THE influential Lex column in the Financial Times summed up best the foreign reaction to the outcome of the recent Malaysian general election when it said: “Malaysia is back.”
The column noted that “since the 1997 Asian market crisis, foreign investors have viewed the country with suspicion and even hostility.” Memories of capital controls took a long time to fade, the column said, adding that “even longer to dent were ingrained perceptions of crony capitalism.”
Lex said historically, the Malaysian market has traded at a premium to Asian peers. This is partly because of the limited free floats available in index heavyweights, which helped to drive up valuations.
“It will not take a huge inflow of funds chasing the Malaysian make-over story to squeeze prices up again,” the Lex column concluded.
What I would like to say is the 2004 general election outcome will not only have a big impact on foreign portfolio investments in Malaysia, but also Malaysia’s foreign relations, particularly with countries which it had recently had some prickly issues, like Singapore, the US and Australia.
The comprehensive rollback of the green tide of Islamic fundamentalism, as represented by PAS, is a source of immense relief for many of Malaysia’s traditional friends. How Malaysia dealt with the challenge from Islamic fundamentalism is a lesson many countries would do well to emulate.
Malaysia is back in the loop of countries in Asia that are working democracies, have open economies, are pro-business, and have pragmatic and moderate governments committed to reforms, good governance and social justice.
A day after the polls, I had a coffee break with two good journalist friends -- one from South Korea, the other from Pakistan.
Both congratulated Malaysians for voting wisely. They were truly impressed with the maturity of the Malaysian voters, and say they are envious of the good fortune of the country – a land of such rich natural resources, no population pressures, and now a bright political future.
My South Korean friend noted that his country is in crisis, and the future is uncertain. The president has been impeached, and deep divisions have surfaced within South Korean society, despite the economy bouncing back from the Asian financial crisis.
The Korean peninsula remains a flashpoint in Northeast Asia, and Seoul has a new worry: the political crisis in Taiwan following a hotly contested presidential election.
On the other side of the Asian continent, the political situation in Pakistan is fragile to say the least, despite recent moves to improve relations with archrival India.
President Pervez Musharraf is unpopular – he recently narrowly survived an assassination attempt – and the government has a big problem with the Islamic fundamentalists and terrorism.
My Korean and Pakistani friends are in agreement that in Southeast Asia, Malaysia and Thailand have the best prospects.
Many countries will be reassessing their relations with Malaysia following the massive mandate given to Datuk Seri Abdullah Ahmad Badawi. On its part, Malaysia needs to do some repair work.
Singapore has been quick on the ball. Premier Goh Chok Tong sent a very warm congratulatory message to Pak Lah including best wishes to the health of Datuk Paduka Seri Endon Mahmood. The two premiers have met three times and golf helps. Expect more Singaporean companies to invest in Malaysia.
The same goes for Japanese companies. Tokyo is reassured the strong bilateral ties will continue under Pak Lah.
Australia is anxious to re-connect. While Malaysian investments in and tourism to Australia have grown substantially in recent years, Australian investments in and tourist arrivals to Malaysia have declined. Australian diplomats and Asian hands are worried that their country is missing out on a resurgent Malaysian economy.
A visiting Australian professor recently told a group of journalists: “Please help us to get Australian businesses back to Malaysia. They could do with some encouragement from you guys.”
Parent site: "Focus on Malaysia AND the World"