This was hardly an environment to attract many tourists to the hotels. Dense smoke from the fires raging across the Strait of Malacca in Indonesia only compounded an already bad situation. On a recent visit, these half-completed high rise structures sat abandoned, monuments to poor investment decisions by the local banks. Then the foreign investors pulled out. Using racist language, the Malaysian Prime Minister, Mahathir bin Mohamad, retreated into blaming his country's economic problems on a Jewish conspiracy.
Investors fare best when the political and economic risk factors are well-understood and minimized.
The most effective way to achieve these goals is to foster broader participation in the private sector under the rule of law. And the most effective way of doing this is to develop a financial system that promotes a sizeable and strong middle class that has a stake in society and its stability. At a recent forum sponsored by the Center for United Nations Reform Education, Professor Sherle R. Schwenninger, a senior consultant at the Council on Foreign Relations, proposed the development of a financial system that allows ordinary people, which he defines as people who will fight to save their homes and businesses, access to long term credit. The credit could be for any worthwhile purpose. Financial policy has usually favored large firms that are export-oriented and that have access to hard currency.