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CHAPTER FIVE MALAYSIA

Sity Daud

1. INTRODUCTION

The decade prior to the 1997 financial crisis can be looked upon as a remarkable achievement of the economic and political liberalization package introduced by the Malaysian government in the mid 1980s. The nation was able to sustain its pace of development, with Gross Domestic Product (GDP) growth rates averaging above 8.0 percent per annum. The unemployment rate in 1997 was 2.6 percent, with nearly two million foreign workers employed in the country. The inflation rate was also less than 3 percent. In 1996 external debt was manageable with a debt service ratio of 5.5 percent. Short-term debt was about 69.2 percent of the international reserves, which was much lower than that of other crisis-hit countries in the region (Sulaiman Mahbob & Govindan, 2000).

There were also rapid improvements in poverty alleviation and restructuring of society as well as in raising the standard of living of all Malaysians. The per capita income in nominal terms increased from RM 1106 in 1970 to RM 9786 in 1995 (Malaysia 1996: 4-5). With the per capita income increasing significantly, the poverty incidence fell from 17.5 percent in 1990 to only 6.1 percent in 1997. These clear signs of the strength of the Malaysian economy such as full employment, low inflation, low external debt, strong fiscal position of the government and external reserves, all of which reflected high revenue base and prudent fiscal management.

However, despite its strong economic fundamentals, Malaysia still could not completely escape from the destabilizing effects of free capital and currency movements. Perhaps the 1997 financial crisis can be described as a deterioration in market sentiments and the general erosion in investor confidence, which in turn triggered sudden and massive reversals of short-term capital flows and a series of downward adjustments in regional currencies and stock markets.

The 1997 financial crisis had wide-ranging effects on Malaysia in that it weakened the financial sector, affected the real economy, and had socio-economic implications. The massive flight of short-term capital which precipitated the drastic depreciation of the Malaysian Ringgit and weakening of stock and property markets as well as the loss in public and investor confidence adversely affected the growth targets set out in the Seventh Malaysia Plan (1996-2000). The target for real GDP growth was 8.0 percent per annum, but the economy grew by only 3.0 percent per annum on average for the period of 1996-1998 and is expected to achieve 3.0 percent per annum growth for the whole Plan period as a result of the contraction of the economy in 1998 (Malaysia 1999: 5). What began as a monetary crisis, within 13 months, engulfed the economy as well and affected future development planning.

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While the strong fundamentals have singled out Malaysia as the only affected country in the region that rejected the IMF package of recovery, the early phase of the crisis witnessed tight monetary and fiscal policies adopted immediately by the Malaysian government. However, the IMF formula was seen as inadequate in addressing the economic and social impacts of the crisis in the country. When the GDP contracted by 2.8 percent over the first quarter of 1998, i.e. a negative GDP growth for the first time in 13 years, radical measures were introduced to facilitate an expansionary fiscal and monetary policy in 1998. As a result, the controversy on high interest policy and radical measures introduced later especially capital controls to revive the Malaysian economy has become the focus of academic debate in the country as well as abroad.

This chapter also considers the debate but the focus is the various programs aimed at poverty alleviation at macro and micro levels in the country in response to the 1997 financial crisis. Consequently, there will be selective discussions on economic policies since 1970 and changes after 1997 in terms of policy directions, the scale and intensity of the measures taken. Specific issues like the pattern of redistribution and growth will be examined to show how these issues have further complicated the post-1997 agenda for economic recovery set by the state and other delivery agencies. The discussions on previous economic policies will show how development planning, particularly poverty alleviation programs, became manifested as capacity building towards social safety nets exercise in the country. The best practice of SSN is also related to these policies. This report suggest that although fiscal policy interventions provide an important stimulus, the favorable turnaround in the last quarter of 1999 can be attributed to strong fundamentals built over the last decade.

1.1 Preliminary definitions

Poverty

In Malaysia, poverty is generally categorized in terms of the two broad concepts of poverty conventionally used: absolute poverty and relative poverty. The concept of hardcore poverty was introduced in 1989 to give special consideration to the position of the very poor. The poverty target groups include rubber smallholders, padi farmers, shifting cultivators (Sabah), sago producers (Sarawak), fishermen, coconut smallholders, estate workers, new village residents, agriculture labourers, orang asli (native people) and the urban poor.

• Absolute poverty

This refers to a condition in which the gross monthly income of a household is insufficient to purchase certain necessities of life that has been measured on the basis of a minimum expenditure level or the poverty line income (PLI). PLI is defined as an income sufficient to purchase a minimum food basket to maintain household members in good nutritional health and other basic needs such as clothing and footwear, rent, fuel and power, transport and communications, healthcare, education and recreation. The PLI is updated annually on the basis of the Consumer Price Index. The PLI in 1997 for

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Peninsular Malaysia was RM 460 for a household size of 4.6, RM 633 for a household size of 4.9 in Sabah, and RM 543 for a household size of 4.8 in Sarawak.

• Relative poverty

This refers to the incidence of poverty measured in terms of inequality between groups. It is measured by using income disparity ratios of income groups, ethnic groups and urban and rural dwellers. Another common relative poverty measurement is the proportion of households, for example, with incomes of less than half of the median or mean income.

• Hardcore poverty

This refers to a condition in which the gross monthly income of households is less than half of the PLI. Absolute poverty as a concept is important in any analyses of the impact of economic growth on the population. Relative inequality is also a valuable concept because income distribution is the outcome of structural processes. It is a kind of ‘scoreboard’ that reflects the result of competing claims on the economy.

In general, poverty problems in the country has been examined in terms of the various conceptions of poverty. Three schools of thought that seem to dominate the Malaysian literature on poverty, are the Structuralist-Institutionalist school, Cultural school and Dependency Theory.

The Structuralist-Institutionalist school, associated with Ungku Aziz, explain rural Malay poverty in terms of structured monopoly-monopsony exploitation. This system generates excessive profits for middlemen and the impoverishment of the Malay peasants. An important branch of the Structuralist school, the feudal land-ownership theory, is advanced by Syed Husin Ali who attributes rural poverty to the dynamic fragmentation of land resulting from a combination of Islamic inheritance laws and population growth.

The Cultural school explains Malay poverty essentially in terms of Islamic values, particularly those of fatalism, low levels of aspirations and motivation. The Dependency school focuses on the international causes of underdevelopment. According to this view, persistent poverty in Malaysia stems from its unequal and dependent participation in the new international division of labor.

