Unlike several regional bourse, the Kuala Lumpur Stock Exchange (KLSE) has for sometime behaved very much like a sick patient. The 'doctors' have been making their rounds and dishing out 'prescriptions' but there seems to be no cure in sight.

It used to run very fast, the players had a tough time keeping up and many people made a fortune - stockbrokers, punters and of course, the many young and energetic remisers who were rollicking during the good old days.

But since the mid-1997 crisis, the pace has slowed down considerably and worse still, many lost their fortunes. God only knows how many are in debt or bankrupt as a result of this.

Even Prime Minister Dr Mahathir Mohamad admitted after announcing the RM3 billion financial package meant to stimulate the economy that he failed to understand the behaviour of the bourse. It is probably not wrong to say that most Malaysians do not understand it either or could no longer be bothered.

Ringgit re-pegging

But recently, when the KLSE Composite Index (KLCI) dipped below the 600 mark, where were the optimistic market analysts who predicted 800 for 2000's year end? After it shed six percent or close to 40 points in a single day, Kuching small-time players gazed unbelievably at the local stockbroking firm's electronic board flashing the red.

The rumour of a possible re-pegging of the ringgit to the greenback in response to the falling currencies of neighbouring countries may have some grounds.

The prime minister is the champion of capital controls and an advocate for the peg to the US dollar being retained for some time to come.

Needless to say, a re-pegging of the ringgit would affect imports, especially for machinery, plant and raw materials needed by export-oriented industries. But such imports are needed to make our export goods more competitive in the light of rivalry from Indonesia, Thailand, Philippines and even China.

Market talk

One very interesting 'market talk' is that in the anticipation of a possible re-pegging to render a cheaper ringgit, it is generally believed, exporters are not bringing their US dollars home. They are keeping part of it offshore, and on the balance sheet this could look like they are selling at a loss.

It is common knowledge that in the timber export trade, in this part of the world, exporters do not bring all their sales proceeds home. The system of retaining part of the profits offshore has probably accounted for a lesser inflow in foreign currency earnings through exports.

Again in the timber trade, the absence of a check-price system has more or less allowed log exporters to declare exports according to their own schemes of timber or wood grading. As a result, lower customs taxes are collected.

A lot of people have often wondered why a check-price system is not introduced so that at least a government revenue-generating agency can collect what is due to the state and nation.

Economic malaise

One Australian-trained economist in Kuching feels that it is wrong for anyone to say that the stock market is not an economic indicator of the country's health. According to him, what needs to be examined in greater depth are some of the related issues which can be both political and economic, leading to a lacklustre performance of the country's stock market.

"It certainly doesn't inspire confidence," another economist with a reputable accounting firm in Kuching added.

There is a general economic malaise and everyone knows the problem but they are not saying it out loud and clear.

Most people tend to agree with former Finance Ministry secretary-general Ramon Navaratnam that the Third Outline Perspective Plan (OPP3) has a noble aim, but it could also be designed to address fundamental issues such as accountability and good governance.

TONY THIEN is a freelance writer based in Kuching.