DECEMBER 20 — On June 1, 1981, 100 Japanese Yen was equal to RM1.06.

By the time Mahathir left on 31 Oct 2003, 100 Japanese Yen had shot up almost 3 ½ fold to RM3.49.

Mahathir had borrowed heavily from Japan when he was in office but when the Yen started soaring, our loans which was in Yen also doubled and tripled since Mahathir and Daim did not have the foresight to hedge the exchange rates.

In fact like the ECRL, KLIA was funded 75per cent by a Japanese yen loan where many of the construction projects also went to Japanese companies. 

Which is why it is so strange for Mahathir and gang to make a big issue of ECRL and its foreign funding. 

At that time, if you had said Mahathir was selling Malaysia to Japan for all those loans to construct KLIA,, you be be beaten and sent in under ISA.

In any case, the appreciation of the Yen against the Ringgit got so bad that Malaysia stopped asking for Japanese loans in 1994 as its prime minister, Datuk Seri Dr Mahathir Mohamad complained the appreciation of the yen rapidly increased the Malaysian debt burden to Japan.

Malaysia ended up having to pay double or triple to clear our “soft” loans to Japan.

However in the face of the 1998 crisis, Mahathir had no choice but to resume asking Japan for loans.

In 1998, Dr Mahathir said Malaysia was seeking to borrow another US$2 billion from Japan, saying that he wanted the loans to be denominated in yen rather than dollars.

Dr Mahathir said then it was now a “good time to borrow yen” as the currency was depreciating, and that proceeds of any borrowing would be used in such areas as project finance and the environment.

However, it turned out that his prediction was not correct as the Yen had continue to appreciate another 30per cent from 150 yen to USD to 100 yen to the USD after that.

Malaysia now learned from this experience and we have little foreign borrowings in foreign currency. In fact, the loan from China for ECRL is protected from such foreign exchange rates.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online.