I've been relooking into the 1998 - 2001 Malaysian economy and discovered many great things. Not about the recession but about how we rebound and learn from our past mistakes. There have been hiccups here and there but yet we survived. I think IF given limited choice, which were the best two ideas that helped - I would vote for two (Of course it's the Legendary Tun M) :
a) 'controversial' decision to peg the RM to the USD and
b) Reintroducing/Rebranding of ICT & new technology
Between 1999 - 2000, new technology including ICT have been reintroduced 'cautiously' into the market and this time, the technology are there to stay and a lot of good things been happening. To mention a few, the Knowledge Management era, B2B/B2C and finally e-commerce.
Numbers of IPOs increased dramatically especially those having to do with technological stocks.
Early 2001 US Market a.k.a. NASDAQ experienced a 'burst of technological bubble'. The Feds attempted to minimize borrowings by increasing the rates to stop bubble burst but the effort came too late.
Then I dig further which leads me towards the fundamental principles of economy. I did say these sacred words (where was it huh?):
"If everybody want to sell, who wants to buy" or "If everyone is a supplier, who is the customer then?"
As you no doubt have guessed - the principle that I'm talking about is "Supply, Demand and Equilibrium" but in a different perspective.
Malaysia almost made the same mistake by giving out loans and grants (via Banks & Financial Institutions including some Government Agencies) but the businesses they were 'helping' are mostly suppliers/contractors/service providers/sellers etc and not customers. New products, New technologies - everything NEW - mostly claimed to 'assist the Government in their plans' but actually to 'make more money'. (In the end suppliers are flooding the market and not customers)
Again, I'm not implying that the business plans submitted didn't take into account the target market a.k.a. the customers but I'm just looking at the facts.
In laymen term, the customers at the point where borrowings were provided to the suppliers or sellers - are either :
a) loosing their purchasing powers quite rapidly.
b) Or did they have too many suppliers to choose hence, they thought of one good idea -
c) why not I just keep my money without spending them?
Then the banking and financial institutions have no choice but to increase the rate in order to minimize borrowings. Although this has; in a manner of speaking; helped in the 'rebounding process, - but again, there were little effort to help out the customers to regain their purchasing powers or increase promotion on buying rather than keeping.
The 'rich' customers did spend their money but based on my analysis on people going out for vacationing and business purposes overseas, these customers were spending outside Malaysia!
Despite the tourism industry did spur the growth of tourists coming in assisted by MIDA, MITI etc for prospects of domestic investment or export but nobody really tried to capture how much money Malaysians are spending outside? (Here, I'm referrring to those who did not use MITI or MIDA avenues to invest outside but rather - their own initiatives - perhaps due to some 'smart partnerships' or 'JVs' that were not announced in the medias. Apart from this category, I will not touch on those who used their money for crazy shopping spree or gambling (well..it's their rights)
The other customers? You've heard it all the time :
Those 'customers really loosing the purchasing power' (moderate or poor family) decided to spend their money by saving them or buying only the required consumables may not be able to invest in 'high end investments'.
Back to the future : (now)
Old habits never die.
We have experienced above 1000 KLCI achievements and suddenly (as I have said in another topic) the market become erratic. Yes, I did say that Banks and Financial Institutions including relevant Government Agencies should help and I must admit I was a bit wrong in my decision. (when I found out - loans and grants are focussing mainly on Suppliers again - as I speak)
So, how to balance and reach 'equilibrium'? (not necessarily 50%-50% - you can't do that)
I was speaking to a Malaysian friend working in the Middle East. He noticed one remarkable thing...it's not easy to find a 'poor guy or family'..everyone is working or at least doing business, or very rarely he heard that people cannot buy things over there.
Again, I dig further...my friend told me that if there is a poor guy and they got to know about it...two things will be done :
a. Giving him/her a sum of money to cater for himself and family, pay his/her debts/overheads etc.
b. Next, giving him a job with proper training and development so that he too can earn a salary just like everyone else,
c. Alternatively, he will be given (not a loan) a sum of money to open up a business (again with training) if he has interest in any kind of business or accepting suggestions from Government 'experts/consultants'.
(Yes, you might say that the Middle East have abundance of oil and everyone is rich. But this country in the Middle East is a LOT bigger than Malaysia. For Malaysia and its population, we also have enough supply of fuel/oil and abundance of resources for everyone as well..)
I'm not asking too much - all I'm hoping for we can take good examples - how we're going to do it..that is really up to us. I think 'good intentions' must also be there before we do everything.
So conclusion for now....make effort to 'balance up' between the 'sellers' and 'buyers'...you'll see improvements in economy..I guarantee it!
Here's my complaints for the day :
1) Funny, I still see 'genuine poor people' in Gombak who are really scared to ask for help because
a) they are illiterate or
b) been cheated with their ICs 'taken away' by unscrupulous people or
c) too scared to go to Government offices to ask for help or scared of procedures or scared of being chased out and many more.
2) Funny, for almost 10 years, I still see 'rats' and 'unattended garbages' - if we can't solve these two 'small problems' or start pointing hands to another party - then what more to solve problems of people?