In Crisis, Can We Find Opportunities?

Joseph Kwok
Associate Professor, City University of Hong Kong
Raymond Chan
Assistant Professor, City University of Hong Kong

Abstract Since the regional financial crisis broke out, the economies of many Asian countries have dropped dramatically such as Korea, Thailand, Japan, Singapore, Indonesia and Hong Kong. When most of people are seeking the opportunities to reduce the lost, disabled people are doing the same things too. This paper tries to take the initiative to analyze the general financial situation among some Asian counties under the attack of the Crisis and also provide some suggestions for concerned parties and people.

Attack of the Asian Financial Crisis

Though an attack by surprise, the coming of the financial turmoil did have some early signals in the Asian economies. First, there had been a built up of huge oversupply of commodities in real estate, electronic and car manufacturing industries (Lit, 1997, p.2). Second, non-performing bank loans were already well above dangerous levels. Most Asian policymakers unfortunately ignored these signals, even though they were not strangers to the often-told lessons about the Japanese "Bubble economy". Perhaps they were still overwhelmed by the legendary dreams of the Asian Dragons and Asian Tigers.

Politicians and economists try to understand what actually had caused the financial turmoil. Some say a key cause is the inappropriate channeling of huge capital funds by Asian governments' to selected projects based on party, political or even family interests rather than the fundamentals of the economy, i.e. the so-called "crony capitalism" (Bello, 1998). These governments, over the years of unscrupulous spending, had acquired a level of current account deficits and foreign debts far beyond their repayment capacity. In 1995, for instance, Indonesia, Thailand and Malaysia had deficits in their current account with an alarming percentage of nine percent, seven percent and four percent of their respective GDPs. Indonesia, in particular, recorded a foreign debt of more than US$ 60 billion.

The Crisis was finally triggered off by currency speculators, beginning with Thai Baht in May 1997, spreading soon and fast to Philippines Peso, Malaysian Ringgit, Indonesian Rupiah, and South Korean Won. These Asian currencies fell sharply for around 30 percent to 50 percent. Asian stock markets followed a similar pattern of free fall. The vicious cycle carried on as currency and stock market crashes hit the confidence of domestic and foreign investors, who started further rounds of capital withdrawal.

Table 1 below gives a comparison of the GDP forecasts before and after the Crisis, vividly showing the sufferings of the Asian economies.

Table 1: GDP Growth Rate of Selected Asian Economies, Actual and Forecast
(1995 - 1999)

The financial turmoil hits not only those rich and powerful. It has caused massive unemployment, run away inflation rates in some economies while sharp consumer spending contraction in others. Wide spread social and political unrest has followed with Indonesia as the most typical case.

Since the Crisis, interventions from Western countries and Japan, plus international organizations including the International Monetary Fund, and the World Bank, have offered timely but conditional help. The recipient economies of foreign aids are required to adopt market procedures that are fair, transparent, accountable, and open to foreign investors. Government borrowers are asked to reduce, within a short time span, their deficit spending. Though utterly bitter, the prescription has been swallowed by Asian governments and their people. Indeed, the lesson for Asia has been extremely expensive and costly in all aspects of the society. By the end of the 1998, the Crises seem to have been contained and signs of stability in political, social and economical areas have been reported. Economic forecast of various Asian economies is becoming more positive, especially for the most worst hit countries, such as Thailand, Indonesia and South Korea (see also Table 1). Also extreme social reactions to the Crisis are beginning to give way to more rational and long-term considerations. Now is high time to find answers to the question: "In Crisis, can we find opportunities?"

Impact on People with Disabilities

Undoubtedly, people with disabilities are among the hardest hit sectors of the society. They are suffered from losing job opportunities as the economy retrenched, and diminishing funding support from the state and the public.

A sudden and significant contraction of consumer spending in some economies has reduced sharply job orders for workshops employing a large number of disabled people. A sharp increase of unemployment rates among mainstream work force has displaced and reduced job placement of disabled people in the open market. As banks have become conservative towards borrowers from mainstream industries, disabled people's enterprises are facing even tougher times to raise loans to support their businesses.

There is also a general reduction on government spending on cash assistance and rehabilitation services. Similarly the spending capacity of non-government funds, including charitable foundations and regular fund raising campaigns, has been sharply inflicted. For example, the Community Chest of Hong Kong, which is one of the largest non-governmental funder for over 130 member organziatons, has reported a fall of 30 percent of funds received for 1998/1999.

