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Mahathir the magnificent

The western media is up in arms against the Malaysian Prime Minister Dr Mahathir bin Mohammad, baying like a pack of wolves after his blood. NEWSWEEK went to the extent of asking for his replacement, TIME featured that possibility, Anwer Ebrahim, Mahathir’s Deputy, on the Front Cover. Not only a very pointed suggestion but a rather subtle way of causing a problem between the two and a rift in the ruling party. The latest imbroglio came about because of the domino effect caused by the collapsing Thai Baht and the resultant pressure on the Malaysia Ringgit. By intervening to arrest the slide and save Malaysian stock market players from bankruptcy, Mahathir unfortunately gave an opportunity for western speculators to cut Malaysia, and Dr Mahathir, to size. Actually the Asian Tiger economies are caught up in the vise between China’s emerging economies and the Japanese colossus, something had to give and soon. With heavy loans buoying up actual growth, Asian economies had no ready answer to the falling value of their currencies. To put it bluntly, years of living beyond their means took a heavy toll once foreign speculators started to make windfall profits by pulling out of the markets. However the focus of all the west’s anger is the person of Mahathir, the 71-year-old PM who has taken Malaysia pell-mell into the 21st century. While making life difficult for Malaysia economically, the west is trying to stoke anger against Mahathir within Malaysia. As one knows, nothing succeeds more simultaneously, than economic discontent.

Dr Mahathir was born in Seberang Perak, Alor Setar, Kedah on Dec 20, 1925. He is married to Dr Siti Hasmah Mohamed Ali and has 7 children, four sons and 3 daughters. In 1947 he joined King Edward VII College of Medicine in Singapore. On graduating he joined government service as a Medical Officer but left in 1957 to set up his own medical practice in Alor Setar, the capital of Kedah. Mahathir has been active in politics since 1945, he joined the United Malays National Organization (UMNO) since its inception in 1946. From 1957 to 1964 he remained in the practice of medicine before entering the electoral fray and becoming Member of Parliament (MP) in 1964. He lost the elections in 1969 and was appointed a Senator in 1973, however he quit in 1974 and again came to Parliament in 1974 for Kubang Pasu, Kedah. Extremely interested in education, he has served in various capacities in the fold including Chairman of the National University Council. In 1974, Mahathir became the country’s Minister for Education. In 1976 he additionally became Deputy PM, relinquishing the Education portfolio in 1978 to become Minister for Trade and Industry. Elected as one of three VPs of UMNO in 1975, he was elected as Deputy President in 1978 and party President in 1981, becoming Prime Minister the same year. In 1984 he was re-elected as President of the ruling party, the Parisan Nasional (National Front). Under his leadership the party won landslide victories in the 1982, 1986 and 1990 General Elections.

On gaining independence in 1957, Malaysia accounted for one-third of the world’s supply of rubber and tin, being the world’s largest producers. A very progressive and dynamic policy has transformed Malaysia from being a source of raw material only into a modern economy with diversified sectors of manufacturing, mining and agriculture as well as the services sectors all playing crucial roles. The establishment of exports substitution industries saw also a broadening of the commodity base. By 1969, the economic dominance of the Chinese within Malaysia was so marked that disparity led to racial violence and to the economic rise of the Malay indigenous population (Bumiputras). The launch of the New Economic Plan (NEP) in 1970 aimed to adjust the economic imbalances so as to have 30% of total equity ownership in the hands of Bumiputras, 40% by other Malaysians and 30% by foreigners. This sought to avoid racial conflict by tackling the rural poverty and ending the identification of economic functions with race. In the 70s, 70% of exports were raw material such as petroleum, rubber, timber, palm oil and tin, by 1980 manufactured exports exceeded the export of raw material. The economy stalled in 1985-86 because of a shortfall in commodity prices, causing austerity measures by the reduction of programmed expenditure by 25%. However since then, till very recently, with a strong recovery beginning in 1986, Malaysia has maintained a steady growth rate of 8% or more. For the entire period of Mahathir’s rule, Malaysia has enjoyed economic prosperity with a focussed growth in production of electronic components, telecommunications and electrical equipment, machinery, textile and clothing. On the other hand inflation has been kept within tight control, hovering around 3-4.5%, by 1993 the Malaysian Government registered a surplus for the first time since independence and the foreign exchange reserves rose to US$ 28 billion, equivalent to 8 months of imports. Along with this the Kuala Lumpur Stock Exchange (KLSE) rose to unprecedented heights, becoming the fourth largest in Asia. Thus began the programme of developing capital which is inherent as an effective means of financing economic development. In the Sixth Malaysia Plan, the largest slices for economic and social development went to agriculture and rural development. By 1993, the external debt outstanding had come down to US$ 15.4 billion from US$ 21.4 billion.

However the rapid economic growth had a downside because it put Malaysia’s infrastructure under considerable strain. Corporate entities undertaking huge projects started to borrow outside the system at high interest rates. Malaysia provided excellent opportunities for foreign companies in billion dollar ventures in sewerage, water treatment plants, public transport, telephone systems, power generation, roads and bridges. Much has been transferred to the private sector but it has tied the economy more closely to the global economy and thus the vagaries of speculators, particularly because of enormous increase in prices in real estate and some really grandiose high cost projects. This has added to external debt. The growing foreign portfolio investment had taken the KLSE to record heights, their pulling out has been disastrous. While the financial sector is extremely conservative, with private banks rarely being granted licences in the recent past but the globalisation of the economy and the weaknesses of monetary over-borrowing made Malaysia a set piece target of opportunity.

