[This is from today's International Herald Tribune. I'm sure things are a lot worse for poor people. But I imagined they would be a lot worse for the middle classes in an economy that shrunk 5% last year. Not to mention one whose leader so offended capital as to introduce controls.]
Paris, Friday, February 5, 1999
Average Malaysians Ask: 'What Crisis?'
By Thomas Fuller International Herald Tribune
ALOR GAJAH, Malaysia - It has been 18 months since Haris Aziz and his
family began hearing the words ''economic crisis'' and by now one
might have expected them to be feeling the pinch.
Yet, on a recent morning, when Mr. Haris, 42, his four brothers and
their younger sister came together from around Malaysia for a reunion
at their parents' wooden stilt house here, family members said little
had changed in their lives since the onset of the crisis.
No one with a job had taken a pay cut - their professions range from
banking to shipping to teaching to manufacturing herbal medicines. On
the contrary: Mr. Haris's brother, Rahmat, 33, recently changed jobs
because the bank he was working for did not give him a big enough
bonus.
The youngest sibling, Rozilawati, 26, was laid off a year ago from a
company that sells locks. But that did not stop her and her husband
from buying a 51,000-ringgit ($13,500) car a week before attending the
family reunion. She has since found another job.
Looking at Mr. Haris's extended family, one might be tempted to
question the notion of an economic ''crisis'' in Malaysia.
A year and a half after the onset of what was billed as this country's
worst economic turmoil since independence in 1957, investors and
corporate high-fliers have been brought down to earth. But the
financial turmoil has been far from devastating for the average
Malaysian.
The unemployment rate hovers at about 5 percent, twice the rate of the
boom years, yet the country has a million foreign workers filling jobs
necessary to keep the economy moving. The official inflation rate is
also about 5 percent, much higher than in most developed economies,
but hardly hyperinflation. The value of both the stock market and the
ringgit plunged sharply in the first month of the crisis, but now the
currency is pegged to the dollar and stocks have registered sharp
gains since September.
''If you're looking for a cataclysmic situation, you won't find it,''
said Jomo K.S., professor of economics at the University of Malaya.
''I think we have to recognize this crisis for what it is. It began as
a currency crisis and it became a financial crisis and now a
recession. Some sectors of the economy have been smashed. But most are
doing reasonably well.''
Economists caution, however, that although Malaysia may have exhibited
resilience in the face of the crisis, there is no telling how much
longer the country can handle a deep recession.
''If the economy doesn't reverse itself by the middle of this year,
you might start seeing some of the acute problems that our neighbors
have,'' said Mohammed Ariff, executive director of the Malaysian
Institute of Economic Research.
Malaysia's economic crisis - like economic downturns the world over -
is often calculated using relatively abstract economic data:
industrial production figures, the rise and fall of exports and change
in gross domestic product, a broad measure of goods and services.
Indeed, by many of these calculations, Malaysia is facing its worst
economic crisis in decades. The economy shrank last year by about 6
percent - a radical shift from the boom-years average of 8 percent
annual growth.
What is striking is how this decline in economic activity has barely
dented the lives of people like Mr. Haris. He and his family say they
are spending less and putting off plans for foreign holidays. But seen
in the scope of their lives - and indeed an entire generation of
Malaysians who grew up in poor, rural environments but who now live in
modern cities - the crisis seems but a blip.
Mr. Haris was raised by his grandparents, who taught him to plant a
rice paddy and tend to the rambutan tree in the back yard. Today he is
the human resources manager of the country's largest port. He has an
Indonesian maid - very common among the country's upper middle class -
as well as two cars and a house in the suburbs of Kuala Lumpur.
And despite the economic crisis, none of that seems in jeopardy.
It is perhaps a sign of the times that one of the most contentious
political issues in Malaysia today is not the alleviation of poverty
or unemployment, but an increase in highway tolls. Opposition
politicians staged protests last month near toll booths just outside
Kuala Lumpur, a modern capital that seems to belie all signs of
crisis. Shopping malls are still bustling, and restaurants and bars in
the city's trendy nightspots are still full, even on weekdays.
''These are things that puzzle a lot of people,'' Mr. Ariff of the
Malaysian Institute of Economic Research said. ''Visitors to KL say:
'Crisis? What crisis?' The city is as active and animated as it was
and people are just as busy. They don't see the crisis by looking
around KL. When they go to Jakarta, they can see the crisis. When they
go to Bangkok, they can see it. But in KL they don't.''
Many Malaysians say that foreign perceptions of the country are worse
than the country's economic realities.
That is perhaps partly due to the high-profile rhetoric of Prime
Minister Mahathir bin Mohamad, who often speaks in provocative terms
of the destructiveness of the crisis on people's lives.
Art may have played a minor role in creating a perception of misery in
Malaysia. Kow Leong Kiang, a young Malaysian painter, last year won
first place in a Southeast Asian painting competition for a work
titled ''Mr. Foreign Speculator, Stop Damaging Our Country!'' The
painting is apocalyptic: Three young children dressed in rags stand
sour-faced in a blood-red field surrounded by sickly looking water
buffaloes.
But one would be hard-pressed to find such a scene of abject poverty
and suffering in Malaysia. The country's resilience to the crisis,
economists say, comes both from its relative affluence before the
crisis and the large number of foreign workers who ''cushion'' the
impact for Malaysians. As many as a million foreign workers have gone
home to places like Indonesia, Bangladesh and Thailand since the
crisis started.
The diversification of the Malaysian economy is another factor. Mr.
Jomo points out that damage to the economy has been concentrated in
the finance, construction and real estate sectors.
Demand for such items as computer chips and television sets remains
relatively steady. High prices for major agricultural products have
also mitigated the effects on the hardest-hit sectors.
''Certain sectors are doing extremely well,'' said Yeap Jin Soo, a
partner at Korn/Ferry International (Malaysia) Sdn., a head-hunting
firm in Kuala Lumpur. Mr. Yeap said the market for top executives
among multinational corporations remained ''tight.''