Over the malaise in Malaysia, but no resting on its laurels

Over the malaise in Malaysia, but no resting on its laurels. Malaysia may be on course to maintain a commendable comeback after suffering its share of fallout from the global financial crisis.

Stay positive, people are often told when confronting serious illnesses, and many swear by the power for good that comes from adopting an upbeat outlook.

If the same may be said of countries, Malaysia may be on course to maintain a commendable comeback after suffering its share of fallout from the global financial crisis.

A hotel brochure is not necessarily the most accurate source of economic analysis. But the guide placed in guests' rooms at the Shangri-La Rasa Sayang Resort and Spa at Batu Ferringhi, west of the Penang state capital of George Town, bears witness to a mood of national confidence vindicated by one international bank's assessment of Malaysia's part in Asia's "stunning economic pirouette".

The guide dwells on Penang but the message is applicable more generally. It points out that the diversity of activity, from tourism to the manufacture of high-technology products, is so firmly established that the economy "continues to thrive, even during economic slowdowns".

The Middle East plays its part. Perhaps because they identify kindred spirits among the population of a modern Islamic state, visitors from Gulf countries have become an important component of the buoyant Malaysian tourism market.

"It is certainly true that in the past year we have seen more guests from the Middle East," says Suleiman Tunku Abdul Rahman, the director of communications for the Shangri-La, currently celebrating its inclusion on a list of the world's top 50 hotels compiled by The DailyTelegraph of London.

Until the global financial crisis had its initial impact on the UAE, the numbers of people travelling from the Emirates to Malaysia were steadily increasing, climbing from just under 30,000 to nearly 35,000 between 2005 and 2007.

The totals slipped in 2008 and especially 2009, but behind the statistics published by the UN World Tourism Organization (UNWTO) there are anecdotal signs of recovery. Saudi Arabia is, not surprisingly, the bigger source of visits by far from the Middle East, with the figures rising each year except 2008, and back up to 77,000 in 2009.

"We are especially popular from the period before Ramadan and among honeymoon couples," says Mr Suleiman, whose father was the secretary general of the Organisation of the Islamic Conference, based in Jeddah, in the early 1970s.

"I think people from the Middle East like to come here because we are an Islamic country, the weather is less humid, they love our cuisine and - in the case of the Saudis - their way of practising their religion is similar to our own."

Malaysians have been told to expect moderate rather than bumper growth this year and next, at about 5 per cent, after last year's robust recovery of 7 per cent. The performance in individual sectors is mixed. The jobs pages of the main English-language newspapers feel thick and advertising in all media bounced back impressively last year, a rise of nearly 16 per cent to record spending of 7.66 billion ringgits (Dh9.22bn).

And the day after one spot of bad news - the supply of newly trained pilots far outstripped demand, leaving 500 graduates from the past two years unable to find jobs - a follow-up report said recruitment would pick up this year as airlines expanded.

Meanwhile, Malaysian banks appear ready to step up overseas investment. One, Malayan Banking (Maybank), was reported by the New Straits Times to be planning to advance Dh72 million (US$19.6m) in the coming six months for the purchase by Malaysians of property in London alone.

HSBC's quarterly Asian economics review says: "Malaysia has recovered well. Exports staged a quick rebound, helped by inventory restocking and the increasing importance of intra-Asian trade. While lingering global uncertainties make it unlikely we will see further bumper growth rates, we do not expect any severe slump.

"The domestic-oriented parts of the economy have performed rather well too. Private consumption continued to support growth, adding a nice complement to exports."

Discussing the region more broadly, the report concludes that while Asia was "pummelled like everyone else" in the worldwide downturn, it was "now delivering a stunning economic pirouette".

But there is a sting in the tail that Malaysia, along with its neighbours, is urged to attend to if recovery is to remain strong.

"The performance may not be quite as stable as it seems," the HSBC report concludes. "Imbalances are gradually sneaking in, prices are rising, leverage is mounting, and investment has started to soar.

"Don't get us wrong: Asia still looks secure in flight. But to bring things down safely, officials need to tighten up. Quickly."