OF HAZY DAYS AHEAD, & TAKING STOCK.....

Dr David Quek

dquek@pc.jaring.my

De facto currency devaluation, collapse of the country's stock exchange and value, speculative attack from foreign manipulators, growing current account deficit, overheated economy (?), and now the haze which continues to envelop the entire country with a seemingly stagnant nondispersing cloud of uncertainty, frustration and even a sense of hopelessness and vulnerability.

Is Malaysia and are Malaysians losing their grip? Are we slipping away from our previously star-studded forecast of being an emerging economic tiger? Is our Vision 2020 in jeopardy of being stillborn? Is Malaysia's future built on a pile of quicksand, as alleged by a reader in Newsweek? Are Malaysian egos so inflated, that we've got it all wrong? Are we blaming the West and foreigners too much for our self-created problems?

In the throes of such a challenging and unrelenting cascade of economic and environmental tribulations, it is certainly time for all Malaysians to sit down and take stock. It is only prudent to analyse how in so short a time, we could have been so swallowed up in the quagmire of uncertainty and such unpredictable losses.

Are we now experiencing the Latin tequila crisis that some economists such as Paul Krugman, the contrarian MIT professor has predicted for the "perspiration" economies of Asia? Perhaps, we have to come to grips with the reality that Asians and Malaysians are indeed no different from anyone else, that we do indeed "live in the same economic universe." Perhaps, we have for too long deceived ourselves that we belong to the exclusive club of the so-called Asian miracle.

Should we not accept that perhaps we have had a hand in this slowdown? Or do we continue to find the elusive bogeymen whom we can finally place the blame? Notwithstanding the George Soros's of the manipulative world, and other hedge funds and currency players, what can we do about them? In truth, not much at all.

Perhaps, we have to really consider increasing our productivity several fold to match those of the west, and not depend too much on speculative foreign investments which have created a false sense of overflowing liquidity and easy wealth, such that we begin to indulge in excessive, grandiose and ultimately wasteful projects. Have we forgotten the economic bubble burst of Japan not too long ago?

Are we losing sight of our much vaunted Asian pragmatism and high savings, and getting caught in a self-congratulatory orgy of profligate monument building? Consider for one moment the following:

Do we need to import foreign palm trees at RM 3,000 per piece to line our already tree-lined boulevards? Do we need ornate foreign-looking lamp-posts, and exotic lighting for the same purpose?

Do we need to reclaim land from the sea when we still have so much more, for so small a population of 21 million? Do we need to cut through our pristine mountain range in order to road-link our hill resorts?

Must we allow utilisation of every spare piece of land for multistorey buildings, no matter how close they are to designated residential houses? No matter that they were the only sites for a playing field or a children's playground? Should we re-designate residential zones to cater to the ambitious and avaricious big-time investor so that it is now industrial or commercial? Must everything be measured in ringgit and sen?

Should we re-locate traditional and heritage schools to allow re-development in already congested areas of the city? Would old boys and girls be able to return to their alumni in ten or even five years' time? Are we so quickly losing touch with our tradition and history, that we allow ourselves to forget, the sentimental parts and nurturing aspects of our lives which perhaps may serve as an anchor to our sanity?

Do we need to build unrealistically expensive Linear cities to cover up our city rivers, when we are already facing interminable chock-a-block traffic snarls, within the city centre?

Do we need so many more mega-malls when older ones are already suffering from severe customer depletion and plummeting retail sales?

Do we really need so many millions of square feet of office spaces when many lie visibly idle, despite the contention from realty managers that 95% of these are occupied?

Do we need these monuments which are often more visually interesting rather than functional? More importantly, can we really afford them?

But we continue to build more and more shopping malls, shophouses, condominiums, towering office blocks. For whom, if not purely for the speculator or investor. As pointed out by Prof. KS Jomo recently in Money Matters (TV3), these are not productive enterprises, and these constructions consume huge amounts of funds, both from within and without the country. And these incur purchases of imported cranes, construction machinery and materials, which inflate the current account deficit even more. Ironically, these require foreign labour to build them as well. All these accounting for the further loss of foreign exchange.

We have to radically shift our economic practice towards more productive ones. We have to produce more value added goods so that these can be exported and therefore attract real income. We have to realise that there is no such thing as a free lunch. We cannot keep buying without selling. We cannot create wealth from paper gains alone. Someone or something has got to give.

Our erstwhile foreign investors and fund managers have recently attested to this. What they are interested in, is purely to reap the maximum profits from whatever short-term projects, they deem fit for the easy picking. When the going gets tough, they very quickly show their true colours and are extremely adept at abandoning ship. Thus, the flight of our capital investments and the sorry plight of our current stock market, and our precious ringgit. We are now after one month of speculative pressure, 20% poorer in ringgit terms and down almost half as much in terms of our hard-earned wealth!

Whilst it is true that many of these follow a herd instinct (from the knock-on effect of our neighbours) with the pressure to sell and dump Malaysian stocks and ringgit, there is also a credibility crisis. And this is on top of whatever good and sound economic fundamentals there may be in our system, as so forcefully reassured by our Deputy Prime Minister, YAB Dato Seri Anwar Ibrahim.

Clearly we have to begin to help ourselves, we have to put our house in order. Everyone of us has to play our part to be more productive, in carrying out our jobs and professions as well as we can. We can try to be less wasteful, and try to discourage uneconomic projects by not becoming a part of the system which is clearly unwinding if not already self-destructing. We can urge the authorities to consider adjusting their priorities and their plans.

We can learn to re-orientate ourselves to subsume to a stronger and more united Malaysian culture committed to high productivity, a diligent work ethos, who are health and environmentally conscious citizens with a thrifty image renown for high savings.

While we continue to believe in ourselves, Malaysians must now try to attain a higher moral ground to excel, and to be world beaters. But we have to show that we can, by tackling the very many contentious issues which have caused the world to increasingly look down at us with caution and wariness. We have to rebuild our "Can-Do"-ism, and our credibility. Amidst the ongoing haze, each one of us have to take stock, and now is as good a time as any.

/Sept 97

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