Who would have thought that Malaysia managed to deal with the economic recession crisis that hit the whole of Asia in 1997-1998. The turmoil made the country of Malaysia continue to rise and develop.
The crisis has had a negative impact in terms of current account deficit as well as low foreign reserves and increasing external debt.
In order to restore a country's economy, Malaysia also received an offer of financial assistance from the International Monetary Fund (IMF), but this offer was rejected by the Prime Minister at that time, Tun Dr. Mahathir Mohamad.
He rejected the IMF's offer because there were conditions that could potentially make the country's economy and society worse. Although Malaysia's foreign reserves are relatively low, they are still able to survive.
A year after the crisis occurred, Malaysia introduced an initiative in the hope that it could reduce the pressure of the crisis and re-stabilize the country's economy.
Among the initiatives implemented is the reduction of interest rates in order to provide opportunities for companies and consumers to make loans to encourage investment and spending.
Next is to stabilize the ringgit currency by locking the American dollar, which is $1 equal to 3.80 Malaysian Ringgit. As a result, it can stop various speculations and also currency fluctuations. Ringgit trading is also closed overseas as well as stock trading in Singapore.
In addition, capital flow control is also implemented, especially short-term capital flow by restricting the transfer of capital by citizens and local companies.
In the meantime, stability in the financial sector is maintained by not closing financial institutions that are facing pressure.
Guarantees against deposits in banks and financial companies are also provided. In this way depositors trust the country's banking system more and do not suffer the same fate as other countries that had to close their banks at the insistence of the IMF.
Meanwhile, restructuring was done to the corporate and banking sectors to enable microeconomic recovery. Various agencies were established to reorganize finances such as the 1998 National Asset Management Act to deal with the issue of unpaid loans.
Danamodal Nasional Berhad was established to capitalize and restructure troubled financial institutions, while the Corporate Debt Restructuring Committee (CDRC) was established to restructure corporate debt.
In addition to that, the government also revived various economic sectors such as the tourism and manufacturing sectors in the country that were affected by the economic crisis.
Malaysia also maintains a number of important economic and social policies, particularly those related to the regulation of foreign asset ownership, price controls, subsidies, and distribution and balancing policies in local ethnic communities.
The result of this strategy made Malaysia succeed in becoming a stable country in terms of economy, and many people are proud and grateful to Tun Dr. Mahathir for his wisdom in governing the country and bringing the country out of the shackles of crisis.
