January 12–13, 1999
Co-hosted by the World Bank and
The Institute of Southeast Asian Studies
Abstracts of Papers Presented
Finance and Economic Policy in Malaysia
Mohamed Ariff, Mohd. Haflah Piei and Tinagchye Tan Malaysian Institute of Economic Research
The paper reviews the implications of the Asian financial crisis for Malaysia. The authors emphasize the importance of restoring investor confidence and mention a number of measures needed to “get the house in order.” They downplay the potential negative implications of capital controls but note that their effectiveness lies only in the short term. They also emphasize the positive role of Danaharta and Danamodal, two organizations created by the government to take over failing businesses and re-capitalize the banks. The success of the entities depends upon the quality of governance i.e. efficient administration, competent rules, and strict accountability, and how the reforms being initiated are perceived by investors, foreign and local.