KUALA LUMPUR : The Asian crisis in the late 1990s was a wake-up call for the region that has turned out to be a blessing in disguise nearly 15 years later, as the region’s financial sector is now strong and able to sustain a certain degree of shocks from the fallout in the Western Hemisphere, according to a panellist at a recent Asean conference. There will be more crises in the future, and the Asian crisis in 1997-98 was a blessing, as the impact of 2008 would have been far worse for the region,
Nor Mohamed Yakcop the prime minister’s department Malaysia has been credited with the idea of pegging the ringgit to the US dollar and increasing government spending during the 1997-98 crisis in order to rescue the country from the region’s economic collapse. The plan, viewed as controversial at the time, was implemented by then-prime minister Mahathir Mohamad.
The headwinds from 2008 still exist and may return, and then we may have to find ways to fight it out, adding that Malaysia would have to be creative to achieve the goal of being a developed country by 2020. They implement a new model. The old model was good and has brought them for where we are today, but if we have to move forward, we need a new model that will take us further.” He urged countries in the region to look not just at growth but also productivity; Malaysia itself is now focusing on urban-led growth and niche cluster industries.
“We have moved away from having balanced growth and instead want niche industries,” the minister said, adding that various restrictions, such as those on foreign workers, are already being liberalised. The investments coming into Malaysia are filtered, as the country wants to get ready to take advantage of any possible dip in the global economy that could offer opportunities to expand its network. The idea he initiated in 1997-98 to spend and create more jobs was not a bad one, but in a financial crisis the government has to know when to step out as well. All the panellists agreed that Asia would emerge stronger from the current global crisis, with the only issues being how long the crisis would last and to what degree..
“Asia today has a current account surplus, is rich in resources, has lower leverage and is increasing investment, Despite all this, Asia is still not decoupled from global problems and could face trouble at any time, though the difference would be in the severity of the crisis. The panellists agreed that in the short term decoupling is not achievable, but that in the long term Asean and Asia would become more self-reliant. despite the strength and agility of Asia and Asean, the economic numbers paint a picture of deceleration in Singapore, Taiwan, Thailand, South Korea and Malaysia. High dependence on exports had been a big reason for the slowdown. But with the integration of the region, “If trade and investments flow freely, we will be the region to watch during the next century.