Opportunities in Crises

As contraction of government budget for disability concerned measures becomes a reality, a more advisable approach is to study what better alternatives are available in maximizing the efficiency and effectiveness of the already limited funds. We have to seek alternatives that are user-friendly, low capital cost, low maintenance cost, involving a high level of community involvement and disabled people's participation. In this regard the decades-old debates on balancing institution based and community-based rehabilitation should receive a higher priority of attention. The budgetary reality might indicate that our only path to the new millenium is to mount an overhaul on those institutions that draw high concentration of professional personnel, and capital and recurrent funding. Some of the savings could then be used constructively in launching community based rehabilitation projects in rural and mountainous areas, and reaching more number of disabled people and their families. Administrators and professionals, with disabled people's involvement, should also take proactive steps to enhance resources and reengineer service delivery systems, with a view to apply savings to new priorities that better serve the challenges of a changing environment. In crisis situations, we shall survive and come out with better qualities of service only if we are open, flexible and innovative enough to challenge our old values, old assumptions and old perspectives.

New approaches for community fund raising and the use of such funds are also needed. First, it has finally been accepted as a reality that money generated from community fund raising is not always expanding year after year. Innovative fund raising strategies will be needed that are low cost and effective, which would be possible in integrating advanced information and telecommunication technology. Community funds, thus raised, should better be applied on a project basis with specific period of completion and clear performance targets giving value for money.

Projects should also be selected not on their complimentary function with governmental measures, but rather their unique contribution to the mission of promoting full participation and equality of disabled people.

In the open market, where there is a shrinking in consumer spending, the hardest hit sector is in luxury items, which are not the traditional markets of most workshops, which employ a large proportion of disabled people. People have become thrifty and spend on low cost items. This might give rise to an expansion in the low-end market. Workshops and disabled people's enterprises could take this opportunity to expand or open new businesses in this sector with low capital and competitive operating costs. In the macro dimension, there are signs that the Crises have accelerated the trend of mass scale based manufacturing to network based manufacturing (e.g. contract-out, sub-subcontracting), which gives more opportunities to small-scale companies. Workshops and disabled enterprises are mainly small-scale operations, and may benefit from this trend.

A network of workshops and disabled people's enterprises will be most effective in mounting regional campaigns to focus national and multi-national corporations on their capacities and potentials in the economy. In this regard, the newly founded Community Workshops for Asia and the Pacific Region, as well as other international NGOs, should take a proactive role in organizing such campaigns and mobilizing support from international business corporations.

Rising from Crises into the New Millenium

The Crises have created more unemployment, caused downward movement of wages, and sharply reduced administrative and management jobs. This would displace workers of relatively lower qualification and lower productivity out of the labor market. Even non-skills jobs have become a rare commodity which, ironically, will be competed by more and more non-skilled workers. No doubt that the disabled workers are among the most vulnerable groups that would be displaced and less competitive group to survive in the labour market.

On the other hand, rapid advances in information and telecommunication technology have reduced production costs and improved efficiency in many fields. New job openings are being created in large numbers in a wide range of related fields requiring application of such technology. An interesting example can be found in information management and technology related job openings in most cities. Such job openings post less communication and mobility barriers to disabled people, as they are no longer required to be physically present in work places. Providing the right kinds of education and vocation training to disabled people is perhaps the key to enable their full integration into the society, in particular the labor market of tomorrow. Moreover, the method of education and mode of delivery of training, which meets the special needs of disabled people, should be an important agenda in policy and research studies.

Therefore, governments, self-help groups and NGOs, when formulating agenda for action in the Post-Crises era, should not undermine the primary and fundamental focus concerning education and training.

References

Bello, W. (1998). Back to the Third World: The Financial Crisis and the Future of East Asia. Asia Alliance of YMCAs (Ed). Financial Crisis: Our Responses. Hong Kong: Asia Alliance of YMCAs.

Lit G. (1997). East Asian Economics Growth: Prospects for Sustainable Development. Third ASEAN University Seminar on Social Development, 28-29 June, Pekan Baru, Indonesia.

Go back to the Contents

Asia and Pacific Journal on Disability
Vol. 2, No. 1, May 1999

Contributed by Mr. Tsuyoshi Takeda, Asahi Shimbum Newspaper

ISSN 1029-4414