Saturday June 12, 2010
Book Review by DAVID TAN
Nowhere to Hide: The Great Financial Crisis and Challenges for Asia
Authors: Dr Lim Mah Hui and Dr Lim Chin
Publisher: Institute of Southeast Asian Studies
ASIAN countries must not depend solely on being export-driven to generate growth but should instead focus on increasing domestic consumption.
Authors Dr Lim Mah Hui and Dr Lim Chin present a cogent argument why Asia should move away from being an export-oriented region in their book titled Nowhere to Hide: The Great Financial Crisis and Challenges for Asia. The authors say that the United States and Europe are no longer reliable markets for Asia.
“The US cannot go on accumulating international debt at the present rate without triggering another financial crisis. It has to narrow its chronic current deficit by either increasing its gross savings or reducing its gross investments,” the authors say.
In China, the population’s capacity to spend is restraint by the need to save for precautionary reasons.
“For instance, the poor are forced to save because of deterioration in access to health care, education, and social security,” the authors say.
Thus, if China wants to increase consumption as a driver of economic growth, it has to reduce income equality, improve social services, and provide social safety nets for the population.
In Malaysia, there is reliance on increasing household debt to fuel consumption. About 55% of the country’s total bank loans are for private consumption and household such as residential and non-residential property loans (36%), passenger car loans (10%), credit cards and personal loans (7%).
In view that some 60% of the Malaysian population makes a monthly wage of about US$900, increasing consumption through debt creation could take it down the same path as the US, the authors say.
“In fact, this is a policy challenge for most Asian countries, particularly China, which is attempting to turn to domestic consumption as an engine of growth,” they say.
In conclusion:
Nowhere to Hide: The Great Financial Crisis and Challenges for Asia is a reliable guide for the layman to understand the origins of the global economic crisis and how Asia should respond to the challenges.

To read the full review, please click here.

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