INCREASE SAVINGS TO CUSHION ECONOMY AGAINST ATTACKS, SAYS MAHATHIR

KUALA LUMPUR, Oct 22 (Bernama) -- Former Prime Minister Dr Mahathir Mohamad
has suggested that developing countries develop a healthy savings regime as it
can help cushion the economy when attacked by foreign currency traders.

With a high savings rate, the country would have the financial resources to
finance its economic development and recovery and not depend on external forces
which might want to control the domestic economy, he said.

Dr Mahathir said the rules and regulations governing trade and industry must
be structured that the country would not be too exposed to the changes in the
international business regime.

As such, "the countries may be forced to build protective barriers and
reduce foreign borrowings," he said in his speech at the Asian Insurers and
Reinsurers Conference organised by Malaysian Reinsurance Bhd here Thursday.

Dr Mahathir said it was imperative for emerging economies to take into
account the threats posed by the new business environment and prepare for
various eventualities.

For example, in the 1997-98 regional financial crisis, the countries of East
Asia, including Malaysia, were attacked by currency traders, he said.

"By the traders devaluing the currencies of these countries, their economies
could be destroyed. Even the offer of help from international institutions can
be destructive to a country's economy," Dr Mahathir said.

He also warned that excessive inflows could result in foreign capitalists
dominating the economy of a country which could be damaging if they pull out
capital anytime they think fit.

Against such a backdrop, Dr Mahathir said: "Clearly, the geopolitical
changes happening are relevant and are already having a lot of effect on the
emerging economies."

"Much depends on how these economies manage their own governance and the
politics of their country," he said.
-- BERNAMA