MALAYSIA is deeply disappointed with the failure of the international community, particularly the developed countries, to support the implementation of a new international financial architecture (IFA) despite global finance being adversely affected by the currency crisis.

Second Finance Minister Datuk Mustapa Mohamed said that not much progress was achieved on the IFA although leaders of developed countries issued statements on it at the World Bank/International Monetary Fund meetings in Washington last week.

"So no progress was made at the meetings in Washington and only the Group of 20 was formed. So we (Malaysia) are deeply disappointed with this which is why we need to defend ourselves against currency speculators," he said when met in Kuala Lumpur Thursday night.

Against such developments, he said Malaysia needs to continue its efforts at economic recovery using its own approach.

"It is clear to us that the prescription meted out by international agencies such as the IMF and World Bank are not able to nurse and overcome a country's economic problems. So their recipe is not applicable here," he said.

As such, he said he expected the revamp of the IFA to take a long time to materialise.

Mustapa said as a representative of developing nations, Malaysia's calls and proposals for control over currency speculators had not been taken seriously by developed countries.

"Until now, there are no signs that these activities (currency speculation) are controlled and because of that we will continue to be exposed to them," he said.

However, he added that Malaysia, at this point, is safe from becoming a victim of currency speculation as it had taken action on its own by implementing selected capital controls a year ago.

"This is our way to save ourselves, and we take the stand that as long as there is no change in the international monetary sistem, we will have to safeguard our country's interest - that is by imposing short-term capital controls," he said.

Mustapa said Malaysia and other developing countries are not in the position to change the international monetary system as it is decided by the developed countries, which at this point, have not shown much regard for the interest of developing nations.

He said the main obstacle faced by Malaysia in calling for changes to the IFA is that developed countries are still defending the interest of currency speculators although there are now clear indications that such activities have brought about world financial turmoil and jeopordised the economies of many countries.

"They (developed countries) still have not accepted the reality that currency speculation was the cause for the financial turmoil and instead, they say that whatever happened so far was due to weaknesses within the country like nepotism, cronysim and others," he said.

He said Malaysia cannot accept the view because it had previously registered good growth until the currency speculators attacked the country's monetary system.

"What they agree on is transparency; that is, greater transparency among the currency traders in their operations. Only that is in place, and even then there is nothing concrete so far," he said.

"What we want and what is most important is that there is either a direct or an indirect control over currency speculation," he said.

On the possibility that local entrepreneurs may face difficulties with global competition as a result of the implementation of the liberalisation policy by the World Trade Organisation (WTO) in 2003, Mustapa said the Government is looking into assisting those involved.

"We are very aware of the effect and we are preparing ourselves and studying the effects and the various measures that will reduce the burdens of our entrepreneurs," he said.

He said the Government is looking at the issue seriously as it is concerned that once the policy is implemented, local entrepreneurs who have successfully built their businesses in various sectors like banking and manufacturing may lose out to stronger international entrepreneurs. - Bernama