Malaysians could be excused for feeling like they had already heard of some of the austerity measures announced Friday.
A decade ago, Daim Zainuddin, the architect of modern corporate Malaysia and the finance minister at the time, slashed government spending and grappled with the issue of corporate bailouts, the same issues facing Finance Minister Anwar Ibrahim today.
In 1985, a year after Mr. Daim took control at the Finance Ministry, the economy shrank. But Mr. Daim's tough and initially unpopular measures led to a decade of record growth. The stock market swelled to become the third-largest in Asia, behind Japan's and Hong Kong's.
In an interview this week, Mr. Daim said that fixing the economy would be more difficult this time.
"In 1985 and 1986, things were different, and the economy was much smaller," he said. "Looking back, it was much easier to handle that."
The possibility of a turnaround, he said, depends on what the government does now. "Are we going to face the problem head on — which I would recommend," he asked, "or do we want to delay things like Japan, thinking that time will cure things?"
His advice: "Cut expenditure and no bailouts for any companies. This is business. If the markets decide it should be that way, they have to face the consequences."
The comments are strikingly similar to those Mr. Anwar made Friday. "We are not here to protect or bail out," Mr. Anwar said, outlining a package he called "market-driven."
Mr. Daim, 59, currently holds the title of economic adviser to Prime Minister Mahathir bin Mohamad. He and Mr. Mahathir are credited with transforming a country that had relied on tin, rubber and palm oil into a diversified high-end manufacturing center.
"Daim's role has been providing access to the prime minister," said Jomo K.S., a professor of economics at the University of Malaya. "In a country where executive support has been crucial for business success, this has been important."
Mr. Daim has also provided a practical, no-nonsense voice on economic policy, in contrast to the fiery rhetoric of Mr. Mahathir. This is his nuts-and-bolts view of the current crisis: "If you want to run a marathon, you need a breather. You have to consolidate your position for the next stage. You can't continue expanding and expanding. There would be bottlenecks, shortage of manpower and, when you become too big, bureaucracy."
Events this week provide a good example of the contrast between the prime minister and Mr. Daim. Mr. Mahathir said early in the week that banks had been instructed not to make too many margin calls — demands that a client make up the difference between loan and the price of the shares pledged as collateral. The prime minister also called traders who recently increased the price of cooking oil "economic saboteurs." Mr. Daim, by contrast, sends a message of sink or swim. On the issue of margin calls, he said: "The banks must be left to decide. They know who their clients are."
Investors have in the past taken comfort from the notion that behind the rhetoric of Mr. Mahathir, they could divine hard government policy through Mr. Daim.
Mr. Daim, who is treasurer of Mr. Mahathir's party, the United Malays National Organization, said he and Mr. Mahathir consulted regularly. "That doesn't mean that we always share the same views," he said, "but Dr. Mahathir is big enough to know that differences of opinion are part of democracy. "
Last week, in a sign of their continued cooperation, he and Mr. Mahathir traveled to Tokyo, where they met with Japanese businessmen and government officials.
It was Japanese investment that played an important role in helping Malaysia emerge from its recession in 1985. This time, however, Mr. Daim said he was not counting on Tokyo.
"The good thing about them is that they understand us," Mr. Daim said, referring to Japan's wartime occupation of much of Southeast Asia. "They have been here a long time; they ruled us."
However, he added, "If they want to lead, they can, but they are not interested, and nobody can force them. So, I do not look to Japan." More than the United States, which he said was is due for an economic correction, Mr. Daim said he was counting on Europe, but he is not counting on outside investment alone.
"Nobody owes us a living," he says. "If you want to survive in this world, there's no other way: hard work, efficiency."
