you the debt load of High Grade U.S Corporations that have been built up since 2006.

As can be seen above from the CITI charts, currently there is a resurgence or what is also known as ‘re-leveraging’ of corporate loans to record levels in the U.S.

The bad news is that most of the loans are used for funding dividends and share buybacks instead of capital spending or hiring. This will not help much towards building a sustainable economy.

Below is the chart of Malaysia’s private sector debts which I reckon is not much better off than our government counterpart.




From the above we can conclude that at the present moment, the private sector poses a greater risk to financial default than the public sector.

Our private sector debt/GDP has reached 115%. Hence the net effect of Quantitative Easing is not only causing a run-up of private sector debts but also produces a highly inflationary situation.

If Bank Negara proceeds with further Quantitative Easing then we shall expect more inflation and private sector debt in the future. However, if Bank Negara stops credit creation completely, then our economy will plunge into deep recession because economic activity will come to a standstill.

In short, there is no easy EXIT strategy available. That also meant that all Central Banks including Bank Negara have fallen into the ‘merry go round’ credit creation circus. It is not easy for them to reverse course.

Crippling our Banking System

Their predicament also means an opportunity is presented to us. How can we capitalize on this?

You see banks operate on a system known as ‘Fractional Reserve Banking.’ The concept of fractional reserve banking operates in a similar manner as the Keynesian multiplier effect on consumption. To illustrate how Fractional Reserve Banking works, I will use the following example. In the banking industry there is a statutory requirement or SDR (statutory deposit ratio) that banks must adhere to. It is the amount of money banks sets aside as a percentage of the deposits (normally 10%) as an insurance against rainy days.

When a bank receives RM100 deposit, it can lend out RM90 after deducting $10 for the SDR. The RM90 will eventually make it’s way back to the bank and then the bank will again lend out RM81 after deducting RM9 (10% for SDR)). This process will go on until it finally reached RM1000 (RM100+RM90+RM81+ … = RM1000) or 10 times leverage. To calculate the total leverage or multiplier we can use the following formula.

Multiplier = 100/SDR

Hence, in our case the SDR is 10% then the multiplier = 100/10 or 10 times.

Since our banking industry operates on the premise that not everyone will withdraw their money simultaneously. This is because during a normal day-to-day operation, one person’s deposit will cover another person’s withdrawal also known as the ‘netting effect’. What happens if all the depositors withdraw 15% of their deposits simultaneously? It will immediately cause a bank run because there is not enough cash (only 10% of deposits) in all bank vaults to meet the 15% withdrawal.

Getting back at a ‘bully’ government

Hence this presents us a potent tool to get even with our Government. If our Government continues to push us against the wall then we can use this tool to bring our Government down to its knees. How can we do it?

All we need to do is to set a date say November the 15th 2013, and we gather as many people as possible (email, facebook, twitter, linkedin and etc) to withdraw 50% of their deposits from their banks. If we can manage to get 20% of the depositors to withdraw 50% of their deposits (total = 10% of all deposits) then a bank run will be assured. By that time our economy will be crippled and our Government will either have to bow to our demands or implement capital controls to limit withdrawals.

Before I pen off, thinking out of the box, there is one problem that I have been figuring about for the past year. As a democratic country our Government is elected by us the Rakyat. Does this mean that whatever resources we have in this country also belongs to the Rakyat? Does that include the money supply or the M1 and M2 since Bank Negara can expand and contracts it? If this is the case then why should we the Rakyat need to pay interest rate when we borrow from the Government (which rightfully is also the Rakyat)?

Since Bank Negara (which also belongs to the Rakyat) has the ability to create money out of thin air, why not lend directly to the Rakyat at a very low or even free interest rates? Why give money to the bloodsucking middle men banks that charges us exorbitantly high interest rates? In the end the Rakyat suffers and become slaves to the banks while the banks are making obscene amounts of profit. At the end of the day it only benefits the small group of elite shareholders at the expense of the Rakyat.

Can some experts in political science or law out there enlighten us on this matter?

If a solution can be worked out, I reckon this would be a good tool for the Pakatan Rakyat in its next GE manifesto, to push for lower interest rates as one of its agenda.

This would surely benefit us in reduced mortgage payments and thus at the same time also helps to reduce the number of bankruptcies (especially from credit cards cases) in our country. Pakatan Rakyat too will surely garner more votes if hits on the winning formula on this issue.

Malaysia Chronicle

Full article: http://www.malaysia-chronicle


Chin Peng, another insight on what his struggle was about?

sourced from
Chin Peng should be remembered in Malaysian history as an ardent freedom fighter whose party – despite its failures in succeeding in its guerilla warfare against the British and the Malaysian state – sowed the seeds for labour organisation and resistance.

P. Ramasamy is the Deputy Chief Minister of the State of Penang, Malaysia

The former secretary general of the Malaysian Communist Party (MCP), Chin Peng alias Ong Boon Hua died at the age of 88 in a private hospital in Bangkok on September 16, the day Malaysians celebrated their national day. It was on this same day, the Minister Mentor of Singapore, Lee Kuan Yew, celebrated his 90th birthday. According to his aide, Chin Peng will be cremated at Bangkok’s Wat That Throng temple in a week’s time. The news of Chin Peng’s death was carried in all the media in the country as well as abroad. Yet in Chin Peng’s own hometown of Sitiawan in the state of Perak, the people could only merely whisper about the passing away of this legend. Even though the MCP is gone, folks here are reluctant to talk openly about Chin Peng.

Like Vietnam, Indonesia and Cambodia, Malaya had its share of anti-imperialist/anti-colonial struggles in the 1940s and 1950s. In Vietnam it was led by the guerilla freedom fighter and communist Ho Chih Minh; in Indonesia it was led by (later President) Sukarno; and in Malaya it was under the leadership of Chin Peng. The MCP formed in the early 1930s first fought the Japanese and later the British. It is well known and acknowledged that without the contribution of the MCP, the British would have delayed the granting of political Independence in 1957. Today in Malaysia, the mention of Chin Peng’s name brings about mixed feelings. While his foes think that he was a traitor and a murderer responsible for so many deaths during the civil war, others regard him as a freedom fighter, a patriot and a nationalist.

Chin Peng’s –  who fought the Japanese, British and later the Malayan/Malaysian authorities –  last wish was to have his ashes buried near the graves of his parents. The Malaysian government turned down this request that came from the relatives who were there to attend the funeral. In fact, before his death, Chin Peng always harboured the desire to return to his hometown to pay his last respects to his deceased parents. His parents and his family members are buried at the Kong Hock Kong Lumut Pundut burial ground. The caretaker when interviewed said that Chin Peng’s brother and relatives would come and pay their respects every Qing Ming (All Souls Day).  But the government, apprehensive about reactions from rightist Malay organisations and former servicemen associations, refused his entry. Chin Peng even took the matter to court but he was unsuccessful because he could not produce evidence of his birth in Sitiawan. Even an international campaign that was launched to garner support for his return failed to materialise.

