Image via Wikipedia
It is often assumed that the system of exchange control (including fixed exchange rate) that we implemented on September 1, 1998 saved the country. The measures of September 1, 1998 were undoubtedly a necessary condition, but it was not a sufficient condition to overcome the crisis. Malaysia was saved, not by exchange control measures per se, but by Dr. Mahathir Mohamad.
Dr M saved the nation. Perhaps the only truism of his 22 years as Prime Minister of Malaysia.
I'm not his greatest fan, but let's give credit where credit is due.
Aiz, whilst some of the points made by TSNMY are valid and has been recognized by some economists, we also have to take it with a pinch of salt. Being the Finance Minister II then, he is hardly going to criticize Mahathir. In reality some of the masures worked and some didn't, just like some of the measures introduced by IMF was actually good (at least for the long term) like removing some of the trade distorting measures in Indonesia. One of the reason why Indonesia is able to outperform Malaysia's economic growth in the last few years is that their public sector is leaner and economy more open. Blaming currency speculators (Soros is the devil) is another myth often perpetuated by the Government, in fact Soros and his hedge fund were buying Malaysian RM for the most part during the crisis. The depreciation of regional currencies (especially in Thailand) was as much a function of inflation due to unsustainable growth as hedge funds selling down their investments (as they should to protect the interest of their investors).
Of course, you're speaking now with the benefit of hindsight, Sani. With 20/20 vision, we know exactly what happened, what went right, and wrong, and which decisions were right, and wrong. It's easy to respond to a crisis once it's already passed.
But consider being in Dr M's shoes while all of this was happening, right there and then. I find the recounting of Dr M's daily struggle to find a way to help the nation get through the crisis particularly believable and heroic.
He didn't know whether what he was doing would succeed or not. He had the whole world telling him that he was mad. He had his own Deputy in revolt. He was standing all alone. And yet he was able to make the right decisions (well, i agree with you, mostly right decisions anyways).
If a leader is lucky, he or she gets this once chance to prove his worth during his term of leadership. Bush Snr's was the first Iraq war. Bush Jnr's was Sept 11 and the aftermath. The Prophet Muhammad's was probably the migration to Medina. Not all leaders will have a chance to pass this test.
Again, with 20/20 hingsight, i think 1997-98's financial crisis was Mahathir's test. If not for the decisions that he made, Malaysia would have suffered terribly.