𝗧𝗵𝗲 𝗔𝘀𝗶𝗮𝗻 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗖𝗿𝗶𝘀𝗶𝘀: 𝟮𝟱 𝘆𝗲𝗮𝗿𝘀 𝗼𝗻
On 2 July 1997, Thai baht was attacked by speculators, which triggered the Asian Financial Crisis. Everything in Malaysia and Asia changed after that day. My life, along with that of the entire generation, changed too.
I was 20 then and couldn’t comprehend what the crisis meant. Now, looking back a quarter of a century later, the Asian Financial Crisis and its associated political crisis, which saw the sacking of Datuk Seri Anwar Ibrahim on 2 September 1998, was one of the most important ruptures in Malaysian history.
25 years on, I would say that the crisis had three major consequences for Malaysia.
𝗔 𝘀𝘁𝗮𝗴𝗻𝗮𝘁𝗲𝗱 𝗠𝗮𝗹𝗮𝘆𝘀𝗶𝗮𝗻 𝗲𝗰𝗼𝗻𝗼𝗺𝘆
The Malaysian economy experienced a major upswing in the early 1970s with the influx of foreign direct investment into manufacturing and suffered a setback in the mid-1980s.
Another wave of growth, also through massive FDIs, started from around 1988 and ended in 1997. During this phase, everything was guided by an exuberant “boleh” (can do) spirit. The Asian Financial Crisis crushed that. Malaysia has not really recovered from it.
With China’s ascension into the World Trade Organisation in 2001 and drawing away FDIs – both in terms of quality and volume – Malaysia has been stuck with a low-wage, low productivity, low cost model.
𝗧𝗵𝗲 𝗲𝗻𝗱 𝗼𝗳 “𝗔𝘀𝗶𝗮𝗻 𝘃𝗮𝗹𝘂𝗲” 𝗮𝘂𝘁𝗵𝗼𝗿𝗶𝘁𝗮𝗿𝗶𝗮𝗻𝗶𝘀𝗺
As a consequence of the crisis and its political mismanagement, Indonesian President Suharto was forced to step down on 21 May 1998. Once upon a time, the Asian authoritarians, namely Singapore’s Lee Kuan Yew, Tun Dr. Mahathir Mohamad, and Suharto, claimed that democracy was chaotic and “Asian value” soft-authoritarianism was the way to go. The Asian Financial Crisis put a stop to this.
Dr. Mahathir went on a two-month leave in May 1997 and handed the reins to Acting Prime Minister Datuk Seri Anwar Ibrahim (Dr. Mahathir had not appointed an acting PM since 1986 after his first deputy Tun Musa Hitam left office). It was supposed to be a rehearsal for Anwar to take over as PM and most pundits assumed that the change would soon happen after the Commonwealth Games in September 1998. The plan went awfully wrong. Instead, Anwar was sacked. In fact, Anwar was arrested the day before the closing ceremony of the Games and only freed on 2 September 2004, six years later. (Anwar was jailed for another time from 10 February 2015 and released only after Pakatan Harapan came into power in May 2018).
It is unfortunate that the relationship between Dr. Mahathir and Anwar Ibrahim still colour politics so many years later. Really, it has been too long.
Perhaps one good thing out of the crisis is that Malaysian voters became very critical. The loyal base of the ancien regime UMNO continues to shrink ever since. Sizable segments of the electorate demand leaders to be clean, incorruptible, and be accountable for their actions. Things change slowly but, I believe, the arc of history is bending towards a more democratic society.