Malaysia's predicament

The fact that Malaysia has not weathered the economic crisis as well as it might have is due more to political factors than to weak economic fundamentals.

Its prime minister acquired the unnerving habit of saying the wrong things at the wrong time for the wrong reasons, while Kuala Lumpur issued confusing policy signals and there have been hints of disagreement at the top about matters like interest rates.

Though there is no doubting the seriousness of Malaysia's economic predicament, the country has advantages that other economies affected by the Asian crisis do not have. It is not weighted down, as Thailand and Indonesia are, by paralyzingly large external debts. Its current account has turned positive of late and longterm capital inflows, including foreign direct investment, have remained modestly healthy.

-- The Straits Times, Singapore