Chin Peng and the MCP

Chin Peng was born in 1924 in Sitiawan, Perak. His parents had a shop that sold bicycles and spare parts. He was educated in Chinese in Nan Hwa High School before continuing his education in English at Anglo-Chinese School. The MCP had an organsed presence even before Chin Peng joined the party. Under the influence of the Chinese Communist Party (CCP), cells were established in Malaya to get the support of the overseas Chinese for the communist cause in China. Before the invasion of the Japanese, the MCP supported the cause of the Chinese revolution and at the same time laid the grounds for the eventual communist takeover of Malaya. In doing so, the party carefully created and sustained networks especially among the urban poor, plantation and port workers. It was only a matter of time, before a considerable section of the urban working class came to be sympathetic towards the cause of the MCP and its affiliates.

Sitiawan, the birth place of Chin Peng, is not a very impressive town. In the early days, it was surrounded by rubber and coconut plantations and small-holdings. Later, rubber was replaced by oil-palm. Only with the establishment of a naval base in nearby Lumut port in the 1970s that there was urban development in Sitiawan. The interesting thing about the state of Perak  is that it had produced a number of prominent individuals who had played a role in the MCP and left-wing organizations. Apart from Chin Peng, Rashid Mydin and CD Abdullah were prominent Malay MCP leaders from places such as Parit and Ipoh. During the Emergency, in Sungei Siput, another town in Perak, a Tamil by the name of Perumal organised plantation workers very often defying and challenging European planters. In the town of Slim River, R.G. Balan was the main labour organiser who later was promoted to be the vice-chairman of the MCP. One Panjang (tall) leader Muniandy who died some years back was a prominent MCP commander in the Sitiawan area.

I also come from a village called Kampung Baru, a few kilometers away from Sitiawan town. My father who migrated from South India had rubber and coconut small-holdings. Chin Peng’s father was known to my father. In the mid-1950s, I was around six years old; he took me to Sitiawan town and purchased a small bicycle for my use from the bicycle shop owned by Chin Peng’s family. This episode is still vivid in my memory!

It was the Japanese invasion that provided the opportunity for Chin Peng to rise in the hierarchy of the party. The British withdrawal from Malaya provided an opportunity for the MCP to enter into close collaboration with the former. The withdrawing British agreed to assist the MCP and its anti-Japanese front, the Malayan Peoples’ Anti-Japanese Army (MPAJA) during the course of the occupation. Apparently, the British also agreed to recognise the MCP as a legitimate political organization on the withdrawal of the Japanese from Malaya. Much later, after the failure of the Baling Peace Talks, Chin Peng criticised the British for not honouring their commitment to the party!

With the end of World War II and just before the British arrived to re-occupy Malaya, the MCP was not certain as to what exact strategy it should adopt towards the British. Lai Tek, the party’s secretary general, later to be executed for being an agent of both the British and the Japanese, formulated a policy of limited agitation and cooperation with the British. This explains the reason why the British were able re-enter Malaya with relative ease and without resistance from the MCP. Some historians have lamented that just before the arrival of the British, the MCP was the most powerful organization in the country but it was not prepared to take power. Before the MCP could act against Lai Tek for his betrayal, he fled the country, first to Thailand and later to Hong Kong.

With the exit of Lai Tek, Chin Peng was elevated to the post of secretary general of the MCP. With his rise, the MCP abandoned its earlier strategy of limited agitation and cooperation and decided to adopt a more aggressive posture towards the British. With the support of his affiliates, the MCP decided that the time had come to evict the British from Malaya once and for all. Directives were given to his affiliates and trade unions to launch massive strikes and demonstrations against the British. With the assassination of three European planters in Perak, the British launched an all out attack against the MCP and its affiliates. In 1948 the British declared an Emergency and brought in Australian, New Zealand and Gurkha troops  to engage the communists in a long and protracted struggle. After 12 years of armed struggle, the MCP, unable to put up an effective resistance withdrew its troops to southern Thailand.  Emergency rule was effectively ended in 1960. However, guerrilla struggle waged by the MCP was not totally over. In states like Perak and Pahang, the traditional strongholds of the MCP, occasional guerrilla warfare was undertaken. The Malaysian government introduced selective emergency measures to root out the remnants of communists even during the early 1980s.

The Decline of the MCP

The British counter-insurgency measures comprised of force, administrative procedures and psychological tactics considerably weakened the MCP. By the 1970s and 1980s, a number of international developments dented the relevance of the MCP. For instance nationalist rivalry in communist camps, the animosity between USSR and China, the tensions between China and Vietnam and the pragmatic thrust of Deng Hsiao Ping’s economic policies led to the weakening of the ideological basis of the left. At the domestic level, one of the greatest weaknesses of the MCP was the lack of Malay/Muslim support. Furthermore, the party’s close identification with the Chinese community and its outward orientation towards the Chinese Communist Party were factors that did not endear the party to the local population.

Given the impossibility of launching  a communist revolution in Malaysia under changed international circumstances, Chin Peng decided to end the armed struggle. On December 2, 1989, at the Haadyai Peace Talks in Southern Thailand with both the Thai and Malaysian governments, the party decided to lay down its arms and to disband its armed units. In return, both the governments agreed to provide financial assistance for their respective nationals for re-settlement in accordance with their laws and regulations. The Malaysian government also promised that Chin Peng would be allowed to come into the country just like his comrades Rashid Mydin, CD Abdullah, Shamsiah Fakeh and many others. However, Chin Peng was in for a rude shock. Following the Haadyai Peace Accord, the Malaysian government broke its promise and refused to allow Chin Peng into the country.

Chin Peng has died. Although his role in Malaysian politics is a controversial one, it must be remembered that without the MCP, the British would not have quickened the pace of Malaysia securing Independence. In India, without the impact of the Indian National Army (INA) under Subhas Chandra Bose, it is unlikely that Independence would have been granted in 1947. Political, social and economic developments in post-war Malaysia would make no sense without any reference to the MCP. The formation of trade unions amongst urban and plantation workers was largely initiated by the MCP. The fight against plantation capital for the improvement of the lives of Tamil workforce was directly inspired by trade unions that came under the influence of the MCP. It was the MCP which  promoted and respected Indian leaders. R.G. Balan of Perak became the vice-chairman of the MCP. It also gave recognition to Malay leaders. The famous Malay Regiment in Pahang operated was under the control of the MCP.

For the Indian community in Malaysia, especially those who had involved in trade unions activities both during the British colonial days and the post-independence period, the MCP had a clear positive impact. After the INA’s debacle at Imphal, many Indians returned and joined trade unions that were affiliated to the MCP. Since they could not liberate India from the British, joining the left-wing trade unions meant not only getting back at their oppressor–the British–but also improving their socio-economic lot. It was the tremendous sacrifice of the left-wing trade unions that emboldened Indians in the plantations and urban areas. Indians labourers especially Tamils described by the British capitalists as “meek” and “docile” were organised, trained and mobilised by the MCP affiliated unions to emerge as a force to assist the MCP in its war against the oppressors.

