00:00This week on WUSAES, we look into the second part of the mini-series on the Asian financial crisis of the late 1990s.
00:08The second episode explores how Malaysia navigated the crisis, the costs and benefits of its bold choices, and the lasting effects on the economy.
00:17Here's a segment from a conversation with Professor Emeritus Datuk Dr Wu Wingtai.
00:22It is important to note that in this time, there was a lot of chaos outside Malaysia.
00:35And this chaos, in turn, undermined investors' confidence.
00:41And basically, they said, hold on, I'm not going to expand operation.
00:47In fact, I'm going to scale back and see what happens.
00:56Now, in the case of Malaysia, the banks basically stopped working because the banks were bankrupt.
01:06So they were not lending up money.
01:08So that was great difficulties.
01:09What usually happens in a democracy when an economic disaster happened,
01:18the usual procedure, the usual ritual that appears is whoever was in charge, take responsibility for it.
01:27He leaves office, and somebody takes over, that somebody may do exactly the same thing, but confidence has been revived.
01:40And when confidence is revived, business goes back to usual.
01:46You could say, in the case of Thailand, right after the exchange rate debacle in July 1997,
01:57Prime Minister Chavalit was replaced by Chungpa within four months.
02:05In the case of Korea, when the exchange rate plummeted in November 1997,
02:14in the presidential election, that was held a month later, the opposition won for the first time.
02:24Kim Dae-jung, the perpetual presidential candidate, he has ran three times before, and he's lost each time.
02:34He won.
02:35Now, basically, economic crisis delegitimized the incumbent, and there is a change in government,
02:48and that business goes back to usual.
02:52Now, this happened in Thailand after the middle of 1997.
03:00In Korea, in Korea, at the end of 1997.
03:05And in the case of Indonesia, when the rupiah had gone from 2,500 to 10,000,
03:16Sohato was re-elected to be president for the seventh term.
03:21So, there was immediate riots in the streets of Jakarta because the elections were seen as unfair.
03:32And what happened to the rupiah?
03:36The rupiah went from 10,000 rupiah to U.S. dollar to 15,000 rupiah dollars.
03:43So, Mahathir could see that the economic crisis is going to give rise to lots of economic unhappiness,
04:01and hence, potential political instability.
04:04And he realized that if people were to start running out of the ringgit even more,
04:16both the stock market in Malaysia will crash as well as the ringgit,
04:22because people will be withdrawing money from the stock market and sending it out to the country.
04:26When you withdraw money from the stock market, the stock market crash.
04:29When you send it out, the money, the ringgit crash.
04:32So, to prevent this crash, Mahathir imposed the capital controls on September 1st, 1998.
04:47And then, after imposing those controls,
04:51he went about restructuring and reorganizing the banks
04:56in order for them to start lending money normally again to revive the economy.
05:04Catch the full conversation on Awani International and across our social media platforms.
05:10So, when they saw the times.
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