Markets and neighbours concerned over M'sia without Mahathir

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Malaysia's stock market and neighbouring countries reacted today with concern for economic and political stability following Prime Minister Dr Mahathir Mohamad's resignation announcement.

Share prices on the key Kuala Lumpur Composite Index closed the morning slightly lower on foreign investor selling, dealers said, on confirmation Mahathir will step down in October next year to be replaced by his deputy, Abdullah Ahmad Badawi.

The market has fallen more than three percent since Malaysia was first hit by uncertainty over Mahathir's future at the weekend.

Dealers said some investors were initially positive Wednesday about the plans for transition but foreign investors questioned the sustainability of policies following Mahathir's departure.

"Although the leadership transition plan announced Tuesday will mean smooth transition of power, foreign funds see the departure of Mahathir as a risk and they prefer to reduce their holdings," said an institutional dealer.

Major Japanese media said that Mahathir's exit would likely erode international confidence in the nation's economy.

"Mahathir's announcement of his decision to resign... triggered the Kuala Lumpur stock market to fall and jitter spread over the market," said the Yomiuri Shimbun , Japan's best selling daily newspaper.

"It reflects fears that, if Mahathir resigns, the nation would lose the top navigator of its economy.

"Amid economic globalisation, (Mahathir's) unique philosophy and approach - including his criticism of Western free-trade systems - have resulted in the prosperity of the nation. Mahathir's achievements are significant."

Learn from history

The influential Asahi Shimbun newspaper agreed.

"Since his announcement to resign, share prices (in Malaysia) have fallen, reflecting that the exiting of the prime minister would affect international confidence in the nation," the Asahi said.

In Indonesia, the Jakarta Post said in an editorial that Mahathir should learn lessons from the departure of former Indonesian president Suharto and Ferdinand Marcos of the Philippines.

"A political leader is judged successful not only in terms of what he delivers during his leadership but also by what happens to the nation once he leaves office.

"Mahathir has brought Malaysia to economic prosperity and political stability. But if this is the legacy that he wants to leave behind, then he must do one more thing: prepare for a smooth and orderly succession.

"Here is the dilemma for Mahathir: he can only ensure this kind of succession by turning Malaysia into a democracy.

"That would mean opening up the political system, tolerating dissent and freeing the media from government censorship. Yet these were the same means he used to prop up his power all these years. And he doesn't have much time left.

"Can Mahathir pull it off? Let's hope so, for the sake of the Malaysian people and of the people in the region."

In neighbouring Singapore, the government welcomed the announcement that Mahathir would not step down immediately.

"At this stage the region cannot live with another political uncertainty in another country, after Indonesia, that will be very, very bad for the region," Prime Minister Goh Chok Tong told reporters.



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