Average Malaysians Ask: 'What Crisis? ' 
International Herald Tribune
February 5, 1999
Thomas Fuller

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."

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