SUNS  4138  Tuesday  27  January  1998

East Asia: Tiger economies cower in year of the tiger



Hong Kong, Jan 26 (IPS/Yojana Sharma) -- Asia welcomes the Lunar New Year this week with a whimper, cowering from rampaging markets that have slashed the value of their currencies by 30 to 80%, throwing workers out of jobs and threatening general unrest.

In Chinese tradition, the tiger, rather than the lion, is the king of the beasts. Its luxurious gold-and-brown coat is associated with wealth, and the Chinese god of wealth Hsuan Tan is sometimes depicted riding the tiger. But in the 12-year Chinese astrology cycle, the tiger year is also a year of reversals, one when luck and chance cannot be relied upon.

Not surprisingly, astrologers here are warning people against speculative dealings and taking financial risks in the new lunar year, beginning Jan 28. They remind clients that two world wars, broke out during tiger years.

People across East Asia hardly need reminding that they need to be cautious after the dramatic market falls of recent weeks.

The dynamism that characterised the tiger economies in the last decade has given way to caution. Everywhere in the region, economic growth forecasts are being revised downwards.

Even those least affected by the recent currency turbulence, such as Hong Kong, has revised downward its forecast from 5.5% to 4.5%. Singapore is forecasting 3 to 4% growth this year, after registering 7.6% in 1997.

Malaysia and Indonesia are even more pessimistic. Few are daring to make predictions while the dust is still swirling -- and the market woes have come in the wake of atmospheric haze from last year's forest fires in Indonesia, which seriously damaged income from tourism.
The 4 to 5% growth rates now being forecast for the region, while still relatively healthy, are nothing like the 7 to 9% growth the tiger economies had become used to in the 1990s. Slower growth also means they have to contend with the spectre of rampant inflation and unemployment.

Although Asian economies are beginning to swallow their pride and turn to the west for help, many western bankers and institutions admit they do not know the answers. As even the International Monetary Fund (IMF) has discovered, it is not easy to cure a sick tiger.

The Fund, which believed its rescue package for Indonesia would quickly stabilise that country's currency, stood by while the rupiah fell another 15% against the dollar, losing 80% of its value compared to last year.

Over the weekend, IMF officials conceded that the amended reform package signed by Indonesia with the Fund less than two weeks ago was not showing the desired results.

Even in places relatively unscathed by market woes, lack of confidence and anxiety over the future have meant a far from energetic bound into the year of the tiger.

In Hong Kong, residents are having to make adjustments as the traditional new year dish -- chicken -- is off the menu due to a virulent flu virus said to have jumped from poultry to humans. The 'bird flu' virus has caused four deaths in recent weeks and had led to the mass culling of more than 1.4 million chickens, ducks and other birds in December.

Although the government announced Friday that controlled imports of chickens from China would be allowed in, for the new year celebrations that begin Wednesday, few are taking any chances.

"It won't be the same without the traditional food," says office worker Ada Chan, wondering what to cook for the family feast. "Even duck and goose has been taken off(from the market) because of the flu problem.
What can I substitute?"

In a recent survey in Hong Kong, nearly 90% of those polled were anxious about the future and 54% concerned about unemployment.

"The problem is not just purely economic now, but a matter of confidence," noted Cheng Kai-nam of the Democratic Alliance for the Betterment of Hong Kong, the political party that commissioned the
poll.Anxiety is at much higher levels elsewhere in the region.

In Bangkok, serious unrest broke out last week with violent demonstrations over pay cuts at a car parts factory. Police made 58 arrests, and many of the workers were savagely beaten. The government is also drawing up plans to expel 300,000 foreign workers, most of them Burmese, during the next six months.

Malaysia had announced plans to expel up to a million foreign workers, but has held back after talks with Indonesia's President Suharto.

Indonesia's unemployment rate is currently 10% and another two million people are forecast to lose their jobs during the year of the tiger. The return of migrant workers from neighbouring countries can only destabilise society further.

This month, panic-stricken Indonesians emptied markets of non-perishable goods for fear of new currency turmoil as the rupiah plunged to new lows against the US dollar. Panic buying has now
subsided and been replaced, they say, by apathy and dejection as people realise worse is still to come. Mob attacks on account of rising prices broke out Friday.

In Hong Kong, at least a dozen deaths, mostly suicides, have been attributed to the financial crisis, mainly because of over-borrowing.
Last week, the Hong Kong Retail Management Association said up to 800 restaurants could close this year -- some 8% of Hong Kong's eating establishments -- as cautious residents tighten their belts in more ways than one.

Even as East Asians look to a less than rip-roaring new lunar year, many are still surprised by the suddenness of the downturn. "Just six months ago I would never have thought we would be forced to resort to such painful measures as this," David Turnbull, managing director of the Hong Kong airline Cathay Pacific, said as he announced the layoff of 700 staff last week.

More bankruptcies and layoffs are predicted around the region, even as astrologers and soothsayers are reporting good business as desperate residents fearful of the future seek their advice.

Many of their fears are being confirmed. Said Hong Kong-based geomancer and palmist Lee Ying-choi: "The year of the tiger brings challenges, particularly in the first half of the year."

"Fear of job losses continue, employees should be prepared for a rough ride. Speculation is particularly discouraged," Lee said. And even if -- as Lee predicts -- there may be better economic news in the second half of the tiger year, the dent in confidence may leave its long-term mark.

Meanwhile, East Asians may well be content to lie in the grass rather than spend aggressively and seek out the good life as they did in the past.