Demand for middle-class housing may remain strong, but pressure is building in the office and retail sectors. Too many edifices are opening their doors, including mega-projects like the twin Petronas Towers, the world's tallest building. Demand will take a long time to catch up. Another factor is Malaysian investment abroad. Over the past four years, local companies have poured billions of dollars into Southeast Asia, Latin America, Africa and eastern Europe.
Many projects have yet to show a decent return.
That's still way below the exposure of Thailand's troubled banks. Rajeev Malik, a senior economist at Jardine Fleming International Securities in Singapore, ticks off other differences between the two countries. Malaysia's capital account has been open for several years now, and hence there is no unstable surge in capital inflows as a result of a structural policy shift. Even so, an economic slowdown may come sooner or later. The question people should ask is whether what is happening there is a Thai-like meltdown or a desirable cooling after a decade of high growth.