Prime Minister Dr Mahathir Mohamad today pledged transparency and a higher standard in corporate governance as part of an effort to regain investors' confidence in the country's capital market.

Mahathir, who is also the finance minister, said the Asian economic crisis had alerted Malaysia to the need to eradicate "unhealthy corporate practices".

"We have carefully examined our own weaknesses and have taken various measures to correct our past mistakes," said the premier in his opening speech at the Malaysian Capital Market Summit 2001 in Kuala Lumpur.

Explaining to an audience of mostly foreign investors, Mahathir said these newly implemented measures were aimed at restructuring and cleaning up poor-performing companies, as well as enhancing corporate governance and transparency.

Among the measures were the consolidation of the Malaysian banking system into 10 anchor banks and the setting up of the Corporate Debt Restructuring Committee which has helped restructured 37 ailing companies by resolving debts amounting to RM28.5 billion.

'Biggest corporate rescue'

During the 1997 regional financial crisis, the government claimed that the country was a victim of currency speculation activities, specifically targetting controversial financier George Soros, and called for reforms in the international capital market.

However, this call was met with widespread criticism that the country was already having internal structural problems then which contributed to its vulnerability.

The premier said the bank merger exercise is in its concluding stages and the CDRC is now finalising the debt-restructuring scheme for the public transportation industry.

Yesterday, Mahathir was quoted in The Sun daily as saying that the government would definitely take over Putra and Star light-rail transit companies but it was still studying the terms of the takeover.

In late July, the government announced its plans to finance the takeover of the LRT companies, said to have incurred losses as much as RM5.5 billion, through an issuance of bonds amounting to RM6 billion.

Some economists described the proposed LRT takeover as the "nation's biggest corporate rescue".

'Serious' investments

Mahathir said apart from a strong growth of 8.5 percent last year, the revival of the stock market from "a humiliating low of 262.7 points" two years ago to "a more accurate and sustainable level" now was indicative of Malaysia's economic recovery.

However, Mahathir urged investors to consider the potential destructive repercussions of their "irresponsible actions" instead of treating the stock market as a tool to make fast money.

He said reminded investors to practise "serious" investments and not gamble on the stock market based on "rumours which may be circling freely".

The premier also said the government has drawn up various strategies to cushion the impact of the US economic slowdown on Malaysia's economy, citing the example of the Capital Market Masterplan which was unveiled early this year to stimulate domestic demand.

Mahathir stated that certain quarters who wanted the ringgit devalued in order to make exports more competitive, have overlooked other aspects of the country's competitiveness.

He said that the other factors such as productivity of labour, political and social stability and the efficiency of the underlying infrastructure are as important as currency parity.

"When all the other factors are taken into consideration, the claim that Malaysia's competitiveness is fast eroding does not really hold water," said the premier.