The annual furniture exhibition takes place this week in Kuala Lumpur. It is at this exhibition that Malaysia's furniture manufacturers display their line to prospective buyers from around the world. This year there are fewer buyers; and fewer manufacturers.

The reduced participation reflects lower demand in Malaysia's major markets and the discouraging fact that as a consequence of fewer orders, primarily from the US, some furniture manufacturers have been forced into bankruptcy.

Bankruptcy in Malaysia tends to take on a racial tone. When a well-connected Malay-owned business fails, the party in power finds means to rescue it, using the public treasury. But if the company is owned by other interests, the banks quickly chain-lock the gates. This fact does not escape the notice of businessmen.

In front of the bankrupt business, crowds of Bangladeshi labourers, imported at low wages to make the factory more manageable, wait, seeking answers for their future. They face frustration and fear. For them there is nothing but the question of when and how they will return home.

As an economic unit, the factory ceases to exist. In its place are the remaining assets, composed of the buildings, equipment and the land below. Against these are the debts owed to workers, suppliers, and all others with claims against the enterprise. Sorting out the claims is difficult, and allegations of shady shufflings in the immediately prior period abound. It is a messy business.

Banks who have advanced funds to the business have an interest in recovering what they can. They are first to freeze the cash and receivables, and to keep control of whatever may be left of value. The central bank of Malaysia has gone on record as being in favour of making loans to enterprises without tangible assets. Bankruptcy in these cases means that all funds advanced are a total writeoff.

Into the depths

A bankruptcy may be regarded as a rapid restructuring. It often follows a long period of tip-toeings and sleight-of-hand to give an appearance of reorganisation that has no purpose than to pull a pillowcase over the head of the public while their pocket is being plundered. This is the poor plight of Malaysia today.

After a decade of decadence, the mood of never-fail became chronic, and mega-projects were plotted without planning or prudence. It took the hiccup of 1997 to bring a stint of sobriety. There has been time to make repair, to bring the crippled luxury liner to a dry dock. But that has not been the choice. Instead the band played louder, the captain gave constant reassurance, and the tables were piled higher with fattening fodder.

Below decks the crew worked feverishly to keep an even keel. Only a few passengers noticed that the liner was losing steerage and settling lower into the water. Rescue of the ship, once potential, is now not possible. The question is more of how many can be saved before the vessel fades into the depths.

The banks have been cajoled into the role of bailors, and now they have run short of buckets. The hated word bankruptcy is heard more and more in the land, and there is some question as to which banks may be among those to go down with the ship.

In October of 1929, the world had some warning that things were amiss. The American stock market was jolted, but was brought back again and again, giving many opportunities to escape. It was not until 1932, three years later, that the stock market of the United States gave up 75 percent of its losses. In that year many companies which had traded for hundreds of dollars were sold for less than one dollar. Much of the world fell into a deep depression, and many consider World War II a consequence of that era.

It is now three years since the dark days of 1998. If Malaysia does not take immediate steps to correct the irregularities in the economic foundations of the market, there is little prospect that a similar fate can be avoided. The untruth and secrecy that is the present policy of the party in power, exemplified by its prime minister, if pursued, portends a protracted period of picking apart pieces of a pulverised plaster pottery pinch by pinch.

HARUN RASHID is a scientist avidly interested in the application of Islamic principles in international affairs. The promotion of goodwill through civilisational dialogue motivates his writing. His Worldview column is a personal analysis of Malaysian affairs from a global perspective.