[MALAYSIA’S ALTERNATIVE STRATEGY]
Introduction
The 1997 Asian Financial Crisis drew attention to just how fragile our global economic system can become either when overexposed to foreign market intervention, or when underperformance remains unchecked. Prior to June 1997, The Republic of Korea encountered issues as 10 of its 30 top performing chaebol (Conglomerate) collapsed underneath debt which far exceeded their respective equities. Korean steel production giant Hanbo faced additional stress after amassing a $4.39 billion debt for one new steel mill. Kia Motors fell due to accruing almost $2.1 billion in loans that was awarded on the basis of “need,” as opposed to independent judgment of credit and cash flow determined by the lending authority. Central banking authorities in Indonesia, Hong Kong, Thailand, the Philippines, and Malaysia came under threat as their respective currencies were jolted by speculative attacks from foreign investors. Political theorists have multiple assumptions behind what was the absolute cause behind the Asian Financial Crisis of 1997, but one country most analysts focus on is Thailand.
Asian Financial Crisis – Thailand
From 1987 to 1996 Thailand experienced a current account deficit averaging -5.4 percent of GDP per year, and the deficit continued to increase. In 1996, the current account deficit accounted for -7.887 percent of GDP ($14.351 billion). Aware of Thailand's economic problems and its currency basket exchange rate, foreign speculators were certain that the government would again devalue the baht. In the spot market, to force devaluation speculators took out loans in baht and made loans in dollars. In the forward market, speculators bet against the currency by contracting wit...
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The fact that majority of the capital funds was in the form of portfolio capital instead of foreign direct investment (FDI) had also worsen the situation. The ratio of portfolio capital to FDI had increased substantially from 1:1.3 in 1990 to 1:6.5 in 1993. Given the volatile nature, portfolio capital tends to respond with greater speed to changes in the environment.
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One caveat to the strength of Singapore’s is the amount of foreign investments there. Its economy is not as diverse as the United States. Recently, the government has invested in diversifying the economy. As a result, the tourism, pharmaceutical, and many other industries have flourished. However, competition among financial institutions, particularly in banking, is significant and should be considered as it is one of Singapore’s core elements in its economy. PESTLE analysis also reflects this and others such as labor shortages, rising labor costs and a decline in
The inflation rate of Thailand was the lowest during 1998. From 1997 to 1998, to solve the Asian financi...
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...adopted to maintain stability and social ethics for observing law and order (Ash and Greene 61). Through the legislative governance, the investors became free to invest as restrictions for trade were eliminated and this catapulted the revenues in foreign exchange to match that of developed countries. Although it encountered some problems during its transition, the investment opportunities it bore helped project the economic growth to its current position of among the fastest growing economy (Chakrabarti 71).
The post- New Order regimes have had to try and manage the aftermath of the Asian Financial Crisis (AFC), while simultaneously dealing with the repercussions of the Suharto regime. An area that this greatly impacted was the Indonesian business sector, which was struggling between the flight of the capital during the AFC, the IMF regulations and changes, and its corrupt business culture. Ultimately the new governments failed to properly address these issues creating an uncertain business and economic environment. The New Order regime left a lasting legacy of cronyism and nepotism, this opaque culture managed to survive the transition to democracy as it served both the political and business elite. The private sectors gains have often come at the expense of public welfare and the elite have used their political influence to block threatening reforms and to protect their interests. (Hamilton- Hart)
The GDP of Malaysia on that time was equal to GDP of such countries as Haiti, Honduras and Egypt and approximately less on 5% of GDP Ghana. Nowadays the income of Malaysia is greater than income of Ghana on 7,8 %, greater on 5 % of income of Honduras, and greater on 2,5 % of income of Egypt. In the list of world developing countries Malaysia taking the first place as China, Taiwan, South Korea and Thailand. The economists of the whole world ...
Singapore as a country has had various transformations throughout its history, however the period 1950 and 1970 was quite critical. Much of these changes had a lot to do with the development of trade and manufacturing. This is without forgetting the financial sector where the intention was to come up with a financial hub that could be used in economic development. Looking at the case of Singapore, we would say that it is a productive economy with a very high market competition. This observation has been further clarified by the Swiss International Institute for Management Development, going with their report that they released in the year 2001 (Chellaraj & Mattoo, 2009). In this study, we intend to evaluate the case of political economy of development in Singapore and examine the tensions between the state and various economic institutions. In additions to examining this institution, we would also like to examine how these variables have contributed towards the attainment of favorable growth rates and economic prosperity.
In addition, after the 2011 Singapore general election, the government of Singapore has greatly changed its economic approach and it seems to be better for the economy of Singapore so far. On the other hand, measures have also been taken to cool down the property market which has constantly affected inflation rates, also tightened the foreign labour policies that constantly influence the labour market and unfold its impacts onto the Singapore’s economy as it comes back in one round. The unemployment rate in Singapore has been maintaining itself as being one of the lowest numbers in the world. The majority of Singapore’s labour force is well educated and highly skilled. Even primary education is a must for all citizens (Economywatch.com, 2010). In addition, for the year 2010, Singapore had the 8th largest current account balance in the world at US$49.454 billion. To conclude, Singapore has come so far from its sunken economy since independence in 1965 to become a booming and prosperous economy that it is
Singapore’s economy is of a good reputation, and its stability in growth has earned the country the title “Asian tiger.” With a high dependency on exports, the country faces international crises. Its location serves...
Warwick J. McKibbin, and Andrew Stoeckel. “The Global Financial Crisis: Causes and Consequences.” Lowy Institute for International Policy 2.09 (2009): 1. PDF file.
Singapore's economy is relatively stable and growing, albeit being slightly affected by global economic woes. As a whole, there are low levels of unemployment and GDP per capita is high(Worldbank,2013), hence implying more disposable income that nationals have to spend. Nonetheless, spurred on by soaring ...