RM12.5 BLN SPENT BY GOVT TO REVIVE ECONOMY IN 1997/1998 FINANCIAL CRISIS

KUALA LUMPUR, Oct 13 (Bernama) -- The government spent RM12.5 billion
(US$3.6 billion) to revive the economy through Danaharta during the financial
crisis 10 years ago, Second Finance Minister Nor Mohamed Yakcop said
Monday.

He said the cost was low, being three percent of the gross domestic product
(GDP) compared to 52.3 percent in Indonesia, 23.1 percent in South Korea and
34.8 percent in Thailand.

Nor Mohamed said the government also recovered the RM7 billion (US$2
billion) allocated under Danamodal to recapitalise the banks affected.

He said this in reply to written questions by an opposition MP Lim Guan Eng
on the impact of the 1997/1998 financial crisis, the parties affected and the
measures taken.

The third meeting of the first session of the 12th Parliament started here
Monday.

Nor Mohamed, who is also the MP for Tasek Glugor in north, said no "unseen
hand" appeared every 10 years to disrupt the national economic and financial
system.

The global financial crisis resulted from weaknesses in the liberal
capitalist system dominated by the United States, he said.

According to him, there is a need to find an alternative system that
provides a financial structure which is fair and impartial.

"We are also aware that under the current global financial system, 80
percent of the world's savings is being used by the US," Nor Mohamed
said.

"In fact, the US borrows US$3 billion (US$1.00=RM3.49) every working day
because the savings rate of its citizens is negative," he said.

Nor Mohamed said to prevent a future crisis in the financial world,
priority should be given to ensure that a major portion of the savings by Asian
countries and oil-exporting countries be used in this region.

In this context, Malaysia had proposed a mechanism to support such an
infrastructure in this region and a seminar on this would be held in Kuala
Lumpur on Nov 10, 2008, he said.

Nor Mohamed said that Malaysia has to be ready and prepared at all times to
face and overcome financial crisis that will occur in the future.

"The crisis to come will be different in nature and we need to have an
economic system which is flexible to face the challenges," he said.

Replying to a supplementary question concerning the effect of the political
factor in the economy, Nor Mohamed said an unstable political system could cause
problems in attracting investments.

"We should have a stable political system," he said.