Posted by admin.....By
Choo Sing Chye
Ipoh has changed so much
over the years since the Tin bust, nobody seems to know that Ipoh used to
be synonymous with tin.
The last time I
met a friend who was born after the Tin-bust, I asked him in jest, “Do you
know what Ipoh 's famous for?R21;
He gave me a
blank look. Anyway, not wasting any time, I told him, “Tin-lah.” “If there
is no tin, Ipoh wouldn’t be here. It would be just another Orang Asli
settlement. He squinted his eyes and responded, “Are you sure? I thought it
was Nga-Choy-Kai.”
Thanks to
Barisan Nasional for single-handedly transforming Ipoh from a rich and
bustling Tin-City to a Nga-Choy-Kai (Bean-Sprout Chicken) industry. Ipoh
never recovered from this fatal stroke of incompetence and greed to corner
the World Tin Market. As a result of this, the once vibrant Tin Industry
was totally wiped out.
It all started
with a shady Egyptian tin trader by the name of David Zaidner. He worked
for the commodities firm Marc Rich & Co in Switzerland .
Actually, he
first approached the Indonesian government thinking that they were stupid
enough to buy his idea of cornering the tin market. But the Indonesians
smelled a con job and had him kicked out of the country.
Next, he
couldn’t believe his lucky stars when his idea was accepted with enthusiasm
by our then brand-new Prime Minister, Tun Dr Mahathir. A plan was quickly
hatched to corner the World Tin market.
In December
1980, the state-owned Malaysian Mining Corp. Bhd. named Marc Rich as its
trading agent in a move that would shock the world commodities industry.
Secret large tin
purchases were made on the London Metal Exchange and went unabated
throughout 1981, inducing a worldwide price increase. The strategy was
cheap and simple. Malaysia had to only pay a 10 percent deposit against
three-month' s forward purchase contracts.
When the price
of tin shot up in the world market, the Malaysian government thought it had
scored a huge victory. But unexpectedly, the price increase attracted many
world producers to increase tin production and even the United States began
selling from its strategic stockpiles to take advantage of the
Malaysian-induced price rises.
Subsequently,
Malaysia amassed about 50,000 tons of tin and had no other choice but to
keep buying just to keep prices up. Production continued to soar and even
unheard-of suppliers started to turn up to cash in on the high tin price.
The world tin market went berserk and it crashed.
Malaysia lost an
estimated US$250 million on its failure to
honour forward contracts, and another local bank lost another US$1 billion in separate losses on
loans it had made covertly out of its Hong Kong subsidiary.
For five years
Mahathir categorically denied that Malaysia had anything to do with the
plan but as outside pressure mounted, Mahathir finally revealed the details
in 1986.
Marc Rich was
finally indicted and arrested then extradited to the United States and
convicted of massive tax fraud.
Think of the
billions of ringgit taken out of our economy in Perak when the tin price
went bust. Had Mahathir not meddled with the tin price, we wouldn’t have
lost 30 years of Tin export income. Perak wouldn’t have been relegated from
one of the richest states to a poor one like today.
Another good
example akin to the Perak demise is Terengganu. If all the oil royalties go
to the people of Terengganu, Terengganu would be an advanced state at par
with Selangor. But unfortunately, these royalties go to the pockets of BN
politicians and cronies in the form of “Duit Esan”.
By Choo Sing Chye
Researched
from Steven Schlossstein’ s book, Asia ’s New Little Dragons.
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