Kuala Lumpur pulled out all the stops in its preparation for the Non-Aligned Movement (NAM) summit last month. The 114 heads of government and heads of state attending would have found that the beautiful high-tech airport’s trouble-prone baggage system had been overhauled under the supervision of transport minister Ling Liong Sik. The system, which embarrassingly failed when the airport was opened in 1998, has now been declared fixed.
Potted flowers sprang up in strategic locations where NAM visitors passed and a fleet of new BMWs shuttled VIPs around town. Hotels were equipped with metal detectors and baggage scanners. Twenty-one of the country’s top medical teams and 16 ambulances were on standby to provide the highest standard of care for any delegate who might suffer a headache, a heart attack or contract anthrax.
To ensure smooth and pleasant journeys for the guests, several of the city’s busiest roads were closed for hours at a time. Television ads were aired to explain the meeting’s importance, the symbolism of its logo (a white dove against a blue-and-white background), and to educate the public about NAM’s history.
The purpose of the movement, founded in 1961 after being first mooted at the 1955 Bandung Conference, is to ensure “the national independence, sovereignty, territorial integrity and security of non-aligned countries” in their “struggle against imperialism, colonialism, neo-colonialism, apartheid, racism, including Zionism, and all forms of foreign aggression, occupation, domination, interference or hegemony as well as against great power and bloc politics”.
NAM has struggled with a lack of focus in recent years and the Kuala Lumpur summit was intended to inject new life and purpose into the diverse grouping. Even a special theme song was composed to mark the occasion.
Generous hosts, reluctant investors
Malaysians have a reputation for being generous hosts and the government has never let them down on this front. But while leaders of the developing world flocked to Malaysia last month, foreign portfolio investors have largely continued to stay away, even though the economy remains one of the region’s bright spots. JPMorgan estimates that international fund managers in Malaysia are currently only exposed to 60% to 70% of the country’s MSCI weighting. The economy is estimated to have grown at a respectable 4.5% in 2002 and is projecting growth of 5.2% in 2003. Malaysia received a ratings upgrade last year and JPMorgan’s head of Asia sovereigns research, David G Fernandez, believes it could well regain its A rating in 2003. The stock market fell a gentle 5.2% in 2002 but fixed-income investments returned 16.9%, the second-highest among investment-grade credits after South Africa, which returned 20%.
Although a couple of international financial groups such as Barclays Capital, which recently poached Steve Clayton, an experienced Malaysia hand, from Nomura, have quietly crept back in, the number staying out is remarkable. Foreign investors have yet to get over the government’s imposition of capital controls during the financial crisis. And with turnover on the Kuala Lumpur Stock Exchange still way below the billion shares a day that it enjoyed in the good old days, Malaysia to them is just not the place it used to be.
It’s true that Malaysia has changed and the irrational exuberance of the boom years has calmed down. The government’s efforts to clean up and strengthen the banking system have been swift and effective and Malaysian banks are lending again, but more prudently than in the past. A recent survey by McKinsey even said that Malaysia had the best corporate governance laws in Asia, although enforcement was not quite as highly praised.
Foreign investors may be ignoring Malaysia but it is doing its best to ensure its voice gets heard. Last month while the NAM summit was going on another notable meeting – aside from the Kuala Lumpur World Film Festival, held in conjunction with NAM with the theme of “peace, harmony, non-violence and non-discrimination” – also took place in the capital, with 200,000 people turning up at the Commonwealth Games stadium for the Malaysians for peace rally, organized by the People’s Alliance For Peace, an NGO.
Popular artistes warmed up the crowd for the main act, prime minister Mahathir Mohamad, who criticized the west on its handling of the terrorist, Palestinian, and Iraqi conflicts. “The westerners claim to have a great civilization but behave like Stone-Age people whenever they are confronted with problems,” he said. “They kill people and overthrow governments to achieve their goals.” Another government official, youth and sports minister Hishammuddin Tun Hussein, exhorted the crowd to say no to weapons of mass destruction – including those of Israel and the US.
Although no-one believes that the US or Israel will pay any more attention to Malaysia’s exhortations for peace and disarmament than foreign investors have to its capital markets of late, Malaysia seems quite comfortable doing its own thing anyway.
