http://www.jaring.my/star/current/29ascapcu.html
>Asian countries seduced by Malaysia-style capital controls (AFP )
>
> KUALA LUMPUR: Troubled East Asian economies are expected to seek more
> resolute international action at this week's International Monetary Fund (IMF)
> talks in Washington as they closely watch Malaysia's experiment with capital
> controls.
>
> Frustrated by the failure of textbook liberalisation measures to avert a
> recession, Malaysia had imposed capital controls on Sept 1, and the initial
> domestic results have been positive.
>
> Foreign reserves are up 40%, the fixed exchange rate has held at RM3.80 to
> the US dollar, and interest rates have eased.
>
> Rejecting the usual formula prescribed by the IMF, Malaysia has stopped
> trading of the ringgit as well as Malaysian shares overseas to insulate the
> economy from externally-induced volatility.
>
> Indonesia has already issued mixed signals, with some officials and business
> leaders hinting at the need for fresh foreign-exchange controls even as the IMF
> approved fresh credit and official lenders agreed to restructure US$44.2bil in
> Jakarta's sovereign debt.
>
> Singapore Prime Minister Goh Chok Tong, a staunch advocate of open
> markets, said over the weekend after talks with US President Bill Clinton that
> the Asian crisis had spawned "a loss of faith in international institutions and a
> desperate search for alternatives to orthodox prescriptions."
>
> "The system is now malfunctioning, with its built-in support mechanisms like
> the IMF looking frail," Goh said, and warned that it would be a mistake to
> dismiss Prime Minister Datuk Seri Dr Mahathir Mohamad's stand as an
> "idiosyncratic opinion."
>
> "It has struck a chord throughout the region and beyond," said Goh, who
> predicted that Washington would show "some strong moves" in the months
> ahead.
>
> Clinton has urged the US congress to approve additional funds for the IMF,
> and US interest rates are expected to be cut soon, possibly today, with
> financial turmoil now creeping into Latin America.
>
> The US house of representatives has approved only US3.4bil of the US$18bil
> Clinton is seeking for the IMF, eliciting a veto threat from the White House.
> The senate has approved the full amount, and both houses are expected to
> forge a compromise.
>
> Christopher Wood, a Hong Kong-based regional analyst with Spanish financial
> house Grupo Santander, said a US rate cut was now "substantially discounted"
> by markets, but there was growing talk of an internationally coordinated
> "jumbo credit line" to emerging markets, starting with Brazil.
>
> "The size of such a package will have to be large enough to prevent the
> financial markets from testing it, at least in the short term," he said. "A sum of
> US$450bil should be just about enough for now."
>
> Much of the Asian disillusionment has been directed at the IMF, the lender of
> last resort which has engineered massive bailouts for Indonesia, South Korea
> and Thailand since mid-1997 -- with still uncertain results.
>
> Former Philippine president Fidel Ramos, who opened up and revived his
> country's economy, said "the IMF must rethink its bailout tactics -- its usual
> requirements for tight money and fiscal restraint -- when typically, borrowers
> needed credit, and economies needed pump-priming."
>
> "Whether one agrees or disagrees with the specific measures that Malaysia has
> taken to defend itself against this inherent instability of the global financial
> market, one must sympathize with Kuala Lumpur's effort to defend itself from
> what it sees as a kind of global laissez-faire capitalism which is going out of
> control," he said recently.