By Choo Sing Chye
Ipoh has changed so much over the years since the Tin bust, nobody seems to know that Ipoh used to be synonymous with tin.
The last time I met a friend who was born after the Tin-bust, I asked him in jest, “Do you know what Ipoh's famous for?”
He gave me a blank look. Anyway, not wasting any time, I told him, “Tin-lah.” “If there is no tin, Ipoh wouldn’t be here. It would be just another Orang Asli settlement.
He squinted his eyes and responded, “Are you sure? I thought it was Nga-Choy-Kai.”
Thanks to Barisan Nasional for single-handedly transforming Ipoh from a rich and bustling Tin-City to a Nga-Choy-Kai (Bean-Sprout Chicken) industry. Ipoh never recovered from this fatal stroke of incompetence and greed to corner the World Tin Market. As a result of this, the once vibrant Tin Industry was totally wiped out.
It all started with a shady Egyptian tin trader by the name of David Zaidner. He worked for the commodities firm Marc Rich & Co in Switzerland.
Actually, he first approached the Indonesian government thinking that they were stupid enough to buy his idea of cornering the tin market. But the Indonesians smelled a con job and had him kicked out of the country.
Next, he couldn’t believe his lucky stars when his idea was accepted with enthusiasm by our then brand-new Prime Minister, Tun Dr Mahathir. A plan was quickly hatched to corner the World Tin market.
In December 1980, the state-owned Malaysian Mining Corp. Bhd. named Marc Rich as its trading agent in a move that would shock the world commodities industry.
Secret large tin purchases were made on the London Metal Exchange and went unabated throughout 1981, inducing a worldwide price increase. The strategy was cheap and simple. Malaysia had to only pay a 10 percent deposit against three-month's forward purchase contracts.
When the price of tin shot up in the world market, the Malaysian government thought it had scored a huge victory. But unexpectedly, the price increase attracted many world producers to increase tin production and even the United States began selling from its strategic stockpiles to take advantage of the Malaysian-induced price rises.
Subsequently, Malaysia amassed about 50,000 tons of tin and had no other choice but to keep buying just to keep prices up. Production continued to soar and even unheard-of suppliers started to turn up to cash in on the high tin price. The world tin market went berserk and it crashed.
Malaysia lost an estimated US$250 million on its failure to honour forward contracts, and another local bank lost another US$1 billion in separate losses on loans it had made covertly out of its Hong Kong subsidiary.
For five years Mahathir categorically denied that Malaysia had anything to do with the plan but as outside pressure mounted, Mahathir finally revealed the details in 1986.
Marc Rich was finally indicted and arrested then extradited to the United States and convicted of massive tax fraud.
Think of the billions of ringgit taken out of our economy in Perak when the tin price went bust. Had Mahathir not meddled with the tin price, we wouldn’t have lost 30 years of Tin export income. Perak wouldn’t have been relegated from one of the richest states to a poor one like today.
Another good example akin to the Perak demise is Terengganu. If all the oil royalties go to the people of Terengganu, Terengganu would be an advanced state at par with Selangor. But unfortunately, these royalties go to the pockets of BN politicians and cronies in the form of “Duit Esan”.
Researched from Steven Schlossstein’s book, Asia’s New Little Dragons.