(Penang, Friday): Two months ago, an important member of the NEAC, Tan Sri Nordin Sopiee wrote an article in a local publication, The Edge, under the title "Time to wake up, rebuild and fight back", starting with the sentence "The current economic turmoil reminds us of the virtue of humility and the vice of arrogance".
He wrote:
"Hopefully, now or very soon, we can get on with the task of rebuilding our strength and resilience. The bullets that need to be bitten have to be bitten, however bitter they may be. The belts that need to be tightened around girths made too large through years of the good life have to be tightened, till it hurts.
"Things that were unimaginable will soon appear not only imaginable but also blatantly clear. Things that were not possible will soon become not only very possible but also urgently necessary.
"Unfortunately, most of our people, including those who should know better, are still asleep and have no idea what damage has been done by the economic tornado that has swept over us. It is time that they wake up … or that they are woken up.
"If we have to throw water over their heads, we must do it. If we must shake them by their shoulders, we should do so. If they must be shocked into reality, it must be done."
He continued:
"If Malaysia does most of the right things immediately, and with just a little bit of luck, the painful period ahead could be as short as two years. If we are unable to respond to the challenges that will be thrown at us by the international economic system, and if we are unlucky, we should set aside four years of tough times.
"If we do all the wrong things and if we are truly unlucky, don’t count on going back to business as usual. There are many countries in history who reach a peak and forever languish, never rising to a higher plane. And history is full of cases where societies have simply gone downhill and do not step heading south."
What frightens me is that looking at the composition of the NEAC, there are members who belong to the category of those who are "still asleep" and have not woken up!
In the past seven months of the national economic crisis, we have not done all the wrong things, but we have not done many right things either. The verdict is still out whether the painfully tough times ahead for Malaysia is going to be two years or four years - and this is why it is shocking that the people are being told that there could be economic recovery in six months to a year.
In this connection, it will do Malaysians good to listen to the views of experts and the experienced, whether he be futurist author John Naisbitt who said in Kota Kinabalu on Monday that he expected a recovery in Malaysia in 18 months or Singapore Senior Minister, Lee Kuan Yew, who said in Bangkok two days ago that " East Asia can recover from its current economic crisis in two to three years if the governments and people are united in implementing the hard painful measures needed". Speaking at the National Defence College of Thailand, titled "How and when will East Asia recover", Lee highlighted two key inter-related factors that caused the crisis that has gripped East Asia.
He said:
"The first is euphoria which resulted in reckless and excessive private sector borrowing. The second is panic and the subsequent collapse of investor confidence, a contagion that got out of control."
Lee noted that while private companies were the main borrowers, governments were to blame for failing to check excessive borrowing. Indeed, they abetted the process by adopting policies which created a euphoric environment.
He said:
"It is a war against ourselves. We failed to see that we had entered into a new global financial market, in which with a computer we are instantly linked up to all the financial centres of the world.
"And not understanding that, we did not take heed, not notice the warning signs, the amber light before it turned red. The amber light was shining and blinking but the governments were too busy expanding to notice that we had reached the danger zone."
On what can be done, Lee said:
"Although the situation looks bleak at the moment, history shows that all financial crises eventually subside and the economies recover."
The question is how long it will take, and whether governments can do anything to speed up the process. While governments have little direct control over market reactions, they can restore confidence by addressing market concerns – in particular, external debt, the soundness of the financial and corporate sectors, and money supply and interest rates.
Warning that pain was unavoidable, he added:
"By pain I mean many bankruptcies of companies which are overexposed (to debt), many bankruptcies of banks which are badly managed. With the bankruptcies come unemployment, many uncompleted projects."
I have openly disagreed with what Lee had said about law and order in Johore or his exposition of Asian Values to justify the suppression of democratic freedoms and human rights but what he said about the Asian economic crisis contains a lot of wisdom which deserves our serious attention.
(23/1/98)