Mahathir admits bailing out tycoons
Published on: Wednesday, October 30, 2019
By: Malay Mail
KUALA LUMPUR: Tun Dr Mahathir Mohamad (pic) has finally admitted and apologised for helping rich businessmen during the Asian Financial Crisis of the 1990s that also sent Malaysia’s economy into a tailspin.
The prime minister a second time around admitted that he made the decision to help the “tycoons” and their businesses, but said it was a strategic move that prevented mass retrenchment that also kept investments and money flowing into the country and the Treasury while the entire region suffered.
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“But of course it would have been better if we didn’t help the tycoons and let their businesses fold,” he wrote on his blog Tuesday.
“By doing that all those under their payroll (both rich and not rich) will be jobless. Exports will decline and there will be no foreign cash inflow into the country.
“And then the government will lose corporate and personal tax income because a large share of it are paid for by the tycoons. Huge sum of government revenue will be lost. Government operations and development will have to stop. No infrastructure developed,” the 94-year-old added.
What prompted his post is unclear, but critics have long accused Dr Mahathir of cronyism when he served as prime minister from 1981 to 2003.
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They claimed his privatisation push had helped enrich a small pool of elites that shared close ties to the government then under Barisan Nasional, and that Dr Mahathir helped bail out many of their businesses when the economy tanked, even if some were said to be underperforming.
Dr Mahathir, who now heads the Pakatan Harapan coalition elected into power last year on promises for reform, has never admitted to any wrongdoing.
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Over the years, he remained insistent that the bail-outs were necessary to limit the effects of the financial crisis and avert a full-blown catastrophe.
Most of these companies are now owned by the government through holdings.
Dr Mahathir said losing tax money from wealthy businessmen would have forced the government to seek income elsewhere.
This, he argued, would have inevitably led to more tax for the middle and lower class.
“In a situation where we have lost tax money from the tycoons so we would have been forced to tax those who are not categorised as tycoons,” he said.
“After those not considered tycoons are taxed, they will then become poorer.”
“About 70 years ago, in some countries, tycoons were murdered and their wealth was confiscated. All of their businesses and enterprises were taken over by the administration, which wanted to enjoy 100 per cent of the revenue.
“If we had wanted to, we could have chased away all the tycoons. We would not have helped them. We would have let them go bankrupt. We only helped those who were not (categorised) as tycoons.”
Dr Mahathir later put forth a question for discussion, if helping those who were not categorised as tycoons would have helped the country get out of the financial crisis.
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“However, what if we helped those were not categorised as tycoons and they could not pay tax? That is the question.
With that, I apologise for my actions in resolving the financial crisis (between) 1997-1998 by conveniencing the tycoons.”