Chin Peng might not have succeeded in organising the communist revolution in Malaysia. Malaysians might not have convinced that communism was the real solution to the myriad problems of the society. But the fact remains that he was less a communist than a left-wing nationalist. In fact, those who joined the party were not inspired so much by the lofty ideals of Marxism-Leninism, but practical necessity to change the oppressive nature of the political and economic system. During his times, it was the British colonialism and its naked oppression of the masses that was something that that any decent human being could not tolerate. Tamil plantation workers joined the MCP led trade unions not for any abstract ideological reasons, but to end the exploitative nature of the merchant capitalism in plantations. Many Malays joined left-wing nationalist organisations that came to be affiliated to the MCP not because of their love for communism, but for the sheer necessity to end the system that was oppressive and feudal in nature. Poor Chinese villagers and workers joined the movement for reasons of economic justice and for the simple reason that MCP was the only fighting force against the Japanese imperialists who massacred members of the Chinese community. For the Chinese, Malays and Indians who readily participated in the activities of the left, the MCP provided a vision for the future.


perversely,it may have been chin peng n his commie forces that forced the brits to let malaysia have an earlier independence. if their presence were not so much of a thorn for the brit imperialist,and they wud rather the locals kill locals instead of sacrificing their own kind, the brits may been reluctant to let go of the cash cow so soon before bleeding malaya dry. Who can say How long Merdeka may have been put on hold then ?

also read…illogical-commie-conspiracy-in-malaysian affairs/



Love him or Despise him and his struggles. At least understand what he was struggling for and what it was about in the proper context from a Malaysian historical perspective. .

Even if one decides to hate Chin Peng and what he stood for, at least be able to justify the sentiment with factual accounts that transpired in history leading to the formation of our independent nation.

Blind hate without understanding is foolish. Mature discerning mindsets ought not be spoon fed selective propaganda and be easily incited to despise that they know nought about.

That will be akin to be led by the nose like a buffalo..!


Chin Peng, an obituary

Chin Peng OBE

Chin Peng, born Ong Boon Hua, 21 October 1924 to 16 September 2013

The passing of Chin Peng in Bangkok on 16 September 2013 brings to an end one of the longest of Asian political biographies. Chin Peng became the Secretary General and effective leader of the Malayan Communist Party (MCP), the country’s oldest political party, in 1947 when he was only 22.  He retained that position for the next 60 years, indeed until his death, even though the party became divided, moribund and irrelevant around him. Long after communism ceased to be a threat to Malaysia he was refused permission to return to the country of his birth (unless he publicly recanted all his views) and so he remained an exile.

The scars of that period have not healed.  The role of communists in fighting first Japanese and later British for control of Malaya is scarcely recognised in Malaysian textbooks and public memory.  Many Chinese and a few radical Malays remain unnecessarily alienated from the Malaysian establishment, and it from them, while an important but polarised chapter in Malaysia-China relations remains off the table, unable to be discussed by either side.  Chin Peng himself spent much of his later life attempting to explain and defend what he called ‘My Side of History’. One hopes that his removal from the scene, after having his say, may make the integration of a very divided history a little easier.

Just why Chin Peng came to lead Malayan communism so early in his life has much to do with accidents of his family upbringing and schooling.  Although essentially educated in the Chinese medium like the overwhelming majority of Malayan communist recruits, he had just enough English education at the beginning and end of this period to be comfortable, if a little hesitant,  in English. His elder brother and his equally committed communist wife were English-educated.  In the crisis that endangered the party in 1947, when its long-term Secretary General Lai Tek was discovered to have worked for both Japanese and British and was assassinated by the Party, Chin Peng was well placed politically to succeed, not least because his English enabled him to talk to other communities. Indeed the early years of his leadership marked a striking reorientation of the Party to being ‘Malayan’, and looking for non-Chinese recruits, rather than a branch of the Chinese party.

As a teenager he had already taken a leading part in the communist-supported Malayan People’s Anti-Japanese Army (MPAJA), the most effective armed resistance to the Japanese in Malaya.  With a half-dozen other communists in the resistance he was decorated by Mountbatten in 1946. But in May 1948, as the Federation of Malaya structure disappointed non-Malay hopes for a post-war democratic order, as the British increasingly cracked down on left-wing activists, and as both sides in what became the global Cold War hardened their international stance, Chin Peng led the communists back to the jungle in armed insurrection.  The Malayan Emergency which followed was a long and ruinous guerilla struggle, involving troops from Britain, Australia and New Zealand as well as Malaya. Progress to independence was speeded to deprive the communists of their most powerful anti-colonial argument. Once the government that would carry the Federation of Malaya to independence was in place, led by the genial prince Tunku Abdul Rahman, a meeting was arranged at which the Tunku could try to persuade Chin Peng to give up the struggle since its nominal object of independence was achieved.  Chin Peng proved clear and persuasive at the 1955 Baling talks in Kedah, but insisted that he could only bring his men out of the jungle to lay down their arms if they were allowed to enter the political process as a legal party.  Under British advice the Tunku  would not agree to this, or indeed to any significant concession to the communists once they surrendered. The talks failed, and all they had changed was to provide the Malayan/Malaysian public with an image of their “enemy”–a slim soft-spoken figure who vanished from sight as suddenly as he arrived.

Chin Peng in 1956

Malaya duly became independent in 1957, to be followed in 1963 by a broader Malaysia involving also Chinese-majority Singapore and the multi-ethnic British Borneo territories. The fortunes of the MCP in the jungle gradually declined in face of an effective containment strategy, and an increasingly prosperous independent Malaya.  The MCP withdrew its central operations base to the Thai border region in 1953, to ease the military pressure. At the end of 1960, with his force shrunk from over 7,000 to fewer than 2,000 men, Chin Peng left his jungle hideout for a mammoth journey to Beijing via Thailand, Laos and northern Vietnam.  There he was an honoured guest of the Chinese government for almost 20 years, though still controlling the Party’s radio station in Hunan and by proxies the party on the Thai border.  This was a troubled time, including the Cultural Revolution in China and its counterproductive extremism in relations with the rest of the world. Chin Peng survived, but the unity of his party did not.  The internal purges in the party became severe in the late 1960s especially, with perhaps 200 executions of alleged spies and traitors. In 1970 two factions broke away from the Chin Peng mainstream, forming the Revolutionary Faction and the Marxist-Leninist Faction respectively. In 1983 they merged to form the Malaysian Communist Party, recognising the new politics of Malaysia as the older party would not.  China’s growing warmth towards Malaysia after diplomatic relations were established in 1974 meant that the MCP no longer had real support from Beijing for its armed struggle. Reconciliation should have occurred then, but each of the three parties –Chin Peng and the Chinese and Malaysian governments—had their own reasons for preferring a frozen status quo to any public change of position.  Only in December 1989 did the Thais broker a peace agreement between the Malaysian Government and the MCP, whereby the few hundred remaining communists laid down their arms and settled as cultivators in southern Thailand.  Chin Peng was no longer an asset to China, and lived thereafter primarily in Thailand.

