That has sparked speculation that he may ease the curbs imposed last year. They hope to dump shares on the hordes of foreigners expected to jump in once capital controls go. The index has topped 600 and Malaysian brokerages forecast 700 before 2000. But Kim Teo, managing director of Nicholas-Applegate Capital Management in Singapore, pours cold water on the wishful thinking. It isn't taking the hard decisions to trim fat and implement broad-based restructuring as Korea and Thailand have done the past year.
Malaysian officials stress they are only fine-tuning the curbs.
But to woo much-needed investment, Malaysia may make it easier to repatriate capital and profits. Investors exiting within six months might pay huge penalties, but not those staying for a year or more. Economists, however, believe Malaysia's fixed exchange rate cannot be sustained with free capital flows at the current low interest rates. They contend that currency curbs are needed for at least another couple of years. If civil servants are to decide on the level of graduated tax, the system had better be super-transparent.