Inside Story

Current affairs & culture from Australia and beyond.

986 words

Malaysia’s mess is Mahathir-made

30 July 2015

The only way out of Malaysia’s malaise is to introduce the reforms first demanded by the reformasi movement in the late 1990s, writes Dan Slater

Right:

Former Malaysian prime minister Mahathir Mohamad waves to media after a forum on the controversial sovereign-investment company, 1Malaysia Development Berhad, was cancelled on security grounds on 5 June. Mohd Samsul Mohd Said/Getty Images

Former Malaysian prime minister Mahathir Mohamad waves to media after a forum on the controversial sovereign-investment company, 1Malaysia Development Berhad, was cancelled on security grounds on 5 June. Mohd Samsul Mohd Said/Getty Images


At least embattled Malaysian prime minister Najib Razak is right about one thing. The current mess in Malaysian politics is the making of his greatest nemesis, Mahathir Mohamad, the man who led the Southeast Asian nation with an iron fist from 1981 to 2003. What Najib fails to fathom is that it wasn’t Mahathir’s recent criticisms of his leadership that produced the mess; it was the way Mahathir paved Najib’s path to power during his own decades in office. Mahathir may believe that he can end the crisis by bringing Najib down. But history should judge Mahathir himself as the author of the long national decline that has culminated in this latest crisis.

To be sure, Najib’s fingerprints are all over the current mess. The proximate source of the crisis has been the collapse of Najib’s pet sovereign-investment company, 1Malaysia Development Berhad, or 1MDB, which has caused Malaysia’s stock market and currency, the ringgit, to plummet. All this has transpired amid credible allegations that the prime minister siphoned an eye-popping US$700 million into his personal bank account.

But this road towards ruin commenced with Mahathir, not Najib. It is vital to recognise that Mahathir rose to power in blessed circumstances. Malaysia’s economy had been growing healthily for decades, thanks to the prudent economic management of a highly capable bureaucracy. Governance and tax collection were effective, and debts were few. Natural resources wealth, including oil, was professionally stewarded. A decade of muscular redistribution to the country’s ethnic Malay majority had restored social stability after the race riots of 1969. Incoming foreign investment was copious and about to mushroom even further. Mahathir found himself in command of one of the most cohesive ruling parties (the United Malays National Organisation, or UMNO) and coalitions (the Barisan Nasional, or BN) in the world. The regime was authoritarian, but not intensely repressive or disliked in comparative terms. In short, Mahathir was holding a winning hand when he became prime minister in 1981.

Then came the debt. Obsessed with following in the footsteps of Asia’s technological leaders, Mahathir began borrowing heavily to fund Look East, his government-led heavy-industrialisation program. Privatisation was part of his growth package, but the beneficiaries were business figures with more loyalty than talent. When the global economy went into recession in the mid 1980s, patronage started drying up. UMNO split, largely in reaction to Mahathir’s strong-arm style of rule. Mahathir’s two most talented rivals, Tengku Razaleigh and Musa Hitam, bolted from UMNO despite their deep personal ties to the party, mostly to get away from Mahathir himself. Mahathir responded by launching a police operation under the pretext of racial tensions, imprisoning and intimidating political rivals and cementing his autocratic control.

By the late 1980s, all of the defining features of Malaysia’s current crisis were evident. The regime was increasingly repressive. The office of prime minister was becoming a haven of autocracy. Ethnic tensions had been reopened to political manipulation. The economy was worrisomely indebted. And UMNO was shedding some of its most capable leaders. This was the beginning of Malaysia’s sad national decline, and it happened under Mahathir’s watch and by his own hand.

Fast-forward a decade and all of these syndromes recurred in even nastier forms. The Asian Financial Crisis of 1997–98 punished Malaysia for the unsustainable dollar-denominated debts it had accumulated under Mahathir’s single-minded push for breakneck growth. Mahathir blamed everybody but himself for the crash. He sacked and imprisoned his popular and gifted deputy, Anwar Ibrahim, largely for his temerity in suggesting that Malaysia needed deeper reforms to regain economic health.

Mahathir didn’t pull Malaysia out of its crisis with economic reform or adjustment, but with more and more borrowing and spending. This was possible because Malaysia was still sitting on the fiscal reserves it had been amassing for the half century since the British colonial period. Mahathir grandiosely claimed that his imposition of capital controls had saved the economy, but capital flight had basically run its course by the time controls were implemented. Mahathir imposed the controls to facilitate political repression as much as economic recovery. The spectre of anti-Chinese riots in neighbouring Indonesia was then callously manipulated to keep ethnic Chinese voters in the BN fold in the 1999 elections.

And so, even before the turn of the millennium, Malaysia was hurtling down the very trajectory of decline we are witnessing in the current crisis. Like Mahathir, Najib assumed autocratic control over the economy and embarked on irresponsible borrowing and investment schemes, especially 1MDB. Like Mahathir, Najib unleashed a torrent of repression under antiquated security laws to protect his own position amid rising criticism from civil society and from within UMNO. Like Mahathir, Najib has recklessly played the ethnic and religious cards as his position has weakened. And in consummate Mahathir style, Najib has now even sacked his deputy, Muhyiddin Yassin, for questioning his repression of the media in response to the 1MDB scandal. In sum, Mahathir has nobody to blame more than himself as he watches Najib drive Malaysia even further into the ground.

Neither Najib nor any of his likely replacements appears capable of reversing Malaysia’s decades-long decline. And herein lies perhaps Mahathir’s worst legacy of all. By forcing the three most capable politicians beside himself out of UMNO during their prime, Mahathir ensured that only relative lightweights would command leading positions in Malaysia’s most powerful political institution. If Malaysia is to exit this crisis on a path to restored health rather than steeper decline, the political and economic reforms first demanded in the reformasi movement of the late 1990s will finally need to be put in place: either by a new generation of leadership within UMNO, or by Malaysia’s repressed but resilient political opposition. •

Read next

2188 words

The story behind the story

24 July 2015

Tom Griffiths welcomes a profound exploration of intergenerational memory

Right:

Worth the telling: Jane Hewett (1832–1928) (centre), pictured here with some of her descendants around 1920, was the last survivor of the family that emigrated from England to Port Phillip in 1850.

Worth the telling: Jane Hewett (1832–1928) (centre), pictured here with some of her descendants around 1920, was the last survivor of the family that emigrated from England to Port Phillip in 1850.