Long-standing MCP habits of illegality and clandestinity were gradually overcome in the 1990s as governments lost their fear of communism, and Chin Peng himself sought to make his case.  Some international journalists found their way to him through Thai military contacts, and articles began appearing from 1997.  One of the enterprising journalists was Bangkok-based Australian Tony Paul. He finally managed to meet Chin Peng at the British Club in Bangkok in 1997, and encouraged his interest in writing his memoirs, in a place better served with libraries than his normal residence near Haadyai.  On his behalf Tony Paul contacted David Chandler at Monash, and then Merle Ricklefs at ANU, who delegated the matter to me. As a result Chin Peng made his first visit to Australia and New Zealand (having nephews both in Sydney and Auckland), in the course of which I took him to lunch in Canberra on 3 February 1998. He was remarkably affable, charming and thoughtful, revealing nothing of the steely side that must have enabled him to survive the lurches in the Chinese and Soviet lines over his time in charge of Malayan communism. I invited him to return for a month as a visitor at ANU working on his memoirs, in return for which we would hope for a rather intense seminar working over the history of the MCP with some experts.

A year later he was installed in the Coombs Building at ANU behind a door discreetly labeled Mr B.H. Ong.  The ANU did not fund his visit, so he stayed with Mr C.C. Chin, omniscient chronicler of the MCP, who at that time was hoping to write an ANU PhD on the subject under my supervision.  He charmed both his old antagonists and the students who gathered to hear him reminisce about “Why I became a communist”.  On 22-23 February we organised a workshop under the auspices of the newly-formed Centre for the Study of the Chinese Southern Diaspora, where some 20 scholars grilled him about the key decisions and turning points of his long career.  Everything would be on the table, he agreed, except the two most sensitive areas for him – the internal disputes of the party and its relations with the Chinese Party.  Among those gathered for this remarkable occasion were not only the leading historians of the Malayan Emergency and the MCP –Cheah Boon Kheng, Yoji Akashi, Peter Edwards, Hara Fujio, Anthony Short, Richard Stubbs and Yong Chin Fatt—but several participants who had fought against him, notably Lt.General John Coates of the Australian Army, Leon Comber of the Special Branch, Malayan Police, and John Leary of the Malayan Scouts.  The exchanges were cordial and fascinating.  On the whole his memory was better that most of those in the room, and his thoughtfulness in reflecting on the issues was second to none.

Chin Peng & Tony Short

CP, AR, Hara Fujio, Peter Edwards

At the end of a remarkable two days of exchanges, revelations, and critiques, Chin Peng made some interesting personal observations.

Since the beginning of the ‘90s I think and think it over whether I made mistakes or not, whether my belief in communism is wrong or not. …. At least I think my conviction to seek an equal society,  that was what communism meant—to seek an equal and just society—I think that is not wrong. …And I think that human society will move on. It will take perhaps another millennium to achieve this fully, or to fundamentally achieve this.


Secondly, about the military defeat…

We were defeated in a sense, we did not realise our goal to set up a government dominated by communists. Or, in our terms, a people’s democracy. But we didn’t [experience] defeat in forcing the British to grant independence to Malaya. Without our struggle, I don’t think the British would grant independence to Malaya. Or it will be many years later…. I don’t think we were humiliated. At least I never surrender, and at least I feel proud, not for me, for our movement, for all those supporters. We can carry on a struggle, a military struggle for twelve years against a major power…This is the longest, the largest scale guerilla warfare in the British Empire, in the twentieth century.[1]

Chin Peng had shown that he was as adept at handling a group of expert academic antagonists as his own hardened guerrillas and the international forces ranged against him.  Although the transcript of this exchange was eventually published, he also sought a more controlled version of his story, as related to Ian Ward and Norma Miraflow in My Side of History (Singapore: Media Masters, 2003).  In October 2004 he was able to visit Singapore, to give a seminar and quietly meet the next most enduring regional politician, Lee Kuan Yew. That was also the last time I would see him. But despite several attempts he was never able to return to Malaysia.


Anthony Reid is Emeritus Professor and Visiting Fellow at the Department of Political & Social Change, School of International, Political & Strategic Studies at the Australian National University.



Feeling threatened and insecure don’t sit well with people’s psyche.

KUALA LUMPUR – The government has never neglected other communities in economic development, says Prime Minister Datuk Seri Najib Razak.

He said the government was a firm believer in the role of the private sector in economic development, an area where the other communities, particularly the Chinese, were much stronger at.

“The government policies that promote and enhance the role of the private sector will certainly benefit the Chinese community in particular,” he said.

He cited that in the awarding of some contracts to Bumiputera companies, they were weak in terms of the entire supply chain.

Full article:


Wonder if this Goverment realizes that the other communities are feeling less secure of their positions in light of so many recent developments lately – especially in the religious /racial and recent societal controversies – feeding in to the negative  environment of the country. And statements by certain powerful ministers and influential Malaysian personalities ,on their positions regarding issues that are seemingly illogical and irrational , only managing to create distrust and suspicion and cries of foul play from the minorities .

As if xenophobia is rearing its ugly head in Malaysia.

This worrying feeling of insecurity is not only about financial positions  but is affecting the very well being of their psyche and identity of being Malaysian, especially when one is not of the Bumi community.

Frankly , the people would rather feel neglected by the goverment – never mind then, they can still fend for themselves because they are able to and can afford to do so.

But  the problem is not feeling neglected by the Goverment but feeling oppressed , bullied and worried that their positions in this country  and livelihood are threatened, which is much more alarming.

The  goverment seem to think  that by scaring the other communitites via creating a worrying insecure  environment may work in driving  support back to them, they could not have gotten it more  wrong in underestimating the people’s sentiments and possible repercussions if they were to adopt this strategy –  since when has anyone supported any goverment they resented.. human nature never responds well to feeling threatened ,  they will want to eliminate  those they feel threatened by the 1st chance they get.

Govrments sowing an atmosphere of intimidation and  of insecurity may work for the ignorant mindsets  but never on the psyche of well informed and those who feel secure enough in their positions to be able to and also afford to do something about it, either choose to  leave for greener pastures or lend their resources to help effect a change in goverment through the ballot, if they are convinced that it is the only option because they have lost their trust and hence hope for the present Goverment..

