Malaysia and Southeast Asia rise as the rest of the world faces economic storms
IT certainly does look like Malaysia and the region is the only part of the world making the most of the opportunities offered by a global economy in turmoil. Innuendo and even studied projections are drawing worst case scenarios, including but not limited to a break-up of the eurozone. Malaysia, on the other hand, has clocked up second-quarter growth exceeding expectations, surging from a readjusted first-quarter growth of 4.9 per cent to 5.4 per cent. Much of it is attributed to strong domestic demand with private consumption rising by 8.8 per cent. Private sector investment growth was at an exceptionally high 26.1 per cent. The figures defy the critics: confidence in the economy remained high, among both investors and consumers. Of course, what most surely underpinned this are the proactive policies of Putrajaya, especially the Economic Transformation Programme, where targets set have been exceeded.
In a very sobering global economic backdrop, where profligacy on the part of some developed countries is getting short shrift from the international community, a newly industrialised nation like Malaysia can have but one option: self-reliance. Contriving an increase in private consumption through wealth creation and distribution while reining in debt to mitigate non-performing loans have paid off for the overall economy. At the same time, generous access to credit for private sector investment in the second quarter is testament to the faith financial institutions have in the government's grand design, which is targeted to produce the desired outcomes of a country planning to survive a predicted perfect economic storm.
More importantly, Malaysia is not bucking the trend in isolation. The aggressive investment policies of Asean companies -- both private and government-linked -- indicate they are flush with funds, enough to defeat major international players. Royal Dutch Shell, for example, was beaten by a relatively unknown Thai company for a UK-listed oil and gas explorer. No longer is the Asian scene dominated by foreign brands. Southeast Asian companies are also forging ahead acquiring assets all over the world and outbidding major Western competitors. Obviously, the financial market is happy to assist Asean companies on the acquisition trail. This interest is not surprising, given the enormous debt overhang in the United States and Europe. Bailing out banks thought too large to fail has been very costly for the nations involved, without really boosting the real economy. Contrast this with what Putrajaya has achieved from a legacy of fiscal prudence. The current bundle of innovative public policies and continuing political stability has defied the gravity of the rest of the world sinking slowly into recession.