Malaysia and the rest of Southeast Asia went through two outstanding financial crises in the last 17 years -the 1997 Asian financial crisis and the 2008 global financial crisis that stemmed from the U.S. The 1997 financial crisis taught Malaysia (and the rest of Southeast Asia) to rebuild their financial and banking sectors to be more resilient in the event of an economic meltdown. The 2008 recession hit the U.S hard, but its effect on Malaysia only involved the GDP (gross domestic product) and trade growth.
Malaysia's quick recovery in the 1997 economic meltdown was due to the policies and decisions of the National Economic Action Council. It was the objective of the organization to stabilize the Ringgit, re-establish market confidence, reorganize corporate debt, restructure and recapitalize the banks, preserve the stability of the financial market and ultimately revive the Malaysian economy.
Malaysia's Bank Negara gradually reduced interest rates from 11% (1998) to 6% (1999). The statutory reserve requirement was also lowered from 13.5% to 4 %. The 6-month loan arrears reverted to 3 months.
Malaysian Economy: Safe
After the 1997 Asian financial crisis, Malaysia remains prepared to respond to global financial crisis. The Malaysian economy is strong and is better prepared to face another global financial dilemma - thanks to the sensible financial and structural structure, and reforms implemented brought about by then 1997 Asian crisis.
Malaysia is confident that its current economic setup is resilient to the volatility of the global financial market. The government's main objectives are to keep the Ringgit from floating and to keep its value stable. A consistent foreign exchange rate will curtail any disruption in trade flow and sustain Malaysias economic growth.
Surviving Financial Woes
The unemployment rate in Malaysia is 3.5 % (May, 2014) and the overall poverty rate is only 1.7%. Though Malaysia's economy seems to be stable, not everyone living in Malaysia is well and good when it comes to their finances. Worldwide economic turbulence is quite unpredictable and there is no telling when a financial meltdown could happen. It is important that Malaysian consumers take the time to understand the current economy of the country. Even more important is for them to take care of their personal finances pertaining to their income, investments and expenses.
What if the financial meltdown is personal? What if you want to ensure that you are prepared in the event that financial problems do come? Are there steps to weather financial woes in Malaysia?
You must understand that you have the power to control your budget and expenses. Yes, it is not easy, but it can be done.
The first thing that you should do is to change the way you spend your money. If your spending habit is not helping you and your family save up in the event of a financial crisis, change your spending habits.
Do not shop whenever and whatever. If you are used to shopping without a list, chances are you tend to overspend. Make a list of what you need to buy and not just go to the store to buy whatever you see. Do not be swayed by bargain items if you do not need them.
Consider buying store or generic brands as they cost less. It is wise to buy generic brands of: milk and juices; cereal and grain products; staples such as flour, sugar, egg, salt, spices; cleaning products; batteries and cables; home equipment and tools; medications and more. Though the price difference is not as much, every bit of saved Ringgit counts in the long haul.
Deal with large financial issues such as taxes and unpaid debt. It is best to contact the creditor and make arrangements on how you can pay for what you owe at an agreed upon payment terms. This is one less looming stress for you.
Make sure you pay your bills on time. Late payment and overcharging your credit limit have penalties that add up to your total debt. If you are going to be a day or so late with your payment, it is wise to advise your creditor so he could waive late payment fees.
Try to put away part of your income for emergencies. It is recommended to save at least 3 months of what you make. This could be hard to do so it is best to deduct a certain percentage from your monthly compensation and deposit it to the bank as soon as you get your paycheck.
If you have to, cut up your credit cards and make do with your cash flow. If you do not have the money to buy the item, then do not buy that item. It is a matter of prioritizing over what you need and what you want.
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