Collectively , the resources can be very formidable , not only financial ,also intellectual and networking , especially when the consciouness is  united in a determination to effect a change ,convinced that it is the only recourse for a better situation for their respective communities , the  well being of the nation and their children’s future. and mainly to feel secure as to their positions and identity of nationhood relative to their position in the world.

Many are willing to sacrifice a lot in what they can contribute to try their best to make that happen.

Illogical Commie conspiracy in Malaysian?

Chin Peng remains barred from Malaysia

Prime Minister Najib Tun Razak said the government will not consider any request from the family of Chin Peng to bring back his remains for burial here.

He said the former communist leader who died in Bangkok on Monday would be remembered as a terrorist who was involved in cruelty towards the people and attacks on the security forces.

As such, he stressed that the government would not be involved in the  funeral of the former secretary-general of the Malayan Communist Party (PKM) whether here or in Thailand.

“We will not allow him to be buried in Malaysia because of the black history he had created. Furthermore, Chin Peng is not a citizen of Malaysia.

full story FMT


Seems as if there is some comical commie conspiracy going on, so much so they are even afraid of a dead commie’s ashes?
A form of McCarthyism in Malaysia. With insinuations of disloyalty, subversion, or treason if the very dead chin peng is let back in, without proper regard for common sense..What are they afraid of ?
During the insane McCarthy era in the US, thousands of Americans were accused of being communists or communist sympathizers and became the subject of aggressive investigations . So illogical was the commie paranoia and to a degree, this Chin Peng issue is like another form of McCarthyism..especially the paranoia of communism .will these mindsets ever mature intellectually and be able to move on?

Chin Peng was from an era when idealogy was a very powerful reason for many to bear arms and were willing to die in their struggles for their beliefs..but now in this day and age, communism is as out moded as the cassette player or typewriter. if we are willing to forgive and try to forget the genocidal Jap imperialism when they were here in Malaya, what is Chin Peng deeds in comparison? .
We do not wish to be reminded of the evil atrocities commited ,regardless of who did it , so many years ago , in a different age and totally different world from today..

But on the other hand , wish someone can have a clearer understanding and enlighten and inform us what this issue is really about why UMNO is deliberately making a big stink over it?

What is in the design or objective or real intention  of UMNO? Their excuse of  Chin Peng being responsible for many deaths and is unforgivable, also is not very convincing either,

It is  doubtful that  that this is merely about the unwillingness to forgive  or simply  UMNO’s vindictive vengeance. .

The ” black history”  Chin Peng  created is just clearly an excuse for UMNO to use for justification and diversionary purposes .

Mostly  the online environment is arguing why his death should be treated fairly , and allowing decency logic and reason for the treatment of Chin Peng’s death.. but no matter how ironic and valid are counter arguments for Chin Peng. ,it will be on deaf ears..

This issue  is so obviously an UMNO agenda with a racial twist to it related to political the real question is what are they trying to achieve in this plot? And to whom is it targeted at?

Many are still not sure as to the real sinister agenda behind the decision not to allow Chin Peng’s remains back into the country.

So far there seems to be a sneaky suspicion of it  to be another racist propaganda tool , because Chin Peng is Chinese and a communist, but there may be more than meets the eye..cannot put it past UMNO to have some sneaky agenda in using CHin Peng’s name for some sinister diabolical scheme , which probably may explain all the huffing and puffing, but for certain the racist dimension is inescapable…and the issue being blown out of proportion is so blatant and transparently intentional.. no doubt they are up to something but .What and WHY?

Hmmm something reeks of a stench of some kind.

Or is it a BAD guy 1st, Good guy later ploy by UMNO.

“First be Ruthless then feign to be Noble”   strategy.

Or the other extreme” Be Ruthless in wearing down  the psyche of those  who have chosen to be on the opposing side.”.


One can’t help but to think of another angle that has a bit of perverse logic.  because yet again  the issue plays nicely into UMNO’s hands actually. By huffing and puffing on it ,  their Malay support base ,especially  the rural vote bank,  will slowly but surely be annoyed by the seemingly nuisance the  urban voters and also the nons are,  and will look for an outlet / excuse to silence them.

Why do u think voices like Adam Adli, Hishamudin Rais & Khalid Ismath  amongst a few  are still loud as ever irritating no end , allowed to freely scream their dissentting voices?

UMNO may even see them as assets to their propaganda cause. The more controversial and sensitive things they say, the more the conventional masses become irritated.

And in this Chin Peng issue, they may be trying to provoke a response and then  twist the voices appealling for decency and humanity to be perceived as a response that seems to glorify the dead commie and his past deeds.

There is a bit of clarity with this reasoning and may  explain a little on why  they seem to play up this Chin Peng issue amongst many other controversial issues that had been blown out of proportion lately, along race/religion.

Their target may not have been the opposing side but aimed at their very own, irritating them no end and maybe even winning over some from the other side.

Accurately deciphering  that the sentiments /emotions are just too easy to manipulate and mould into their nefarious design.

If we are to follow this  line of thought,  the puzzling reason of the  overhyped huffing and puffing over the Chin Peng issue may not be too baffling after all , if the intent was deliberately designed  to anger and irritate their own Malay support base and subtly or subconsciously driving another wedge into the racial divide  via insinuation through association.

Communism  means Chinese to/in many Malaysian mindsets , making them perceived as  co conspirators in some diabolical drawn out  plot to overthrow the status quo in goverment .


on another line of thought, could this be the initiation of their own  drawn out conspiracy planned over few years to vilify their political opponent  party.. phase 1 is to paint the picture of CPM as evil incarnate, then phase 2 is to incriminate them ,particularly DAP, by associating them and their idealogy with the CPM.

The power of suggestive thought is very effective and damaging on simple and easily manipulated mindsets , doesn’t need to be true. making the  opposing political party  lose credibility among their own supporters and resented by fence sitters and hated by non supporters.

Call me a conspiracy theorist, my  rambling thought patterns is just having a field day mulling over the plausibilities.

Whatever it is, using the name of a deceased person whose deeds are a part of the country’s past , for selfish political design is just not right,morally and otherwise.




We ought to watch this   SLIPSTREAM VIDEO    again with an intepretation and narrative of the visual imagery and perhaps we can be more appreciative of what we are today as Malaysians and be reminded of our unique identity in the world.