Despite their varied orientations, these dominant theories of poverty have one positivist link, that poverty can be cured by policy intervention. If only the right policies were designed, poverty could somehow be reduced. The Neo-classical theory suggests that problems of poverty can be resolved without recourse to special policy interventions by simply accelerating the rate of growth of production.

However, these dominant theories of poverty in the current Malaysian literature on poverty tend to focus on structural poverty more than anything else. Perhaps for the purpose of this analysis, it is worth considering another form of poverty which is “accidental poverty”, as opposed to structural poverty, which explains how people can

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be poor by a sudden change in economic circumstances for various reasons such as the 1997 financial crisis.1

1.2 Social Safety Nets

Social safety nets (SSN) can be defined as short-term collective compensatory mechanisms or remedies adopted by governments against the major adversities confronting wage earners. They provide reimbursements in special cases of income loss. What distinguishes modern-day social safety nets from prior social security arrangements is their nationwide, collective and compulsory character. The former have developed only in societies with a highly effective central state and in connection with a growing sense of national identity.

As arrangements for the compensation of income loss, they were to remedy the adversities that befell wage-earners who had no resources of their own to fall back on in times of hardship. As such, these arrangements could only emerge in societies where regular employment for a money wage had become the normal condition of working life.

Simply put, SSN presupposes a highly developed monetary economy in which wages and benefits are paid in money. It also presupposes that a sizeable portion of the workforce is employed under similar conditions which allow uniform administrative handling and it requires an awareness that workers may lose their income through no fault of their own and cannot anticipate such adversity by individual providence alone (Vivian 1994).

1.3 Social policy

Social policy generally refers to long-term measures aimed at social leveling in the form of structural adjustment meant to change the structure of the economy. The argument for structural adjustment in the 1980s focused on the contention that poverty could not be addressed without economic growth, and that structural adjustment was the most efficient way to return to a sustainable growth path. Adjustment was not merely portrayed as a matter of fiscal responsibility, but rather perceived as the best solution to the long-term problem of poverty (Vivian 1994).

As a necessary precondition for both economic and social progress, it then follows that these adjustment measures necessarily have distributional effects, and thus by definition will create winners and losers. The keywords now are ‘poverty’ and ‘equity’, but it is not clear whether the poor would benefit from the increased growth that was supposed to come with adjustment.

It is also important to note that the acknowledgement that some groups need special help has given rise to the notion of targeting or affirmative action. There are two types of targeting: one is expenditure shifting to correct the tendency for better-off groups to capture the bulk of social expenditure, and thus greatly increase welfare benefits within a budget constraint; and the other type of targeting is restricting additional interventions to

1 Various discusions with Prof. Shamsul Amri Baharuddin at Universiti Kebangsaan Malaysia.

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particular groups to administer compensatory measures within the terms of adjustment package.

2. THE CONTEXT

2.1 Specific features of Malaysian economic development

The multi-ethnic Malaysian society with its different cultures, languages, religious beliefs, and socio-economic status as a result of British-initiated policy of importing labour from China, India and the Dutch East Indies (now Indonesia) to exploit the richly endowed Malaya was a classic example of Furnivall’s plural society, with ethnic groups living side by side but never actually mixed. There was also an ethnic identification to economic activities largely due to the colonial immigration policy of importing foreign labour into Malaya to different sectors of the economy. Suffice to say that the development of the dual economy, i.e. an export–oriented commercial sector and subsistence agricultural sector, and communal ideology under a century of British rule segmented the Malaysian society along ethnic, occupational and geographical lines.

Meanwhile, political stability in the country has been attributed to the political system that could be called ‘an elite accommodation model’ or ‘consociational model’ in which each ethnic community is unified under a leadership that can authoritatively bargain for the interests of that community. The leaders of each community, in turn, have the capacity to secure compliance and legitimacy for the bargains that are reached by elite negotiations. Under such circumstances, there exists sufficient trust and empathy among the elite to be sensitive to the most vital concerns of other ethnic communities. Above all, representative institutions accept their diminished role of merely ratifying the product of elite bargaining as appropriate for a resolution of ethnically sensitive issues (See Means 1992: 2).

As a result, while colonialism set the stage for economic imbalances among ethnic groups during the post-colonial era, at the center stage was the so-called ‘ethnic bargain’ struck by the Alliance’s2 multi-ethnic ruling elite, which was enshrined in Article 153 of the 1957 Merdeka (Independence) Constitution. The Constitution provided for Malay “special rights” to improve their economic position in exchange for “political rights” extended to non-Malays in the offer of citizenship status on the basis of jus soli.3 This ethnic bargain tended to symbolize mutual trust, tolerance and compromise. The transfer of power was generally regarded as the way to solve past ills and as a key to future development planning. There was also a widespread belief that ethnic unity depended

2 The Alliance was a coalition initially formed by two dominant political parties in Malaya prior to Independence, namely the United Malays National Organization (UMNO) and the Malayan Chinese Association (MCA) to contest against other political parties on a common platform. The Alliance, indeed a product of an ethnic bargain, won almost all the seats contested in the 1955 general elections, the first of such elections in Malaya. 3 Malay “special rights” give preference to Malays in terms of Federal scholarships, employment in the public sector, Malay reserve land and licenses and permits.

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ultimately on economic development, in that a more equitable distribution of growth between major ethnic groups would eventually resolve communal antagonism.4

There was an attempt at redistribution, mainly a result of active demand from the Malay community, and hence the establishment of statutory bodies such as RIDA (Rural and Industrial Development Authority). State intervention was justified by the existence of political instability after the Second World War, especially the Emergency. Affirmative action-oriented policies began to take root soon after the war, not after the racial riot of May 13 1969, as many observers on Malaysian affairs were made to believe (Bacchi 1996).

This view is championed by Shamsul in his various writings on the Malays’ economic nationalism. In one of his recent writings, he claims that “a pro-Malay affirmative action in Malaysia that is within the UMNO’s bangsa and kebangsaan Melayu framework did not begin with the NEP as many analysts have asserted” (Shamsul 1996: 28-29). In fact, the NEP should be located within the economic aspect of Malay nationalism for apart from education, the debate within UMNO over the NEP was mainly concerned with the acquisition of capital and skill which the Malays needed most to transform their disadvantaged economic condition. Shamsul argues that

“…it was clear to the Nationalists that the struggle in the economic sphere was to regain control both in the rural agricultural sector (dominated by British and Chinese-owned plantation and mining), and the urban commercial sector (dominated by British agency houses and Chinese family businesses). A successful implementation of this agenda should have solved both the poverty problem of the poor rural Malays and the problem of creating a niche for Malay entrepreneurs in the ever-expanding urban business sphere” (1996: 245-246).

