KINIBIZ Tiger remembers well the time when some Asian countries, including Malaysia, were loosely referred to as the Tiger economies. Definitions differed but among countries included at one time or another were Thailand, Indonesia, South Korea, Singapore, Malaysia and Taiwan.

They were called tiger economies because like tigers their economies grew by leaps and bounds. And then came the Asian financial crisis of 1997/98 and the tigers were reduced to a whimper and some had to be rescued by the International Monetary Fund or IMF which prescribed punitive measures such as austerity and high interest rates. What ignominy for these once majestic animals, er... countries!

Thailand, Indonesia and South Korea suffered but even financially sound Malaysia was not spared when its currency and market came under sustained attack by opportunists called hedge funds. Tiger does not understand the use of the term “hedge” for these funds because they hedge nothing but leverage their positions through large levels of debt to bring extraordinary but high-risk gains to their owners.

This Tiger is no fan of former prime minister Dr Mahathir Mohamad but nevertheless believes in giving credit where it is due. Malaysia’s and Mahathir’s unorthodox step of introducing capital controls to stem the rapid outflow of funds resulted in a more rapid recovery of Malaysia’s economy. It stopped the barbarians at the gate although they continued to bay.

This was because once the exchange rate was fixed, it was not subject to the vagaries of the market place and therefore Malaysia could go about fixing the lack of confidence and repairing the poor economic perception by lowering interest rates, releasing more money into the system and spending money that it had.

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This article was written by P Gunasegaram.