It is the very features of globalization, decried by Mahathir that have contributed to the recovery. Indonesia, because of special political factors, has yet to record a resumption of capital flows. The Malaysian recovery remains shallow. Export growth and massive levels of deficit financing have aided the recovery. There has been only a modest revival in consumer demand.
Private investment remains sluggish, and foreign investment is a trickle.
Herein lie the dangers of the economy sliding into yet another crisis. Capital controls and the ringgit peg, touted as the foundations for the recovery by Mahathir and officialdom, if anything, have had a perverse effect. Despite several attempts at relaxing these, markets have largely remained unconvinced. The inclusion of Malaysian stocks in the benchmark Morgan Stanley indices was supposedly to trigger a massive flow. This has yet to happen.