Dr. Azly Rahman

We need to explore the story behind the armed struggle to understand the ideology behind the movement. We might denounce the atrocities of the communist insurgents/Malayan co-freedom fighters, but we must also recognise the intellectual value and power of the Marxist critique of society as a legitimate, systematic, liberating, humanising and praxical (the translation of theory to practice) body of knowledge that has evolved into an organic discipline itself.
The story of the Malayan nationalist leader Chin Peng interests me academically.  I hope his story may one day be given the chance to be examined in Malaysia’s universities,  discussing his story on Malaysia’s struggle against imperialism.After 50 years of Independence, we still cannot tell the difference between say, communism, Marxism, socialism or anarchism.
We are well versed in the foundations of crypto-corporate-cybernetic-crony capitalism, of the inner workings of the capital markets, and on how to get cheap labour and squeeze profits out of modern-day indentured slaves from countries impoverished by the policies of the International Monetary Fund and the World Bank.We are good at talking about ‘global economics’ and the ‘globalisation’ of Wall Street and Silicon Valley industries.
What we think profitable at the global market we import into our local economies, and what we see profitable in our country, we force our farmers and labourers to produce for the global economies.We then complain about the evils of globalisation without realising that the big capitalists amongst us are the new globalisers of our own labour.
At a time when we are exploring the possibilities of becoming a ‘bio-technologised nation’ (whatever that means to the padi planter/farmer in Changlung, Kedah or Tambun Tulang in Perlis), we still have not explored the meaning of ideas we ‘fear’.We still equate communism only with armed struggle – just like some Western media conglomerate’s tendency of equating Islam with terrorism, and many other concept/word associations that are not accurate and dangerously misleading.We need to explore the story behind the armed struggle to understand the ideology behind the movement.
We might denounce the atrocities of the communist insurgents/Malayan co-freedom fighters, but we must also recognise the intellectual value and power of the Marxist critique of society as a legitimate, systematic, liberating, humanising and praxical (the translation of theory to practice) body of knowledge that has evolved into an organic discipline itself.
One must engage in a systematic study of Marxism in order to be well-equipped with the understanding of what ‘national development’ means. Without this knowledge, we will forever colonise ourselves by importing more and more members of international advisory panel of any national project we blindly embark upon.We need to ask these questions:

Had the Communists won in Malaya, what kind of sharing of power would there have been?•
How might the character of neo-colonialism have turned out had Malaysian political-economic arrangement been based on non-communalism?
Would there be conspicuously rich and – at the other end of the spectrum – silenced under-class poor Malaysians?•
Would there be a BN? –
what would have been the fate of the monarchy? –
What would have been the nature of the distribution of wealth in society and what might the ‘digital divide’ mean?
How might the reformasi movement learn from the theoretical foundations of Marxism, as a radical critique and restructuring tool of society?
What themes in Islam does Marxism share in the areas of social justice and the social control of greed?•
How might ancient Chinese philosophy be a powerful and non-oppositional force to Marxism?•
How might the concept of Marxist-metaphysicalism emerge from the synthesis of foundational tenets of the Western and Eastern societies?These and many more might help us explore the possibilities of emergent ideas and make our graduate/Masters/Ph.D students smarter and our politicians more learned.Imagine the quality of dissertation topics we will have in the archives of our public universities? These topics should generate interest in looking at the possibilities of newer and better arrangement of base and superstructure of Malaysian society as we develop newer commanding heights, and as we continue to profess our status as an independent nation that is slowly suffocating in the haze of globalisation.Marxism and other ‘isms’I have a few suggestion to create an augmentation to this argument over Chin Peng :I suggest we have our undergraduate students read the variety of ‘isms’ and have them construct their own understanding of what this ‘nebulous of ideas’ means. We must give our students the message that these ‘truths’ must be explored and not be shied away from.We cannot, in this context of the issue, ban books on radical political change anymore. We must even have courses on Marxism, socialism, capitalism and anarchism and encourage our teaching faculty to teach their favourite thinkers such as Karl Marx, Ibnu Sina, Al Farabi, Ali Shariati, Che Guevara, Socrates, Krishnamurthi, Radhakrishna,the French Existentialists, Einstein, Malcolm X, Plato, Habermas, Bourdieu, Foucault, Syed Hussein Al-Aattas, Sukarno, Raden Adjeng Kartini, Jose Rizal, Lee Kuan Yew, Gandhi, Kung Fu Tze, Lao Tzi, and Mao Ze Dong.One could even develop a course around the life and times of the American poet-musician Bob Dylan. Or teach about the struggles of the Malaysian radical thinkers of the Independence movement and create an educational, social, and political paradigm of change out of their ideas.

I believe, we will create better thinkers amongst our students and faculty. Campus authorities will not need to use scare tactics during student elections nor university lecturers need not be fired by vice-chancellors and by extension, the higher education ministry, who are bankrupt of intelligent arguments. We must let a hundred flowers bloom.

“The simplest questions are the most profound,” said Socrates.

CHIN PENG deconstructed …

patriot or not
chin peng was a messenger
of an idea
whose time has come
a man who loved his country
and humanity
more than all the prime ministers
of a nationalist party combined…

wake up
that’s only a lesson
in history
to be cherished
from here to eternity — 

Of Patriots and Nationalistsand what’s a true patriot and a nationalist?
one who fights against the enemies from outside
so that the wealth of the nation can be safeguarded
for the peace and prosperity of the people on the inside
and not those who sells the country
to those outside
so that the wealth can be kept for oneself
and the family and friends and cronies …
and dare call themselves
patriots and nationalists
while lying through their teeth
and taking the people for a joy ride ..


Pete Teo:  

I saw a 30 minute newsreel more than a year ago. Shot at Malaya’s Independence ceremony, the archive film was in poor repair yet the spirit captured was unmistakable. I was struck by how people’s faces were more open then, how proud their eyes were and upright their stance – especially when held spellbound by Tunku Abdul Rahman, whose Proclamation Of Independence declared us to be:

“…forever a sovereign democratic and independent state founded upon the principles of liberty and justice and ever seeking the welfare and happiness of its people…”

That was in 1957. Although we would only become Malaysia in 1963, Tunku’s Merdeka speech clearly outlined the foundations of our country. Yet subsequent years have often seen us falter in the high principles that he envisioned. To the extent that modern Malaysia is a mixed bag of beauty and filth, I began to wonder if Tunku was alive today what he would make of us. I concluded that perhaps it would do us good to listen to him again.

Thus an idea began to take shape…

It occurred to me that I should make a time machine: a temporal device to transport Malaysia back to the days of its founding. In times of heightened political, religious and racial tension, perhaps time-traveling to where we began would be good. It might remind us of our greater commonality instead of our petty differences.


So much optimism can be inferred into the images in the video if we really look for them with a positive approach and mindset as we interpret the visuals individually .

From the famous landmarks to the unnamed Malaysians (then and now) and the respective roles they played , and to the handful of famous faces and names in the video ,(that have emerged the last 50 years,) .

All of which who have individually made some significant contribution to raise the name of Malaysia and the identity of being Malaysian , they are merely among hundreds if not thousands  more Malaysian names that were not able to be included .

Names that crosses all the ethnic/religo divides and collectively forged the singular identity recognised among the international community of what is uniquely known as Malaysian.

Sometimes we can get reminded poignantly that it feels nice to be a Malaysian..!        .     . Bryan





See how you go slipstreaming on.
Past crimson rose and fields of gold.

Along these fallowed steps to your heart
Where you did find me there
And I did come so far

People are you coming with me?
People are you coming with me?