In a sense, affirmative action under the colonial government began in 1950 with RIDA and later expanded by the post-colonial government until 1969. The main thrust of RIDA was to look after rural development, emphasizing development schemes for basic infrastructures and providing loans and training to Malays for various projects. In the mid 1960s RIDA was reorganized and converted into MARA (Majlis Amanah Rakyat, Council of Trust for the Indigenous People) with more financial support in response to the need for greater participation of Bumiputera in the modern sector and greater ownership of companies.

The outbreak of the May 13, 1969 bloody affair in Kuala Lumpur further reinforced the need for state intervention to address the problems of economic imbalance among major 4 In a way the Malaysian Constitution is not only a legal document, like any other constitution, but also a sort of ‘social contract’ between the ethnic groups in which the interests of each of the ethnic groups were guaranteed, protected and written into the constitution. In essence, the understanding reached was that in the interests of leadership groups, and it was argued, of the society as a whole, Malay entitlement to political and administrative authority should be accepted unchallenged, in return for non-interference in Chinese control of the economy. With those understanding as a starting point, a process of reconciliation of interests would be embarked upon, aimed explicitly, for the Malays, at measures intended to redress the balance of economic power and implicitly, for the Chinese, at gradual admission to the franchise and to the political power flowing from this.

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ethnic groups in the country. The New Economic Policy (NEP) was launched in 1971 to create a Malay commercial and industrial community in all categories and at all levels of urban business activities, so that Malays and other Bumiputera would be able to compete with the nonMalays. What makes the NEP outstanding is the fact that it is all-encompassing in nature and the Third Malaysia Plan (1976-80) provides the aims of the NEP to be achieved in quantitative terms.5

The main objectives of the NEP may be summarized as follows:

• The incidence of poverty is to be reduced from 49.3 percent in 1970 to 16.7 percent in 1990. While no figures were assigned to ethnic groups, the incidence in both the rural and urban areas was expected to decline from 58.7 percent and 21.3 percent in 1970 to 23.0 and 9.1 percent, respectively, in 1990.

• In terms of employment restructuring, the NEP envisaged that the employment structure in every economic sector and occupational level would in the long run reflect the population structure of the country. But between 1970 and 1990 the proportion of Malays was expected to be reduced in the primary sector from 67.6 percent to 61.4 percent, while in the secondary sector it was to be increased from 30.8 to 51.9 percent, and in the tertiary sector from 37.9 to 48.4 percent. Correspondingly, the Chinese share is to decline from 59.5 to 38.1 percent in the secondary sector, but to increase from 21.4 to 28.3 percent in the primary sector. The share of the Indians would remain more or less the same, around 10 to 12 percent in all sectors.

• The ownership pattern of share capital in limited companies is to change from the ratio of 2.4: 34.3: 63.3 (bumiputera: non-bumiputera: foreign) in 1970 to 30:40:30 by 1990.

The first objective of the NEP, which is poverty eradication, required that eventually no one household should be living below the poverty line.6 Whereas, the second objective, which is the restructuring of the Malaysian society, requires that there should be an equal distribution of income and occupations between ethnic groups. The broad objective of the NEP’s affirmative action scheme was to launch the Malays, the majority ethnic group, into the mainstream of Malaysian economic life. To achieve the objectives of the NEP, the state acted as a protector and a trustee of the rakyat (people), the rationale for this being akin to that of the “infant industry argument” and using “special rights”, as enshrined in the Constitution, Malays and other bumiputera were granted subsidies, favorable treatment under licensing and franchising, quotas in jobs and university places, as well as loans and grants to enter industry and trade, and to purchase equity shares.

Perhaps the most significant form of state intervention in the implementation of the NEP is the direct participation of the state itself in commercial and industrial undertakings.

5 It was only for the launching of the Third Malaysia Plan that the government had sufficient data for more specific planning. Data for poverty problems in East Malaysia were only available since 1976. 6 It should be noted that the first objective is concerned merely with the eradication of “absolute” poverty. However, even if absolute poverty is reduced or eradicated, it does not necessarily follow that relative poverty will also be corrected.

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This was possible through wholly owned enterprises and joint ventures with the private sector. It was thought necessary for the state to set up companies and undertake projects in order to make them commercially more viable, to open up new growth centers by expanding activities in areas where private sectors are more reluctant to participate, and to help create a bumiputera commercial and industrial community. However, the NEP has been criticized for its patronizing nature in securing the Malay power base as Torii argues: “…the NEP partially restricts the full play of economic rationality as well as the market mechanism and equal opportunity principles in favor of Malay-first ethnicity principles coupled with political favoritism” (1997: 210).

Despite many mistakes along the way, during the two and a half decades since 1970 Malaysia has achieved significant progress in economic growth as well as in meeting its social goals. The nation was able to sustain its pace of development, with GDP growing at an average rate of 6.7 percent per annum during the NEP period, 1971-90 and 8.7 percent during the Sixth Malaysia Plan period, 1991-95 (Malaysia 1996). In fact, during the eight years since 1988, the economy’s performance had been even more impressive with a sustained high growth of 8.9 percent per annum. This economic growth within an environment of relatively low inflation is indeed a remarkable achievement. Concomitant with this significant expansion, there were also rapid improvements in poverty alleviation and restructuring of society as well as in raising the standard of living of all Malaysians. The per capita income in nominal terms increased from RM1,106 in 1970 to RM 9,786 in 1995 (Malaysia 1996: 4-5).

A remarkable progress was also evident in reducing the incidence of poverty in Malaysia during the 1970-1990 period. The overall incidence of poverty in Peninsular Malaysia fell from 49.3 percent in 1970 to 15.0 percent in 1990. In absolute terms, the number of poor households in Peninsular Malaysia has been reduced from 791,800 in 1970 to 619,400 in 1990. The incidence of poverty in rural Peninsular Malaysia has also been reduced from 58.7 percent in 1970 to 19.3 percent in 1990. In absolute terms, the number of poor households in rural areas fell from 705,900 in 1970 to 530,300 in 1990. During the same period, reduction in the incidence of poverty was also recorded in the urban areas. In Peninsular Malaysia, it declined from 21.3 percent in 1970 to 7.3 percent in 1990 (See Table 1).

