That is what the US Government did when their banks were going bankrupt. Bailout means putting in money to revive the business but the ownership of the business remains with the original owner. We decided to bailout our companies which were in distress.ġ1. Malaysia decided not to borrow from the IMF and not to open its market. But the fact remains that the condition that the domestic market must be open to foreign investors brought about the results stated above.ġ0. We must not suspect that the IMF and the World Bank was collaborating with these foreign investors to rape the countries concerned. They could then sell their acquisitions at a high price and make large profits.ĩ. If after they had bought all the banks and businesses at these low prices, the devaluation of the currency is stopped, the value of the entities acquired by the foreigners would recover. Obviously if foreign capital was allowed to buy local businesses at the time of the financial crisis, it would have acquired the local business very, very cheaply.Ĩ. Thus a business that was worth US40 million Dollars could be bought for only US14 million Dollars because of the effect of devaluing the currency by 50 per cent.ħ. to 70 million Ringgit, then the foreign buyer need to pay only 14 million in US currency.Ħ. If because of the crisis the value of the business in the local currency falls by 30 per cent i.e. For example if the local business is worth RM100 million in local currency, equivalent to US40 million at 2.5 Ringgit to the US Dollar, a devaluation to five Ringgit to the US Dollar would bring down the value of the business to US20 million.ĥ. In addition the financial crisis would make the businesses less profitable or unprofitable so that their market value in local currency would be depressed.Ĥ. The effect of currency devaluation is to reduce the value of the countries' business in terms of foreign (US Dollar) currency.

The countries must open their economies to foreign capital including the buying up of their businesses by foreigners.ģ. When the currencies of East Asia were being devalued in 1997-98 the International Monetary Fund and the World Bank offered to help with loans. Mahathir Mohamad at Che Det on Janu8:56 AMġ.

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