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Southeast Asia
What'sNewS Issue 10'October 1998
Klaas Evert Engelse - Malaysia:
Talk to Klaas Evert about the radical
change in the Malaysian situation over the
past few weeks and you can't avoid the
feeling that most people there are in a
state of shock. '1 think that applies for a
lot of people in the whole region,' he says.
'Most haven't experienced more than a
slight downturn. Psychologically, many
were not prepared for the depth of the
crisis, let alone the recently imposed
capital control. Everyone knew things
would be tough, but people hoped this
kind of drastic measure would not be
necessary. As I said, the biggest problem
here - at least in my view - is
yasychological. There are no food
"shortages, people still have their homes,
they even have jobs. It's not like
Indonesia. Still, people are devastated.'
The capital control imposed on 1
September this year is said to be stop gap.
'It could be a very good thing if the
Éjnterim period is used to reform and
restructure the whole economie and
financial framework,' Engelse explains.
'For us, RI, the current situation nieans
that in a strictly theoretical sense we can
continue to do business. But given the
uneertainty about what will happen and
liow long the capital control will last,
we're basieally biding our time. We're
waiting for the dust to settle and in the
meantime we've been managing our
existing portfolio continually. We need to
know how things will affect customers.'
What is like Indonesia is the fact that
many Malaysian corporates are suffering.
Those oriented to domestic markets are in
trouble because purchasing power has
declined and people are wary of spending
nioney in these troubled times. 'In the
manufacturing sector,' Engelse continues,
^around 60% of exports normally go to
Asian markets. Demand has declined
significantly and there are no imniediate
replacement options - after all, the
Koreans, Thais, Japanese - they all do the
same as us and they're fïghting for any
surplus offset market.' Palm oil, the
countries biggest export, is still doing
well, but this sector alone cannot make up
for the loss of not only hard-fought
prosperity and the trappings, rather than
the reality of political maturity. Or for a
significant piece of national pride that will
be hard to retrieve.
Paul Beiboer, Indonesia:
We've been checking in with our people in
Jakarta frequently since the crisis hit there
just over a year ago. Eor Paul Beiboer,
who has often been obliged to be the
chronicler of ever-more tragic
developments, this represents the next
installment in a situation that is 'getting
worse by the day. So much so,' he
continues, 'it's amazing that morale in the
office is so good. We're suffering, but it's
not quite as bad as in some companies
where people have no job security. At
least we know the bank is here for the
long haul and there will be no layoffs.'
The situation for many other people in the
archipelago is dire. Around 50% of the
population of close to 210 ntillion is now
below the poverty line. 'This is a real
blow,' Beiboer says, 'people can't feed
themselves and there is already a risk that
malnutrition will start to affect the
development of children. Kids are being
taken out of school, students are having
to drop out of university. There is 20%
unemployment and a lot of the pain is on
Java - the most densely populated island
(60% of all Indonesians live here).' As if
the people didn't have enough to contend
with, El Nino-generated bad weather hit
the rice harvest. Staple goods have more
than doubled in price, a lot of people are
in real trouble. 'The IMF,' Beiboer says,
'which has changed tack here a number of
times - is now allowing a budget deficit in
an attempt to stabilize the social situation.
Jakarta
The governntent is subsidizing some food
staples and medicines.' The picture is
depressing, and as far as our people in
Jakarta can see, there is little relief in the
shorter term. 'Our intpression is that we
haven't seen the bottom.' But the staff
have little time to dweil on the big picture
- they are very busy, although the work is
recovery, rather than the preferred new
business. 'Much of what we're doing is
restructuring. We've been extending
maturities for those clients who we see as
viabie. There will have to be some debt
forgiveness, and debt for equity solutions.
One thing is sure, it will be a long painful
process. A
number of
customers have
come to us with
counter-trade
schemes - no
one can get
credit here,
counterparts
f want cash. Lucy
Pandjaitan and
her team are
doing well in
that sense, and
we are working on quite a few trade
finance structures that mitigate credit and
country risk significantly. But a lot of our
customers are suffering badly. All we can
do is keep smiling, keep working, doing
what we do.'
Hans Winkelmolen, Thailand:
To the north, Elans Winkelmolen and his
team appear hugely optimistic in
comparison to colleagues in Jakarta.
'Thailand is certainly not Indonesia or
even Malaysia,' he says. 'It is very quiet
here - maybe too quiet. Obviously, you
feel the effects of the economie problems.
Just a year ago, shopping actually meant
buying things. Now, the mails are still
full, but no one is spending any money.
Fortunately, though, there is no social
unrest. As Thailand is a main F8cA
producer, and a major food exporting
country, nobody here has to suffer from
having not enough to eat.' The situation
may be very different in Thailand, but in
a way it mirrors the Indonesian
experience. 'It is very difficult to do any
business at all here,' says Winkelmolen.
'There are lots of interesting
opportunities, but the art is making them
happen. I'd say we are preparing the
ground for the future - Thailand was the
first sick man of Asia, predictions for
1999 are still pessimistic, but there are
indications that we may be the first out
of the hospital.'
The treatment for Thailand appears to
be a constructive cooperation between
government and institutions through
