INTRODUCTION Well managed fiscal policy leads to upward growth trend
Diversification puts economy in good shape

Business is looking up for Malaysian firms

nce hailed as a tiger economy of southeast Asia, Malaysia’s fortunes have been affected by the global slowdown in trade, in common with many other states in the region. But indicators this year point to an upward growth trend, aided by a well-managed fiscal policy and improved economic climate.
Diversification of the economy, particularly into IT and high-end manufacturing, has provided Malaysia with a broader export base, which is less vulnerable to downturns in world markets. A quarter of Malaysia’s exports go to the US, so any recession there will hit the Asean state hard.

Nevertheless, the Malaysia economy is in good shape, faring better than many of its neighbours. Foreign exchange reserves and savings rates are both high, and inflation levels are expected to remain low – they have been averaging two to three per cent for several years.
The financial crisis that overran Malaysia and southeast Asia in 1997-98 now seems a distant memory. Consumer confidence and, more importantly, investor confidence has returned, boding well for domestic expansion and growth within the region. This brighter outlook, combined with general concerns regarding China’s effect on the region, has caused a stir of activity among the Asean states.

AHMAD BADAWI, deputy prime minister, sees Asean as a body of like-minded people

Deputy prime minister Abdullah bin Haji Ahmad Badawi says: “We want to be an active member of the Asean. We are strongly comm-itted to it and we would like to vigorously implement the Asean free trade area.
“We are aware that some economies are at different levels, some are doing well and some not so well. But we see the Asean as a body of like-minded people, all committed to achieving regional prosperity, peace and stability.”
A stronger Malaysian economy will help to achieve this. Dr Zeti Akhtar Aziz, governor of Bank Negara Malaysia, the central bank, forecasts “strong growth” in the second half of 2002. He points out: “Malaysia’s economy is gradually changing into a knowledge-driven one, with financial services, telecommunications and so on. The economy is changing from being labour intensive to capital intensive.”

ABDUL KADIR, minister of arts, culture and tourism, says society is strengthened by a multi-ethnic population

The minister of culture, arts and tourism, Abdul Kadir bin Sheikh Fadzir, believes his society is strengthened by the multicultural and multi-ethnic population of 23 million people, who include Malays, Chinese and Indians. “We have so many races, religions, languages and cultures, but from the first day of our independence one of our major fundamental policies has been the fight against extremism,” he says.
Although Malaysia receives fewer tourists than neighbouring Thailand from Britain and elsewhere, Mr Abdul Kadir says: “Communication in the region is very good, especially between Thailand, Malaysia, Singapore and Indonesia.

I want to attract more tourists to my country, but I also want to attract as many as possible to my neighbours, because the more they have, the more tourists will spill over into Malaysia.”
Minister of works Samy Vellu says the govern-ment is making a huge push to improve infrastructure across the country. The North-South Expressway is complete and the East Coast Highway now under construction will eventually connect to Kuantan, the biggest port in the east of the Malaysian peninsular.
“Then the state of Pahang will start to be developed more,” says Mr Vellu. “Container cargo will be able to come from Kuantan to Kuala Lumpur. This is a fundamental thing that the government wants.”
The minister also remarks on the cooperation between Malaysia and its neighbours regarding infrastructure. For example, Malaysia supplies gas to Singapore and Singapore supplies fresh water in return. “The close relationship between the Asean countries has created greater cooperation in both trade and the manufacturing sector,” adds Mr Vellu.