Following Chandra Muzaffar's article in malaysiakini (Anwar and the IMF), I would like to add a remark that has been missed out in all discussions on the wisdom of Mahathir Mohamad's pegging the ringgit to the US dollar.

He had pegged it at about the lowest rate ever and this made business transactions predictable in terms of currency. There was an effective cut in salary and costs in terms of US dollars, which made Malaysian goods cheaper in US dollars. The garments industry revived for a short time because of this exchange rate.

But the country would not have been stable economically if Mahathir had not fixed the petrol and gas prices simultaneously. He saw that his efforts at pegging the ringgit to the US dollar would be futile if energy prices were allowed to escalate according to the depressed rate of exchange. So he disallowed the rise in petrol and gas prices. Thus, we hardly noticed any direct effects of the devaluation in the local economy. Life went on as it was, no rocking the boat, like in neighbouring countries.

Neighbouring countries saw a change of leadership because the sudden increase in oil prices caused severe economic downturns. Thus in disallowing the rise in oil prices, Mahathir was in effect saving his own job but oil companies and the country had to pay the price for it. Having said that, I think the price was worth it and he deserves the job he has kept.