While Mahathir has always been very nationalistic in outlook, the real opportunities in his country and the liberal incentives offered made Malaysia a haven for foreign investment. In January 1994, when British newspapers suggested corruption in high Malaysian Government Circles, an angry Mahathir retaliated by announcing that British corporate entities would not get lucrative contracts in Malaysia. In the face of loss of billions of dollars of lucrative exporters to Malaysia, the British backed down. However, the simmering anger has persisted on and almost 3 years ago to the day it became apparent that the west had focused on Mahathir as a target. At 2:30 pm on 13 Oct 94, in the Europe-East Asia Meeting of the World Economic Forum in Singapore in the Shangrila Hotel, Mahathir went head-on against the west’s condescension towards East Asia in a speech on “Re-engineering” the economic and political links between Europe and East Asia.” By the reaction of the assembled senior executives of western multinational corporate entities gathered there it was clear that Mahathir had touched a raw nerve by telling them that they had not come to East Asia out of any altruistic purpose but because of their own greed and aspirations of profits. He directly attacked the corruption they fostered in the areas they targeted and their lack of moral values. Sitting in that Conference Hall, one could feel the burning anger against Mahathir as well as the frustration among the westerners that they could not do anything about it. Nothing Mahathir said that day was incorrect and therefore it hurt them even more to have the truth thrown in their faces. While former PM of France, Raymond Barre, who was in the Chair, made a spirited defence of western mores and values, one came away with the distinct impression that the west would not take the rubbing of their collective noses in the dust lying down. Since then a muted barrage of media criticism has been constantly directed at Mahathir but due to the strength of the Malaysian economy and the pragmatic policies of its PM, the murmuring remained relatively innocuous till recently. In the meantime, Mahathir has changed the face of Malaysia, taking a multi-racial multi-ethnic society by the scruff of the neck and making it economically homogeneous and extremely successful, its basic solidity lying in its capacity to absorb diverse entities under one roof and use them in tandem to bring his country to the doorstep of the 21st century.

A whole set of circumstances came together, a combination of a run on the economy of the so-called Tigers of South Asia, a golden opportunity to cut Malaysia’s growing economic power to size and the possibility of a political transition in the near future because of Mahathir’s age (he is 71 now), has given a coalition of anti-Mahathir forces encouragement to take him on directly in his own home ground. Till now Mahathir had managed a balancing act of sorts despite his anti-west rhetoric, he has continued to invite outside investment and kept on course in trying to create a new financial centre for Southeast Asia as well as a technological base for the entire region.

The present financial crisis really started in Thailand, which for many years has been flirting with economic disaster because of artificially raised prices of assets, extended credits and bad fiscal management. IMF’s Camdessus had an “Article Four” meeting with Thai Finance Ministry officials to warn them of impending disaster but the danger signals went unheeded. They started a run on the Thai Baht and a domino effect throughout the region, mainly focussing on Singapore, Indonesia and Malaysia. While Thailand was bailed out by Japan and the IMF by a massive infusion of funds, Singapore endured a run on its currency but managed to contain it by intervention. Not so Indonesia and Malaysia. Predictably Malaysia’s Mahathir fought back to shore up the KLSE and the Malaysian Ringgit by government intervention. While this was necessary the west’s reaction was ruthless, by speculating against the Malaysian currency even while moving money out of stocks and shares, they ensured near disaster for the Malaysian economy. Their goal was obvious viz (1) in the long run, shackle the Malaysian economy and (2) in the short run get rid of Mahathir. Suggesting that Anwer Ebrahim, the Finance Minister, as such in charge of the economy take over, seems a mind-boggling logic. At the same time they are trying to drive a wedge in the hierarchy, even suggesting that Muslim fundamentalists are not happy with Mahathir, a devout Muslim all his life. While there is no doubt that the anointed successor is a capable man, for Mahathir to fall now could be a disaster not only for Malaysia but the entire Third World, particularly the Muslim countries. Mahathir’s fault lies in being predictably nationalistic in his responses, an elaborate trap was set for him before the IMF Meeting in Hong Kong in September, Mahathir walked into it.

A much publicized debate between Mahathir and the man he accuses of being behind the economic woes of South East Asia, George Soros, is being manipulated in the media in Soros’ favour. While one does not want to enter into the morality of such currency speculation, it is a fact that this does put pressure on developing nations striving to improve the lot of the impoverished. No doubt the rich will be discomfited by losses in stocks and schemes, who will starve, who will be without water, electricity, medicine, transportation, education and so on? The poor will become poorer, if not cease to exist. Mahathir has taken up cudgels on their behalf, we must put pen to paper, we must be vocal and stand up, be counted with Mahathir, not leave him alone to fight a lonely battle.
What Mahathir has done for Malaysia cannot be described in words. The critical factor he has provided is leadership. This is what his detractors want, Malaysia to be deprived of, of leadership that they cannot manipulate. He has been a magnificent leader of men in an era of outstanding leaders. He has been revolutionary in his ideas and protected his nation from the vagaries of the world economy at least, till very recently. He has stood tall against intervention by foreigners desperate to dominate a resource-rich and dynamic economy. He has ensured that prosperity has filtered down rapidly to the lower end of the spectrum. His selflessness with respect to the nation is seen in his choice of his potential successor, Anwer Ebrahim, with whom he has not had a very comfortable relationship but who, in the larger interests of his country, he is grooming as the man most suitable and capable of leading Malaysia in the 21st century. We should not stand idly by and see him be mercilessly gored by the foreign media. This genuine person has been a good Muslim and a good friend of Pakistan. It is incumbent upon us to support Mahathir the Magnificent.

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