1. Prof Mahani Zainal Abidin
The Financial Crisis -
Ten Years After
Concurrent Session 1
Prof Mahani Zainal Abidin

2. Malaysia – 10 years after the crisis
Steady economic growth
Has instituted reforms
Maintains social cohesion
Deeper regional and global integration
But facing challenges to achieve higher level of economic development

3. Malaysian economy recovered well
Except for 2001 and 2003, on average the economy grew by 5.4% per annum
Exports continue their strong performance
High international reserves
New growth industries e.g. palm oil, tourism, education and health services

4. But, there are concerns
GDP growth below pre-crisis rate – need to create jobs
Some industries are still adjusting – automotive, construction
Smaller FDI inflow
Deficits have been narrowed but difficult to eliminate

5. Reforms are changing the structure of Malaysian economy
Consolidation of financial institutions
Stronger corporate governance – more stringent disclosure requirements
Exchange rate system
Corporate restructuring
Review of privatization projects and policy

6. Recovery without high social costs
Moderate social impact
Low inflation
Low unemployment
Racial harmony maintained
Majority of population benefited from economic growth
Political system proven robust

7. Deeper regional and global integration
Chiang Mai Initiatives
Macroeconomic monitoring of global and regional economies
Trade and investment liberalization, FTAs for a more competitive economy

8. Emerging developments that can be cause for concern
Global imbalances may trigger massive exchange rate adjustments
Massive capital flows, role of hedge funds
Stronger regional factors – China, Japan
Regional stock market boom – contagion effects

9. Can we weather the next crisis?
Has responded well to mini crises – September 11, SARS, oil price increases
Learnt from past experience – not over reacting e.g. ensuring sufficient liquidity when economy weakened
More regional and international coordination
But what will be the next crisis - massive short term capital movements, massive exchange rate adjustments?

10. Thank You