Even though the country and the region have been feeling a bit down for quite some time with the flagging economy, it did not really dawn upon many that a recession is just around the corner.
It was only after the winding up of US investment bank Lehman Brothers and the subsequent bailouts of Morgan Stanley and Goldman Sachs by the US Federal Reserve did many wake up from their slumber.
Singapore's stock market has taken a massive hit. A bit farther, Iceland is on the brink of bankruptcy while Europe is struggling with a credit crunch and a slow property market.
While Malaysia is not in a recession yet, the secondary effects of one hitting the US and European markets will directly and indirectly affect us.
One by one, the indicators are showing all is not well.
On the local front, prices of commodities that have contributed significantly to our earnings — rubber, palm oil and crude oil — have dropped tremendously.
Oil prices reached an all-time high of US$150 per barrel earlier this year but have now come tumbling down to about US$70 per barrel.
In the 1997 Asian Financial Crisis, governments which were seen as not responding to mitigate the effects of economic slowdown were punished by their people.
“Doi Moi” in Thailand as well as “Reformasi” in Indonesia and Malaysia threatened and even caused some governments to fall.
This was highlighted by the fall of President Suharto of Indonesia, marking the end of more than two decades of autocratic rule.
The bailout recovery packages that were prescribed by the International Monetary Fund and World Bank for the region, especially for Thailand, Indonesia and Malaysia, were viewed as an act of “imperial invasion” by the West.
This was because these institutions seemingly demanded that certain preferential and protectionist policies be removed.
Malaysia, however, rejected IMF help as it felt the aid offered cringed on our sovereignty.
These institutions wanted to bail out countries on the condition that they subscribe to “good market economics”.
The bailout of Morgan Stanley and Goldman Sachs came with conditions attached too — transparency and accountability — which were the same conditions that the IMF demanded from Indonesia, Thailand and Korea when it came with their financial stimulus package.
We also introduced a rational belt-tightening budget, the kind of philosophy that “Joe the Plumber” — who bravely questioned Barack Obama's tax plans — subscribes to.
But it was neither nationalistic sentiments that helped us during the 1997/1998 economic crisis nor was it patriotism, but the action of some very bright people helming the nation’s financial heart, Bank Negara and the Securities Commission.
Malaysia’s central bank understood that it had to safeguard the banking industry at all cost, by being rigid and following procedures to the core that people called very bureaucratic.
Bank Negara and the Securities Commission have put regulations and more regulations in place to protect the banks and the markets.
Our markets were heavily regulated to a point that many foreign investors complained that the environment was not friendly and not conducive enough for investments.
Our markets are to an extent very insulated, maybe too insulated.
During the good times, when other countries were achieving growth by leaps and bounds, Malaysia, on the other hand, was recording very modest growth.
However, with the global economic outlook looking scary at the moment, Bank Negara and the Securities Commission stand out as messiahs which have largely mitigated and prevented a freefall in the markets.
We cannot deny that other aspects of our economy are not performing to expectation — productivity, investments and competitiveness.
The government has to understand the global market to ensure that we can manage our way through this current turmoil.
The economic stimulus must be able to address productivity concerns mainly through the development of a skilful and competent workforce.
Foreign direct investments must reach the relative high of the mid-‘90s to ensure continuous holistic development.
But in order to draw in high investments, our competitiveness must be shored up so as to ensure that our markets remain attractive.
To achieve this; integrity, transparency and accountability are the key words.
So, it is a worry that while the nation is grappling with the economic turmoil, our politicians are busy arguing on polarising issues — race, religion and patriotism.
Race and religion have both been unifying and divisive for the nation.
They have caused riots and conflicts before but they also unify people of all faiths, creed and religion during celebrations and festivities.
Nationalism and patriotism mean very little to the people on the street if their pockets are not filled and their welfare is not taken care of.
At this point of time, when the welfare of the people should be of utmost importance, our leaders are engrossed in polishing their rhetoric of race and patriotism.
When the discussion should be about unity in the face of global uncertainties, our leaders are talking about going back to basics and rediscovering their roots — basically, clawing back into their shells or crawling back into their caves.
However, calls for bipartisanship in Parliament in the effort to manage the economy as well as calls for “setiakawan” from both sides of the divide are comforting in this time of crisis.
Calls for an end to divisive right-wing politics resonate with many, as people need to feel secure and not be threatened with such politics of fear.
It is so easy for people to be distracted from the real issues.
The issue right here, right now, is the economy of the country and the welfare of the people.
This will only be achieved if government and private procurements are tendered to gain maximum returns.
Hence, the awarding of infrastructural, development and especially defence contracts worth billions must pass the litmus test of integrity.
All government institutions should be transparent and accountable to the people i.e. Parliament, none more so than our nation's flag bearer — Petronas.
With all this in place, our economy will be on track to survive the fiercest of times and in the end the welfare of the people as well as the nation will be safeguarded.
The article above reflects the personal view of the writer.
- The Malaysian Insider
