Austerity and Independence in Malaysia 9th December 1997 Back to Asia Pacific Management News Menu | Asia Business News Portal | Asia Business News Feeds | Asia Pacific Management Forum Lean and Nosey like a Chao Phraya River Rat

Much excitement in the Rat's nest end of last week as Malaysian friends of the Rat passed on the news of an "emergency" press conference announced by Malaysian Finance Minister Datuk Seri Anwar Ibrahim. Speculation ranged from a resignation announcement, to the calling in of the IMF. Alas the excitement was not to be, Anwar being a more measured man than his boss and less enamored of colorful statements. Anwar's press conference turned out to be a more boring but still significant announcement of austerity measures designed to stabilize the Malaysian economy as an add on to an already responsible budget handed down on 17th October. Key points announced on Friday and subsequently, include: Growth estimates for next year reduced from 7% (minimum) to 4 to 5%. (Read 4%.. Eds..) 18% cut in Federal government expenditure Freeze on new listings, rights issues, and corporate restructuring Postponement of "mega-projects" (unnamed..Eds..) postponed Freeze on housing projects not already commenced, excluding low income projects. Rescheduling of "lumpy" imports in particular by MAS (exclusively foreseen by Rat insiders a couple of weeks ago..) and MISC 10% pay cut for ministers and their deputies Tightening of banking and corporate sectors The Malaysian response to current regional downturns is tougher than those already announced in Thailand and Indonesia, both more severely affected, and the inevitable reduction in salaries coupled with cost rises in imported goods, will have a substantial effect on consumer spending power for at least the next couple of years. Additionally, the last few weeks have seen a plethora of public statements from Mahathir especially calling on Malaysian business's nationalism and patriotism to resist rising prices and to employees to resist asking for wage rises. In typical Malaysian fashion, Mahathir has less asked for these measures than thanked for people for not doing so. A bit like those "Thank you for not smoking signs" that alternatively seem very polite or over-presumptuous, depending on how you are feeling on the day. ..And how desperate you are for a rokok... These comments serve as a gentle reminder to those who have been the recipient of government formal and informal largesse in the last few years. Significantly, Sime Darby DECREASED their price for Palm Oil yesterday. To those who know who they are, Mahathir is whispering that it is now pay-back time... Behind the strong and painful measure is a commitment at government levels to avoid IMF intervention, ala Thailand, Indonesia and South Korea, at all costs. Mahathir is explaining this by the less independence that IMF measures will give the Malaysian economy in the future. Other less kind correspondents are suggesting that it may have something to do with skeletons in the cupboard that an IMF bail out may uncover. In any case, an IMF bail-out is a last resort. Finally, the most obvious measures are being encouraged. BUY LOCAL screams the message. Everything from university degrees to packaged goods are being targeted, with the clout of tax re-arrangements as the big stick behind the smiling face. If Malaysians heed the call, foreign exporters to Malaysia are in for a hard time in the future. And just as well.. ...as the Rat has argued before, now is the best ever time for the Asian people to rekindle their fondness for things made and produced by their compatriots, and at the same time recapture our unique cultures and heritage.

© Asian Business Strategy & Street Intelligence Ezine 1997
The views expressed here may not necessarily reflect those of Orient Pacific Century or partners of the Asia Pacific Management Forum

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