Many of the NEP’s achievements can be attributed to education. Thousands of Malays received scholarships to study abroad, whilst at home, 64 percent of the slots in public universities were reserved for Malays. The affirmative action scheme in education has cut the process of increasing the number of Malay doctors, lawyers and engineers and gradually wiped out previous stereotypes about Malays being mainly farmers and civil servants, a process that otherwise would have taken longer time to be realized. The 1997 Statistical Handbook of Malaysia shows Malays’ improvement in the professional sector although they have not yet dominated that crucial sector of the Malaysian economy (See Table 2).

Figures also shows that in terms of ownership of share capital in limited companies, while the Bumiputera proportion did not reach the targeted 30 percent by 1990, it nevertheless grew by an average of 29.6 percent per annum during the NEP period. Its

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Table 1. Incidence of Poverty by Rural-Urban Strata in Malaysia, 1970 and 1990

1970 1990

Strata Total Households (‘000)

Total poor households (‘000)

Incidence of poverty (%)

Total households (‘000)

Total poor households (‘000)

Incidence of poverty (%)

Peninsular Malaysia Rural Target group

1203.4 705.9 58.7 1924.3 371.4 19.3

Rubber smallholders

350 226.4 64.7 n.a n.a n.a

Padi farmers 140 123.4 88.1 n.a n.a n.a

Estate workers

148.4 59.4 40 n.a n.a n.a

Fishermen 38.4 28.1 73.2 n.a n.a n.a

Coconut smallholders

32 16.9 52.8 n.a n.a n.a

Urban 402.6 85.9 21.3 1062.2 77.5 7.3

Total 1606 791.8 49 2986.5 448.9 15.0

Sabah Rural n.a n.a n.a 233.1 91.1 39.1

Urban n.a n.a n.a 57.7 8.5 14.7

Total n.a n.a n.a 290.8 96.6 34.3

Sarawak Rural n.a n.a n.a 274.6 67.8 24.7

Urban n.a n.a n.a 62.8 3.1 4.9

Total n.a n.a n.a 337.4 70.9 21.9

Sources: Malaysia (1981 & 1991)

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Table 2. Distribution of Professionals in Malaysia by Ethnicity, 1994 Professional Sector Bumiputera (%) Chinese (%) Indians (%) Others (%)

Architects 335(27.0) 884(71.3) 18(1.45) 3(1.40)

Building Draftsmen

102(32.9) 194(62.6) 8(2.58) 6(1.94)

Architectural Graduates

302(52.5) 264(45.9) 8(1.39) 1(0.17)

Accountants 972(12.6) 6,232(80.5) 457(5.90) 79(1.02)

Engineers 9,290(36.2) 14,545(56.7) 1,799(7.0) 7(0.03)

Dentists 577(30.9) 854(45.7) 409(21.9) 30(1.60)

Doctors 2.860(32.4) 2,875(32.5) 2,874(32.5) 222(2.51)

Veterinary Surgeons

325(40.3) 196(24.3) 251(31.1) 35(4.34)

Surveyors 900(48.6) 856(46.2) 77(4.16) 19(1.03)

Lawyers 1,691(28.8) 2,741(46.7) 1,362(23.2) 72(1.23)

Source: Statistics Handbook of Malaysia, 1997, p.30. proportion rose from 1.9 in 1970 to 20.3 percent in 1990. In other words, a Malay business class had developed over the twenty years, competing with and, at times serving as partners of Chinese as well as foreign businesses (Abdul Rahman Embong 1995: 43). However, this class is largely limited to finance, property and construction, but weak in manufacturing and generally dependent on state patronage (Lubeck 1992: 189).

In 1991 the NEP was replaced by the National Development Policy (NDP) which continued to pursue the goals of the NEP with its primary thrust of ‘balanced development’ within the framework of a rapid growth with equity in order to establish a more united and just Malaysian society. Unlike the NEP, the NDP has its new dimensions in its anti-poverty strategy by emphasizing the eradication of hardcore poverty while reducing relative poverty. The focus is more on employment creation, the rapid development of an active Bumiputera Commercial and Industrial community, the private sector as an engine of growth, and human resource development as a prerequisite for growth with distribution.

By any standards, the Malaysian bold social-engineering policy has been a success in promoting racial harmony and preventing further bloodshed but admittedly not without its problems. However, my emphasis is on its positive consequences on the society at large. Of course, we can also highlight the uglier past, which is abundant in affirmative

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action literatures. As in other multiethnic society, of course, Malaysia’s social equilibrium remains more fragile than that of a homogeneous nation. Race relations deteriorated in the mid-1980s during a sharp economic downturn. Yet since the 1997 financial crisis, despite the widespread media coverage of street demonstrations following the arrest of the ex-Deputy Prime Minister, Anwar Ibrahim, the country has not experienced any serious ethnic tensions. This could be explained by the fact that although the Bumiputera failed to achieve the targeted 30 percent corporate wealth by December 1990, there was an overall improvement in the quality of life in rural and urban areas. More important, the period since 1970 to 1997 recorded some progress in poverty alleviation and restructuring of the urban employment compared to situations in the initial stage of the NEP (See Table 3).

This success can be credited to a range of government regulations, licenses, quotas, scholarships and other privileges aimed at boosting the status of Malays. The dramatic increase of the Malay share of national wealth from about 1.5 percent in 1969 to 19.4 percent in 1998 has considerably reduce the occurrence of poverty among the Malays. More important in the context of social restructuring, the Malays’ advance did not come at the expense of other races because the country’s economy surged by an average of more than 7.0 percent. In fact, the Chinese share has also increased from 22.8 percent to 38.5 percent over the same period (Hiebert & Jayasankaran 1999: 45-47).

Table 3. Incidence of Poverty , 1970-1997 (% of households)

1970 1990 1993 1995 1997 ________________________________________________________________________ Overall 49.3 17.1 13.5 9.6 6.8 Rural 58.7 21.8 18.6 16.1 11.8 Urban 21.3 7.5 5.3 4.1 2.4 Source: Malaysia.1999. The Malaysian Economy in Figures 1999. Kuala Lumpur: Economic Planning Unit, Prime Minister’s Department.

3. THE IMPACT OF THE CRISIS

3.1 Increased poverty

As a result of the crisis, there was an increase in 1998 in the incidence of poverty in the country to 7.0 percent while the number of poor households grew to 342,500 in 1998. With the inclusion of non-citizens (largely from Indonesia), the incidence of poverty increased to 7.6 percent and the number of poor households to 393,900. The majority of the new poor households were from urban areas where the effects of retrenchment, unemployment and inflation were greater.7 The recessionary effects of the economic slowdown in 1998 also negatively affected the progress made in eradicating hardcore poverty. There was also an increase in the overall incidence of hardcore poverty among 7 Malaysia, 1999, Mid-Term Review of the Seventh Malaysia Plan, 1996-2000, National Printers, Kuala Lumpur.