So now we go through wind rain sleet and snow.
The love we speak is more than they’ll ever know.


My thoughts and evocated sentiments on the video:

Moments in the video that are thought provoking and poignant, and for us to decipher what we individually see in the imagery.

Brilliant imagery and visual story telling on  how the story of our nation enfolds post merdeka ..with a multi diverse cast all of which who in one way or another have a contributing stake in the shaping of our country’s identity..whether through politics , arts  and entertaiment , sports and collectively moulded Malaysia into what we are today.

As we watch the video , note the expressions of solemnness and eager anticipation on the faces of David Arumugam /NameWee ,

whereas  Nazir Razak (would like to think that he also represents Najib in this image) / Liow Tiong Lai , Sofea Jane and Saifudin Abdullah had a look of relief / joy  and of course suppressed excitement eagerly awaiting the moment of declaring independence for the country.

Ambiga ..still has that endearing no-nonsense look on her as she observes the historic moment in the making..


NameWee serious and solemn expression captured on his face almost boyish like innocence in the serious expression.


Michelle Yeoh… waiting elegantly .


Tengku Razali and Lim Kit Siang (political opponents from both sides united in one common voice of being Malaysian)  seems to be savouring the moment as it builds up , as their smiles seem to be suggesting.


Noticed that  Namewee  is  seated in a multi racial mix of a songkok wearing Malay  pak cik and a Indian gentleman  plus of course the Malaysian  Chinese Namewee .

Truly a accurate depiction and representation of the 3 main ethnic  groups waiting to celebrate the moment together and of course with the other minorities in one voice and mind.


All who are  present at the stadium real and “added on” ,  eagerly anticipating the declaring of Merdeka..of their nation that they are yearning to chant together in sincerity and passion.


Then comes a panoramic shot of KL skyline of the 60s  . back then as the cries of Merdeka rang out from the stadium.

( this is a good footage comparison to the enhanced images later in the video)


Another favourite thought provoking and endearing  scene is of Marina Mahathir and Nurul Izzah ( children of the political nemesis of each other..

today both of these ladies much loved and popular with the people in their own right )  crossing a busy street together. holding arms looking out for each other, and with the Arch in the background with the message ” Bersekutu bertambah mutu” . Quality in Alliance”.

.A message of reconciliation in the image , that doesn’t get better than that.


Then followed by a scene of the couple from the movie ” Sepet”.  An interracial love story that ended in tragedy.

Directed by the much loved and acclaimed Yasmin Ahmad.  But in this image, the couple had a baby in their arms..

An alternate happy ending. A poignant message that there is hope for us yet in our Malaysian multi ethnic and cultural backgrounds as we interact amongst each other.


Then of course comes the footage of Tunku Abdul Rahman preparing the declaration of “MERDEKA” , and against a surrealistic misty  backdrop of the post modern KL skyline with the outline of the twin towers faintly  visible.

Like a prophetic optimistic futuristic visual projection of  the direction of where our nation’s capital and country  will be headed post  independence.


Who can forget the glory days of our country’s football in the era  when Santokh Singh (2.36)  combined with Soh Chin Aun was defending our Malaysian team , it was almost an  impenetrable wall .

And looking at that  big strong ,friendly aged and mellowed Santokh Singh gazing  back at us with his ” dignified resilience , strength ,  maturity  and commanding respect with his presence .

Such are the qualities Malaysia can do with as a nation.


The late Yasmin Ahmad  with a  “child in her arms”.

Another very poignant image that can be significant as she is so fondly known for her distinctly down to earth film productions that had a very Malaysian flavour of a multi racial Malaysia.

Her movies had been able to touch many hearts and minds of our nation’s people.

Her productions are well known in Malaysia for their humour, heart and love that crosses cross-cultural barriers although  in Malaysia some of her productions were deemed  controversial for skirting taboo subjects.

Many of her “babies” went on to become  multiple award winning short or  feature films and documentaries locally and internationally.

Here we see Yasmin cradling a baby asleep in her arms , feeling protected / safe / secure as to his/her position in the world.

How we wish that the child in her arms is the  metaphor of  Yasmin’s imaginings of a multi cultural diverse society she yearns to see accepted.,.  

That child can also represent the future generations of Malaysians , “mothered and nurtured ” by Yasmin ‘s  ideals of a Malaysian psyche.


Finally as the video ends , take in the few seconds of  silence and ponder on the background scenery of a modern but fuzzy KL city skyline and even as KL tower comes into view…

The Silence lets you witness the images and contemplate how far we have come since the ringing of the Merdeka chant from Tunku reverberating from Stadium Merdeka..


–Slip Stream is very much A feel good video to watch , reminding us of what being Malaysian is. If only we have full length movies produced with this theme of reminding us of the wealth of our cultural diversity and help unify us as a nation with a common identity.

Why can’t we have more movies that go this direction in creating inspiration and love for our country and also acknowledgment of our diversity we have inherited , as the source of our strength.? This is indeed a very Malaysian  production reflecting the creativity of our home grown talent.

Well done to Pete Teo and his production  team

CAST LIST featured in the video: 

spotted in order of appearance –

David Arumugam (of the Alleycats) at 0:50 – looking very sombre.

Nazir Razak and Liow Tiong Lai and Sofea Jane at  0:54

Ambiga Sreenevasan at 0:57. with the endearing no-nonsense expression on her face.

Namewee at 1:04–also serious and somber looking to almost a point of reverence

Saifuddin Abdullah 1 .06- relaxed and calm look as usual

Jo Kukathas at 1:11.. quaint hat amongst european crowd

Lim Kit Siang and Tengku Razaleigh at 1:12  . both have a smile that seems to suggest that they are enjoying every minute of the historic moment.. Sitting next to each other . Suggesting perhaps that  despite idealogical or political differences and inclinations  is no  reason for not getting along if they united in the common cause of being Malaysian first.

Michelle Yeoh at 1:14. looking elegant in relaxed anticipation.

Marina Mahathir and Nurul Izzah Anwar at 2:10. liked this scene a lot as they cross the busy street looking out for each other

Jinniboy (of Youtube fame) at 2:15   merdeka !

The couple from Sepet The movie  2.16  couple re emerge with a baby in their arms suggestive of a happy ending after all. alternate conclusion to the tragic ending . If only real life imitates art.

Santokh Singh 2.36  may be aged and mellowed  but still projects formidable strength and resolve simply by a glare at the camera.

Pete Teo 3.20  has to sneak himself in to this much loved  video he directed and produced and play a part and deservingly so.

Ramli Ibrahim 3.27  icon of the art of dance in Malaysia

Yasmin Ahmad 3.34 multiple award winning local and international film maker of movies  that has a social message which has resonated with viewers especially her Malaysian productions.

About the project?  credits  and also the BM version

How the Allah issue started

Allah” issue: Who started it?

