Friday 29 Mar 2024
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WITH globalisation changing the way business is done, investors should think outside the box and consider non-ringgit transactions when managing their portfolio, says economist and former central banker Tan Sri Lin See-Yan.

Many Malaysians lack a diversified portfolio with foreign investments, but this is something they should have right now. “We forget that the world has changed,” Lin points out. 

“Thirty years ago, if I were an investor in Singapore, I would have half my portfolio in Malaysia and half in Singapore, and I would do well. Today, the Singaporean investor would have less than 10% of his portfolio in Singapore, less than 5% in Malaysia and the remainder invested in the rest of the world,” he adds. 

What does this mean? It simply means that now, investors must understand interest rate risk, exchange rate risk, political risk and so on, Lin says. “I am not saying that you do not invest in Malaysia. I am saying you can invest, but be aware of your options [in other markets],” he clarifies.

Malaysian investors are so accustomed to making transactions in the ringgit. But in Singapore, investors often discuss investments that go beyond their borders, Lin points out.

“If you go to Singapore and sit in a coffee shop or at a dinner, they often talk about investments. But they are not talking about the Singapore Exchange, they are talking about yen stocks and Apple shares.

They know how to handle them,” he adds. 

However, not many Malaysians understand the global markets, Lin says. “You don’t have to take risks, but you have to know what the risks are. That is why when I write my columns, I try to educate people on looking outside Malaysia, to understand what is happening around the world. That is what we need to do as simple investors.” 

Lin recently published The Global Economy in Turbulent Times, a compilation of his articles written over the years. The book contains his views on the global economy during the Great Recession years since 2008.

Lin notes that the ordinary investor, more often than not, does not take political risk into consideration when making financial decisions. Yet, it is something one should be wary of. 

“Politics is very real. In whatever you are doing, you must take politics into account,” he says. “Risks will always be there. You need to manage your risks, given the politics.”

Some people may believe that they are not involved in politics, but Lin argues that whether one likes it or not, politics affects every aspect of our lives, including the economy, the shares investors buy and the price of things in general. As the political situation is unstable at this point of time, Lin strongly holds that investors should be more aware, and even more so if the public sector’s involvement in business is very significant. 

But this was not always the case. “We used to be more stable in terms of politics. In my time, you would not have to worry about politics. It was predictable. Today, it is not. Now, you don’t know what is going to happen tomorrow,” he laments.

Lin has been writing a column for a local newspaper for about six years now. He says that he had three main objectives for penning his opinions. 

“One, I wanted it to be educational. Two, I write to give people my interpretation of things. Lastly, it is a commentary. I always end my articles with what are we to do [given the current situation].” 

Over the years, he has written on a myriad of subjects, from pure economics and finance to education, environment and governance. Lin’s decades of experience as a central banker with Bank Negara Malaysia have given him a unique perspective on the ongoing state of affairs. 

“You see, I was trained very differently from bankers today. Alongside [Tan Sri] Andrew Sheng and a few others, we did things at the central bank that no other central bank did,” he reminisces. 

When Lin joined Bank Negara, he was only 21. There were six economics graduates working at the bank at the time. “The moment I joined, I was seconded to the Department of Statistics to compile the balance of payment numbers,” he says. Back then, there were no statistics to speak of, so his role was to compile them. 

“I worked under this tall statistician named Harvey. He gave me a file and told me that was all he had. But it was empty,” he laughs. 

“I was given six months to compile the balance of payments and present it in London. I knew nothing [about statistics], but I compiled and presented Malaysia’s balance of payments at the Commonwealth meeting in London in six months.” 

Though he knew little about statistics back then, Lin says his paper was accepted and until today, some of his methods are still in practice. Later on, he went on to do an economic and functional classification of government accounts. 

“I looked at the public sector as a whole and compiled how much wages and salaries were, how much went to debt servicing, scholarships, capital expenditure and so on,” he says. 

Lin spent a year working at the International Monetary Fund (IMF) before returning to the central bank and subsequently pursuing his PhD at Harvard University. After his postgraduate studies, he returned to Bank Negara where he served until retirement. 

Lin had a very interesting career at the central bank, even in the early days. “When I was very young, still in my twenties, I traded in rubber,” he recalls. 

Lin was sent to China in 1974 by then prime minister Tun Abdul Razak Hussein to sell rubber to the Chinese. It was during the Cultural Revolution and the idea was for him to sell rubber directly to the country instead of having it exported to Singapore before being sold to China later on. 

“I dealt with Zhou En-Lai and negotiated with him. He was a nice and very wise man. At the end of our discussion, he agreed to buy rubber from Malaysia. He asked, ‘How many tonnes do you want to sell?’ Zhou also said to me, ‘You are my new friend, but I will not abandon my old friends. I will still buy from Singapore but I will also buy from you. So, everybody is happy.’”

During the day, Lin went to a local rubber dealer’s office to learn how to trade rubber. And at 7pm, when the London market opened, he would trade the commodity. “We traded on behalf of the government, on behalf of Felda,” he says. 

Later on, Lin set up a rubber contract which is still in place today. He also sat on the board of the local rubber exchange. He was in the business of understanding businesses and that, he says, is the role of a central banker. 

During his 35-year stint at Bank Negara, he had many side projects, including three years as an adviser to the People’s Bank of China, which was under then governor Zhu Rong Ji. “I helped draft its central bank and banking laws,” says Lin.

After he retired, he pursued other challenges. He had never run a commercial bank before, so when a friend approached him to run Pacific Bank, he agreed to do it. But he quit after three years. 

“Running a commercial bank is boring. But running a central bank is exciting because I did a lot of policy work. For example, I negotiated for two years for a common currency and banking system between Malaysia and Singapore,” he says. 

Lin also helped set up Malaysia’s first joint stock exchange. “Those days, it was easy to make money. There was a lot of arbitrage. But once I set up the first joint stock exchange in Bank Negara with a telephone system, that was the end of arbitrage,” he says. 

 

This story first appeared in our new digital publication Wealth, a section within the new digitalEdge weekly. Click here to subscribe to our digital products for the next three months. 

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