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Malaysians from 1.4 percent in 1997 to 1.6 percent in 1998 and the number of hardcore-poor households from 67,300 in 1997 to 78,100 in 1998. Similarly, with the inclusion of non-citizens, the incidence of hardcore poverty increased from 1.4 percent in 1997 to 1.5 percent in 1998 with the number of hardcore-poor households increasing from 70,300 in 1997 to 79,600 in 1998.8 However, official figures tend to overlook some groups especially the aged who are affected by the crisis through indirect means. A large number of this population group are dependent on transfer payments from family members. The crisis resulted in a loss or reduction in their income.

4. FORMAL RESPONSES

Formal responses to the current crisis have gone through three phases. In the first phase, a tight monetary and fiscal stance was adopted to reduce the excess liquidity in the system, raise interest rates, cap credit growth, and restrain further lending for real estate and stock market purchases. Private consumption was also limited due to allowance-cuts in the public sector and wage restraints in the private sector. The 1998 Budget announced on 17 October 1997 included measures to reduce current account deficit, strengthen the balance of payments and fiscal accounts, improve competitiveness, and increase monetary and financial stability (See Box 2).

Box 2. The 1998 Budget

• Reduction of Federal government expenditure by 2 percent, deferment of mega projects, and review of public agencies’ purchases of foreign goods.

• On the financial aspect, the prudential standards were strengthened with the classification on non-performing loans (NPL) in arrears from six to three months, greater financial disclosure by banking institutions, and increasing general provision to 1.5 percent.

• The Credit Plan was introduced to limit overall credit growth to 25 percent by end-1997 and 15 percent by end-1998. In providing loans, banking institutions were to give priority to productive and export-oriented activities.

The rationale for this approach was that financial prudence will stabilize the Malaysian Ringgit (RM), restore market confidence, and attract foreign capital, which in turn will form the basis of an economic recovery.9 However, high interest rates had virtually no

8 Ibid. 9 Although Malaysia rejected the International Monetary Fund (IMF) recovery package in the region, it adopted the IMF policy of high interest rates. However, the high interest policy has been the centre of controversy. On the one hand, the policy was defended on the grounds that it will help curb the outflow of funds, particularly by Malaysian citizens, by inducing saving. High interest rates were likely to attract foreign investment and help stabilize the exchange rate. But at the same time, the high cost of borrowing

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Table 4. Gross Domestic Product (GDP) by sector, 1995-1998 (% growth)

1995 1996 1997 1998

Agriculture, forestry and fishing1 1.1 2.2 1.3 -4.5 Mining 9.0 4.5 1.0 1.8

Manufacturing 14.2 12.3 12.5 -13.7

Construction 17.3 14.2 9.5 -23.0

Services 7.8 8.4 7.2 -0.8

– Imputed bank service charges 15.2 18.0 14.6 -0.6

+ Import duties 3.3 6.1 6.7 -41.5

GDP 9.4 8.6 7.7 -7.5

1 Includes livestock and horticulture Source: Malaysia. 1999. Economic Report 1999/2000. Kuala Lumpur: Ministry of Finance, and Malaysia. The Malaysian Economy in Figures. Kuala Lumpur: Economic Planning Unit, Prime Minister’s Department. (1996, 1997, 1998 and 1999). impact on attracting foreign funds. The tight monetary policy and fiscal restraint proved to have adverse implications as the GDP recorded a negative growth in 1998 for the first time in 13 years (See Table 4).

The second phase of the policy-mix was aimed at injecting some life into the domestic sector via increased government spending although high interest rates were still maintained. There has been a great debate on the high interest rate policy of the first 13 months. On the one hand, opponents of the policy attribute the GDP contraction to it. Supporters, on the other hand, argue that it was precisely the tight monetary policy of the early phase that that contributed to the stabilization of the RM. While it was true that the exchange rate had depreciated by 40 percent since the crisis began, it had shown signs of stabilizing at RM4.20 to a US Dollar (Narayanan 1998).

The third phase of the policy mix came around on September 1, 1998 when the government opted for capital control. RM was no longer tradable in the foreign exchange market and capital account transactions were declared non-convertible. The government also envisaged GDP to recover by 4.3% in 1999 mainly through growth in manufacturing, agriculture and services sectors. The manufacturing sector, in particular, will experience a significant turnaround with value-added increasing by an expected 8.9%, underpinned by recovery in the export market-oriented industries as a result of stronger demand from the U.S. and East Asia economies.

funds would choke new domestic private investment in already troubled environment and burden existing firms in terms of higher debt repayment costs.

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The output of domestic market-oriented manufacturing industries is also expected to recover, driven by sharp increase in the output of transport equipment and plastic product industries. In the agricultural sector, the growth results from higher output of crude palm oil. The value added in the construction sector could contract by a smaller margin by of 3.6 percent in 1999. The services sector is envisaged to register a growth of 2.4 percent with the contribution mainly from transport, storage and communication sub-sector (See Table 5).

Table 5. Gross Domestic Product (GDP) by Sector, 1998 and 1999 (%) 1998 1999e Growth Share of

GDP Contribution

to growth Growth Share of

GDP Contribution

to Growth Agriculture, forestry and fishing1

4.5 9.4 -5.4 4.6 9.4 10.1

Mining 1.8 8.1 1.8 -1.2 7.6 -2.3

Manufacturing -13.7 27.9 -54.5 8.9 29.2 58.0

Construction -23.0 4.0 -14.8 -3.6 3.7 -3.4

Services -0.8 55.6 -5.8 2.4 54.6 31.3

Less Imputed bank service charges

-0.6 7.5 -0.5 3.7 7.4 6.4

Plus import duties -41.5 2.5 -21.8 21.6 2.9 12.7

GDP 2.7 100.0 100.0 4.3 100.0 100.0

1 Includes livestock and horticulture e Estimates Source: Malaysia. 1999. Economic Report 1999/2000. Kuala Lumpur: Ministry of Finance. 4.1 Governmental organizations

The initial state responses contained some elements of the IMF’s prescription for other regional economies, which involved tightening of the monetary policy by increasing interest rates and limiting credit growth. There was also greater restraint by reducing both operating and development expenditures. However, these measures turned out to be counter-productive and led to a contraction in the economy in the first quarter of 1998.

