ABSTRACT
Moody's upgrading of Malaysia's financial health in October 1999 boosted not only the stock market it also triggered even more specula tion of a snap election since Mahathir could go to the people with more confidence as it were. But a number of issues had bothered Mahathir and he had to tread cautiously. Prime among them was the business community notably heavily-indebted bumiputras who had looked to Mahathir and Daim Zainuddin for redemption not unlike the generosity of NEP. It would have been politically inexpedient for Mahathir to help them while allegations of bailout for his own son, Mirzan, and Halim Saad of Renong and MAS' Tajudin Ramli were still fresh on everybody's mind. He pleaded with the Chinese to help salvage Malay business, and the Chinese business community responded positively and said that 'it's only right that the stronger help the weaker'.^"'
The Chinese in return exacted concessions on the issue of the banks' merger by asking that there should be a total of eight which Mahathir readily conceded. That effectively put paid to Finance Min ister Daim Zainuddin's recommendation of six which he had previ ously declared was the government's official position. In a country where the Chinese virtually own most banks, the question of merger was an obvious concern because it literally meant that some banks were asked to close down. Daim felt that the proliferation of banks in recent years was the cause of unhealthy competition that had contrib uted to the large non-performing loans that had emerged during the financial crisis and for which Malaysia had been severely criticized by the IMF. Daim no doubt felt rather undermined being over-ridden so publicly by Mahathir.
