MALAYSIA'S MEDICINE AN ANTIDOTE TO MISERY.

Your Sept. 3 editorial "Malaysia's Dubious Recovery" is a gloomy assessment of Malaysia's economic recovery that is contrary to the conclusion of a broad spectrum of international economic and financial experts who say that Malaysia's economic policy package, launched in September 1998, is working well. The measures were necessary for the government to regain control of the battered economy and preserve its national interest. We could not stand and watch while external market forces ripped apart the economy, destroying thousands of jobs and consigning the people into poverty.

Our unorthodox measures have given the country a breathing space and stability to business and investment planning. While you claim that foreign investors would be discouraged by the measures, we find that foreign direct investments continue to rise, principally because the selective controls eliminate currency fluctuations and make Malaysia more attractive to foreign investors.

Through our own prescription we have achieved results comparable to those countries that initially had taken the orthodox medicine but then later incorporated elements of the policy-mix that we have instituted. Our achievements have been realized without going through the misery of massive unemployment; the decimation of the middle class, which we have spent a generation to build; blood on the streets and political turmoil. We have regained the basic course as others without going into massive debts; saddling future generations with huge debt-servicing; and auctioning off our precious corporations at fire-sale prices.

Malaysia does not believe that its prescription is a one-size-fits-all cure for others. We continue to pursue economic reforms and restructuring with undiminished zeal. The selective capital controls are still needed to insulate the country from future shocks. Indeed, the recent attack by speculators on the currency of a neighboring country tells us that danger is still lurking.

Dato' Ghazzali Sheikh Abdul Khalid
Ambassador of Malaysia
Washington.