There were significant changes in state responses to the crisis especially with the establishment of the National Economic Action Council (NEAC) on January 7, 1998 as a consultative body to the Cabinet to deal with the current economic crisis. As one of its primary tasks, the NEAC had come up with the National Economic Recovery Plan (NERP) which presents a comprehensive framework for action for national economic recovery.10

10 The preparation of the NERP was undertaken by the Economic Planning Unit in collaboration with the NEAC Working Group, and members of the NEAC Executive Committee and Council comprising a broad

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The NERP has six objectives:

• To stabilize the ringgit • To restore market confidence • To maintain financial market stability • To strengthen economic fundamentals • To continue with the equity and socio-economic agenda • To revive adversely affected sectors

Besides, the NEAC also claimed to have taken measures to increase transparency and consistency of government policies, as well as to strengthen the regulatory framework of the capital market, adopt liberal and market-based policies, and restore confidence in the stock market.11

The first major thrust of the Recovery Plan was market stabilization through the stabilization of the RM, restoration of confidence and strengthening of the financial market. The second major thrust was strengthening economic fundamentals to be brought about by increasing the efficiency of investments and strengthening of the balance of payments. The state also realizes the need to continue with the equity and socio-economic agenda by addressing the effects of the crisis on household income, level of poverty, employment and Bumiputera share of ownership. These changes include the expansion of local tertiary education in a cost-effective manner, tight regulations on foreign workers, and a total revamping of the state corporations and cooperatives so that they are more focused on their activities.

Besides, the government has introduced several compensating measures to reduce the negative impact of the economic slowdown on the poor and hardcore-poor, some of which are as follows:

• Retain the original budget allocation for the Program Pembangunan Rakyat Termiskin (PPRT),12 or the Development Program for the Poorest, which is not subjected to budget cut. In anticipation of a higher incidence of poverty, the Government has also allocated an additional budget for the PPRT amounting to RM100 million from the RM1 billion (USD300 million) World Bank loan.

spectrum of Federal and State Government leaders and representatives, senior and retired government officials, captains of industries, representatives from the private sector, industry groups, trade unions, multilateral agencies, cooperatives, and Non-Governmental Organizations. 11 National Economic Action Council, 1998, National Economic Recovery Plan: Agenda for Action, Economic Planning Unit, Prime Minister's Department, Kuala Lumpur. 12 PPRT was introduced in 1989 to deal specifically with hardcore poor households and to meet the various needs of different subgroups among the hardcore poor. Poverty reduction programs through the implementation of PPRT and social programs gave priority to areas and groups with high incidences of poverty and placed primary emphasis on income-generating projects. These projects focused on the commercial production of cash crops, livestock and fish rearing, some of which were carried out in cooperation with the private sector. To improve the quality of life of the rural poor, the state provided and rehabilitated houses of the hardcore poor with special attention to the design, size and features of the houses. The state also took measures to tackle urban poverty through micro-credit facilities made available to the urban poor to assist petty traders and hawkers.

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• Allocate RM200 million of the World Bank loan to provide micro-credit assistance to petty traders and hawkers in urban areas.

• Make smaller cuts to the 1998 budgets of ministries involved in providing the social safety net, such as the Ministry of Health whose budget has been cut by only 12 percent. This measure also applies to ministries involved in rural development and agriculture where most of the poor are found. In addition, RM200 million of the RM1 billion World Bank loan is being allocated for rural infrastructure facilities.

• Allocate from the additional RM7 billion for 1998 development allocation, RM300 million for poverty eradication, RM200 million for rural development and RM350 million for agricultural development.

Similarly, some measures have been taken to address the slower employment growth and retrenchment of workers, which worsened hardship faced by poor households. The following measures are recommended to increase opportunities for employment and self-employment:

• Encourage organized and systematic petty trading, farming and setting up of small businesses.

• Institute and provide training schemes for newcomers in petty trading and agricultural activities.

• Revitalize construction and infrastructure projects with multiplier employment effects.

It is also important to highlight the problems of massive inflows of migrant workers and reducing the number of migrant workers already in the Malaysian economy. Since the crisis, there have been numerous efforts at controlling the influx of foreign labor through shared borders with Thailand and Indonesia. However, the frequent raids and spot-check exercises, together with higher penalties imposed upon those aiding and abetting the illegal entry of migrants, were generally unsuccessful.

4.2 Quasi-governmental agencies

Statutory bodies and financial institutions such as PNB, MARA, PERNAS, have focused their efforts in promoting Small and Medium Industries or SMIs in the urban sector and credit facilities for rural development programs. For example, in order to increase the household income of the hardcore poor, the repayment schedule of the Amanah Saham Bumiputera (ASB)-PPRT loan scheme was reviewed and expanded to cover the hardcore poor and Orang Asli (the native Bumiputera). The hardcore poor, with each family obtained a RM5000 interest-free loan to participate in the ASB scheme, received the full amount of annual dividends and bonuses. By the end of 1998, a total of RM257 million in dividends and bonuses was paid to the hardcore poor who participated in the scheme (Malaysia 1998).

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4.3 Non-Governmental Organizations

The programs of NGOs in particular Amanah Ikhtiar Malaysia (AIM) and the various state-based poverty eradication foundations, also contributed towards increasing the income of hardcore-poor households, thereby reducing the incidence of hardcore poverty. Recognizing the effectiveness of AIM in providing loans to the hardcore poor and lifting them out of poverty, the government provided it with an interest-free loan of RM200 million for disbursement during the NERP period. The loan enabled AIM to expand its activities to Sabah and Sarawak and provide loans to more of the hardcore poor involved in agricultural activities and small businesses.

But the problem with NGOs, which often carry out their activities independently, is the tendency to concentrate around urban areas and thus limit the access of the poorest and most remote communities to the remedies. Nevertheless, NGOs often play supportive roles in the various poverty-alleviation programs in the country.

4.4 Household / individual

Household or individual obviously adjusted their consumption patterns according to their budget. On an annual basis, private consumption shrunk by 10 percent throughout 1998 compared to the figures for 1997. The shift in the household expenditure pattern is partially explained by the substitution of expensive items particularly food with cheaper substitute, as well as substitution of imported goods by local products.

5. DELIVERING SSN PROGRAMS

5.1 Examples of how programs are developed and delivered

PPRT

In Malaysia, the ‘poorest’ are households of five members or more with a monthly income of less than RM205 (about 45 USD), or 50 percent less than poverty line. A recent survey by the Ministry of Rural Development reveals that there are at least 114,000 poorest households. The most common factor for their disadvantaged position is lack of skills and no education.