By Jacqueline Ann Surin

LEST we forget, the source of the Allah controversy that resulted in churches, and a Catholic school, being torched and threatened did not begin on the streets. It did not begin with narrow-minded and ignorant Muslim pressure groups threatening to spill blood to assert their sole right to use “Allah”.

Lest we forget, it began with the 1986 government ban on the use by non-Muslims of the word “Allah”, and three others — “solat”, “Kaabah” and “Baitullah”. That’s the Barisan Nasional (BN) government we are talking about, the one that Umno leads.

Hence, lest we forget, the issue of non-Muslims using the word “Allah” would not be an issue at all in Malaysia if the Umno-led government had, to begin with, respected the legitimate rights of other faith communities. The “Allah” issue would not have spiraled into, to quote a friend, suburban terrorism — and it is terrorism when violence and intimidation are used towards achieving one’s goals — if the Home Ministry had not acted to deny the rights of non-Muslim citizens in the first place.

Today, in the aftermath of churches being torched and threatened, we hear Umno leaders, most notably Prime Minister and party president Datuk Seri Najib Razak denying that Umno is responsible for the situation we find ourselves in. We hear BN leaders condemning the violence committed against churches throughout the country. But as a lawyer friend commented on Twitter on 8 Jan 2010: “If you inflame passions, you cannot condemn violence.”

Doing what’s right

We know historically and culturally that firstly, “Allah” predates Islam; and secondly that it is used by non-Muslims in other Muslim countries with no restriction. So, the government is responsible for this narrow-minded and bigoted interpretation of who can use “Allah” in Malaysia. And by continuing to defend its position through a court appeal, the government is the one responsible for perpetuating the notion that Muslim rights will always supersede non-Muslim rights no matter if it is illogical, irrational or unconstitutional.

Are we surprised then that some groups will resort to acts of terrorism in Malaysia in order to assert their superiority at all costs? With the kind of government we have today — one that consistently does little to delegitimise violence in the name of Malay and Muslim superiority — I’m not at all surprised that there are those who think they can get away with using fear and intimidation to strip others of their rights. After all, the government is already doing it.

And even in this particular issue, Najib and his Umno ministers continue to resist doing the right thing instead of kow-towing to and fanning the flames of ignorance and fear among the bigots in our midst.

Demonstrators at the National Mosque on 8 Jan, protesting against the “Allah” ruling

No more dialogue

In an attempt at damage control, the government and a couple of politicians including Umno Youth chief Khairy Jamaluddin have now called for an interfaith dialogue to resolve the issue.

But really, the time for dialogue is over. Meaningful dialogue can only happen when all parties to the dialogue are treated as equals. In the current scenario, I’ll wager that any “dialogue” will involve non-Muslims acceding to the perceived “sensitivities” and assumed rights of Muslimsto own copyright to the word “Allah”.

And mind you, the use of the word “Allah” is not a “sensitive” issue, as top Umno leaders and the Umno-backed Utusan Malaysia are fond of restating repeatedly. It’s a copyright issue. And there is nothing at all that gives Muslims in Malaysia, or elsewhere, the copyright to use the word to refer to God and deny others the right to do so.

Indeed, there have been Muslims who demand that Christians should use the word “Tuhan” instead of “Allah” so that Muslims won’t be confused. But if Christians and Sikhs have not been confused thus far from the use of “Allah” in their worship, what makes Malaysian Muslims so special that the government should continue to perpetuate their ignorance about a word that pre-dates Islam?

Additionally, since copyright for the word does not belong to Muslims, what right do Muslim groups and politicians have to demand that non-Muslims can only use “Tuhan” and not “Allah”?

Instead of an interfaith dialogue where non-Muslims are likely to be asked to compromise on their rights to protect the false sensitivities of some Muslims, here’s what I would like to see happen. If Najib’s administration is really sincere about 1Malaysia, I would like to see the government host public forums and seminars for Muslims who may be confused about the word “Allah”.

Really, what’s stopping the Umno-led government from wanting to educate the ummah? Islam, after all, brought enlightenment to those who lived during zaman jahiliyah — the age of ignorance. If Umno is such a champion of Malay Muslims, why is it perpetuating this age of ignorance instead of educating Muslims while simultaneously respecting the rights of non-Muslims? Why is it enforcing the ban and appealing the High Court decision that nullified the ban when it is even stated in the Quran that “Allah” doesn’t just belong to Muslims?

Perchance the home minister, who was from Umno in 1986 when the ban was gazetted, and continues to be from Umno, is ignorant about historical fact and constitutional rights? Or perhaps Umno would rather Muslims remained ignorant? Or perhaps, Umno just doesn’t care about the legitimate rights of non-Muslims no matter the rhetoric about 1Malaysia?
BN-sponsored fascism

The West often likes to describe Malaysia as a “moderate Muslim state“. We are far from it. We have become a fascist state under BN rule. How so? Well, a state that actively and aggressively promotes racial and religious superiority is no different from the Nazi state that asserted that the Aryans were superior to the Jews. And the systematic use of violence, fear and draconian laws to diminish and suppress the legitimate rights of minority groups can only be described as fascist.

The BN will, of course, deny responsibility for the way the “Allah” issue is playing out. The government will provide financial aid to churches to prove to Christians that it does not condone these acts of violence. It will now be open to interfaith forums, where before itbanned any such attempts by groups such as Article 11.

Too little too late, I’m afraid. Make no mistake: the BN government started this. And by denying culpability now and stubbornly refusing to do what is right despite the historical, cultural and religious evidence, the BN is responsible for the rising fascism in our midst.

Is this the kind of Malaysia we want to live in?



Who owns the word Allah? — allah-in-malay/

Also read : confusion-because-of-the-use-of-the-word-allah/



Fit for Golden Raspberry Award – Biggest Box-Office Flop

The latest reviews on the mockumentary, ‘Tanda Putera’, which were garnered from the Internet, describe a badly produced film, littered with howlers.

If the film-producer, Shuhaimi Baba had done her homework properly, she would have discovered that there were many anachronisms, like CCTV and Proton cars.

Must be embarassing  that despite so much  hype around her film, which  most films become box-office hits  from the massive free publicity.

In Shuhaimi’s case, ‘Tanda Putera’ bombed. It deserves the Golden Raspberry Award in recognition for all that is bad in film making.

Shuhaimi Baba was under pressure to produce a propaganda film and the compulsory viewing suggests that Umno Baru is desperate.

Umno Baru is reluctant to let the ghosts of May 13 rest because they are needed to perpetuate the myth that only Umno Baru can “save” the Malays. These ghosts help prolong the fears and insecurities, particularly at election time.If Umno Baru can’t maintain the spectre of May 13, it will become irrelevant and redundant to the Malays, because there will be no “enemy” to defend against.


Just as well if you haven’t seen the movie, you didn’t miss much, it was terrible , save your money on the ticket and buy yourself a good meal, …

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