For the hardcore poor, special programs were implemented through provision of housing, education and training, income-generating activities, and basic infrastructure facilities. PPRT was introduced in 1989 to deal specifically with hardcore poor households and to meet the varying needs of different subgroups among the hardcore poor. The program also provided direct welfare assistance. In the rural sector, poverty reduction programs through the implementation of PPRT focused on the commercial production of cash crops, livestock and fish rearing, some of which were carried out in cooperation with the private sector. To improve the quality of life of the rural poor, the state provided and rehabilitated houses of the hardcore poor with special attention to the design, size and features of the houses. The 2000 Budget has allocated RM492 million for low cost housing to achieve the target of building 58,600 units of low cost houses.

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The Ministry of Rural Development combined with the Ministry of National Unity (particularly KEMAS) have also set up motivation programs aimed at changing the mentality and attitudes of the poorest towards development, before giving them proper training for the various package of commercial projects under PPRT. These programs, conducted by Unit Bina Insan (Motivation Unit) of KEMAS, focus mainly on ethics, morality, religion and patriotism. Above all, PPRT has been implemented under the NEP but in the 1990s poverty-alleviation programs for the poorest have been revised to meet with the challenges of Vision 2020. The implementation of PPRT was monitored at district levels to allow for efficient and effective management of fund distributions.

Beginning in 1991 a nation-wide Gerakan Desa Wawasan or GDW (literally translated as Vision Village Movement) has been directed towards a second transformation of the rural sector. The movement emphasized the participation of villagers in the planning and implementation of rural development programs. The objective of this GDW is to involve 3000 villages by the year 2000, with 642 villages participating each year including the poorest villages. The main objectives of GDW are to develop independence, active participation, empowerment and skills among the people. GDW is also aimed at paradigm shift from the common perception of the traditional pattern of land ownership to an integrated management of the corporate rural economic activities. (See Box 3)

Box 3. Vision Village Movement Strategies

• Strong structure and system • Integrated approach by the public sector, private sector, NGOs and target groups. • Attitude, skill and knowledge • Full participation • Persistent planning, implementation and evaluations • Integrity of local social institution especially Jawatankuasa Kemajuan dan Keselamatan Kampung (JKKK) or Village Development and Security Committee and cooperatives.

Micro-credit facilities (quasi-governmental organizations)

The state together with semi-governmental organizations like PNB, MARA and PERNAS have taken measures to tackle urban poverty through micro-credit facilities made available to the urban poor to assist petty traders and hawkers. RM100 million were allocated for the "Small-Scale Entrepreneur Fund" and another RM150 million to "Economic Business Group Fund" to assist petty traders, hawkers and small

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Table 6. Percentage Distribution of Labor Force by Gender and Employment by Sectors, 1990, 1996-2000

Unit 1990 1996 1997 1998 1999e 2000f

Labor force

Labor force ‘000s 7,042 8,641 9,038 8,881 9,010 9,194 Labor force participation rates: Total 1/ % 66.5 65.8 67.0 64.3 64.3 64.6 Male 2/ % 85.6 84.8 85.7 83.4 83.4 83.8 Female 3/ % 47.3 45.8 47.4 44.2 44.2 44.4 Unemployment % of labor

force 5.1 2.5 2.4 3.2 3.0 3.0

Employment

Total 1000s 6,686 8,427 8,817 8,597 8,741 8,920 Agriculture % of total 26.0 17.7 16.7 16.5 16.0 15.5 Mining % of total 0.6 0.5 0.5 0.5 0.5 0.5 Manufacturing % of total 19.9 26.5 26.9 26.5 27.1 27.3 Construction % of total 6.3 9.4 9.9 9.4 9.2 9.3 Services % of total 47.2 45.9 46.0 47.3 47.2 47.4 e Estimates, f Forecast 1 Total number of people economically active as a percentage of total number in the working age population of 15-64 years 2 Total number of people economically active as a percentage of total number of males in the working age population 3 Total number of people economically active as a percentage of total number of females in the working age population Source: Economic Planning Unit, Department of Statistics entrepreneurs, including women entrepreneurs, in urban areas. This micro-credit fund is meant for the lower income group in urban areas who may suffer a loss or reduction of real income as a result of retrenchment. (See Table 6)

Micro-credit facilities are available for various business activities such as manufacturing, services, transportation and constructions and loans granted are up to RM1,000,000.

Micro-credit facilities (NGOs)

Amanah Ikhtiar Malaysia (AIM), formerly known as “Projek Ikhtiar” formed in 1986, is the first NGO aimed at poverty alleviation in the country. The establishment of AIM was for the sole purpose of assisting very poor household to lift themselves out of poverty primarily by means of micro-credit to be used for financing income-generating activities. AIM is one of the agency that compliments the government’s target of having only 0.5 percent hardcore poor by the year 2000 in both rural and urban areas. AIM programs include micro-credit financing, human potential development, mobilization of fund, equity investment and economic activities.

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The Ikhtiar Loan Scheme (SPI) is specialized credit delivery system focused exclusively on the poor, whereby credit is literally brought to their doorsteps. This approach ensures that credit is delivered to the target beneficiaries who in turn will be empowered to improve their living conditions. The beneficiaries are poor households, regardless of gender, race or political affiliation, whose monthly incomes do not exceed RM310 or RM67 per capita, while in the case of Sabah and Sarawak, the monthly income not exceeding RM422 or RM86 per capita and RM362 or RM75 per capita respectively.

In order to have an efficient network of credit facilities nationwide, AIM has obtained funds, expertise and technical assistance from its partners particularly the government, financial institution, corporate sector and insurance company. Through this smart partnership, AIM successfully reach out 82,218 with active members until July 1999 were 57, 832 household.

The main program of AIM is to provide interest-free loans without collateral or guarantor to facilitate the poor family’s ability to have a share in the national economic pie. The loans of AIM are divided into three schemes:

• Ikhtiar Loan Scheme 1 (SPI 1)

The first borrower in the scheme gets a maximum loan of RM1,000. Borrowers who have good repayment record on their first loan are considered for a second loan which is twice the amount of the first loan and up to a maximum of RM2,000, followed by a maximum of RM3,000 for the third loan, RM4,000 for the fourth loan and RM4,900 for the fifth and subsequent loans.

• Ikhtiar Loan Scheme 2 (SPI 2)

This scheme offers a range of loans from RM5,000 – RM9,900. Borrowers who have shown good repayment records in SPI 1 and with monthly income of at least RM 600 will be considered for this loan. The repayment period is between 50 to 150 weeks.

• Ikhtiar Loan Scheme 3 (SPI 3)

The loan offered in this scheme is RM10,000. The borrowers with good repayment record, discipline and with monthly income of at least RM1,000 are considered for loan from this scheme. It is specially designed to give opportunities to those who need bigger capital to expand their business activities. The repayment period is between 50 to 150 weeks.

Loan may be used to start or expand any type of legitimate income generating activities of the borrower’s choice, according to their experience, skill and capabilities. The major activities are petty trading, agriculture, animal husbandry and fishing.

Under the economic loan scheme, AIM has introduced two additional schemes, namely Female Single Parents Financing Schemes (SKIT) and Fishermen Financing Scheme (SPIN).

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• Female Single Parents Financing Scheme

Female Single Parents Financing Scheme (SKIT) is a financing scheme for the benefit of female single parents living in town areas. This scheme is introduced in view of economic and social problems faced by single parents due to divorce or death of the breadwinner. The purpose is to ensure that the living standard of female single parents does not decline dramatically following these incidents. The maximum amount the first loan is RM10,000 and the maximum amount of second and subsequent loans is RM20,000

• Fishermen Financing Scheme

Fishermen Financing Scheme (SPIN) is a financing scheme targeted at coastal fishermen of Malaysia. This scheme is introduced to help small fishermen increase their livelihood as well as prepare them for the commercialized fishing industry. It also aims at increasingly fish-based food production. The maximum amount the first loan is RM10,000 and the maximum amount of second and subsequent loans is RM20,000.

Beside economic loan schemes, AIM also provides social loan schemes, which are of two types:

• Educational Loan Borrowers who have completed the first loan in SPI 1 could apply for Educational Loan whose maximum amount is RM1,000 and to be repaid within 50 weeks. The purpose of the loan is to cover school expenses of their children.

• Housing Loan Borrowers who have completed the third loan in SPI 1 entitled to get Housing Loan whose maximum amount is RM 5,000 for house renovation, land purchase and enlarging business premises. The repayment period for this scheme is between 50 to 100 weeks (www.aim.gov.my).

6. EVALUATING POVERTY ALLEVIATION PROGRAMS

The most important issue is whether the poor really benefit from SSN. Although the metaphor "safety net" implies an ability to prevent every person from living under poverty lines, SSN programs have to face obstacles to reach the poorest groups in society for various reasons such as the emphasis on the project approach, urban bias and the lack of time commitment among the poor.

Very often the most emphasized goals of SSN are poverty alleviation, increasing the political acceptability of adjustment, and institutional reform. SSN programs were originally sold to donors as short-term, emergency measures, with a strictly limited period. In other words these programs were not intended to solve problems of poverty and unemployment, they merely served as palliative measures, making it easier for some people to make it through the transition period. Somehow, their mandate was stretched to

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include structural social problems that required longer-term strategy. It is under such circumstances that SSN programs were transformed into social policies.

As far as the case of Malaysia is concerned, the implementation of NEP and NDP serve as a capacity building towards SSN. Despite inevitable injustices and consequent resentment and alienation, the overall benefits of affirmative action policies have been increasingly acknowledged by non-Malays in the country. As Crouch argues that “The absence of a sharp rise in racial tensions after the 1997 economic collapse and the tendency for Chinese to support the BN (Barisan Nasional) are important indicators of these benefits” (2000: 38). This development also explained why SSN programs compliment the government economic policies pursued since the 1970s.

7. JUSTIFYING EXEMPLAR PRACTICES

The Malaysian government attributed the turnaround in real GDP growth in the last quarter of 1999 to policies initiated by the NEAC in line with its NERP as well as other favourable domestic and external developments (Daim 2000). Fiscal stimulus provided through an expansionary budget in 1999, the easing of monetary policies and reforms introduced in the third phase support the economic recovery process. (See Table 7)

However, this neo-classical argument doesn’t always work as the case of Malaysia have shown that the number of poorest households is still very high although the government is proud of the steady GDP growth prior to the 1997 crisis as well as the quick turnaround. Nevertheless, PPRT and AIM credit facilities could be singled out as exemplar SSN programs in raising the living standards of the poorest people in rural areas and some of the measures taken can be applied to address poverty problems elsewhere.

8. CONCLUSION

Although fiscal policy interventions in the third phase of responses to the crisis provide an important stimulus, the favorable turnaround in the last quarter of 1999 has been largely attributed to strong fundamentals built over the last three decades. The various poverty-alleviation programs adopted after the crisis proved to have been successful in reducing the incidence of poverty among the worst impacted groups in both rural and urban areas. In fact, some of these programs have been there since the 1970s and therefore, it is not surprising at all for Malaysia to recover so fast.

Nevertheless, recommendations to cushion the impact of future economic crisis of the kind that emerged in 1997 should go beyond government and NGOs-based SSN programs like AIM. Efforts should be taken to establish a more integrated framework so that the interests of the hardcore poor will be placed at the centre of contemporary Malaysian economic development planning. Given the divergence in interests and outcomes facing the nation-building agenda, greater participation of the low-income groups in the country’s economic activities can accelerate the achievement of Vision 2020.

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Table 7. Gross Domestic Product (GDP) by Industrial Origin (RM Million), 1995 - 2000 (in 1978 constant prices)

Years GDP Agriculture, forestry &

fishing Manufacturing Mining &

Quarrying Construction Electricity, Gas,

Water & Services

2000** 199,590 (5.0) 18,635 (3.8) 59,863 (8.0) 14,514 (-0.2) 7,425 (5.0) 109,340 (5.3)

1999* 190,138 (4.3) 17,946 (4.6) 55,429 (8.9) 14,542 (-1.2) 7,069 (-3.6) 103,793 (2.4)

1998 182,331 (-7.5) 17,157 (-4.5) 50,899 (-13.7) 14,719 (1.8) 7,333 (-23.0) 101,346 (-0.8)

1997 197,120 (7.5) 17,961 (0.4) 58,956 (10.4) 14,454 (3.0) 9,522 (10.6) 102,200 (9.9)

1996 183,292 (10.0) 17,889 (4.5) 53,387 (18.2) 14,040 (2.9) 8,610 (16.2) 92,963 (8.9)

1995 166,625 (9.8) 17,115 (-2.5) 45,174 (11.4) 13,643 (22.9) 7,411 (21.1) 85,348 (10.2)

** Forecast by Ministry of Finance Estimates by Ministry of Finance Figures in parentheses are annual percentage changes Source: Economic Report 1999/2000, Ministry of Finance

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