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Malaysia’s mess is Mahathir-made

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In Brief

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, who led the Southeast Asian nation with an iron fist from 1981–2003. What Najib fails to fathom is that Mahathir has not produced this mess by criticising his leadership, but by paving Najib’s path to power in the fashion he did during his decades in office.

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Mahathir may believe that he can end the crisis by bringing Najib down. But history should judge Mahathir himself as the author of a 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 (1MDB). This has caused Malaysia’s stock market and currency, the ringgit, to plummet in turn. 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 toward ruin commenced with Mahathir, not Najib. It is vital to realise 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 resource 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 commanded one of the most cohesive ruling parties (the United Malays National Organization, 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 his ‘Look East’, state-led heavy-industrialisation program. Privatisation was part of his growth package, but the beneficiaries were businessmen of loyalty more 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-armed 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.

Hence by the late 1980s, all of the defining features of Malaysia’s current crisis under Najib’s leadership were already evident under Mahathir. 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. UMNO was shedding some of its most capable leaders. This was the beginning of Malaysia’s sad national decline, under Mahathir’s watch and at his own hand.

Fast-forward a decade and all of these syndromes would recur 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 half a 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 them 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.

Hence 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 reckless 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 card as his position has weakened. And in consummate Mahathir style, Najib has now even sacked his deputy, Muyhiddin Yassin, for questioning Najib’s 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 current plausible replacements appear capable of reversing Malaysia’s decades-long decline. 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 put in place: either by a new generation of leadership within UMNO, or by Malaysia’s repressed but resilient political opposition.

Dan Slater is associate professor in political science at the University of Chicago.

18 responses to “Malaysia’s mess is Mahathir-made”

  1. You wrote, “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 half a century, since the British colonial period.”

    I wonder what made you think there was such fiscal reserves since colonial times. Malaysia has always run on deficit (comparably larger in the 1970s and earlier vs the 2000s and now), with the exception during the 1990s boom years.

    Also, if Malaysia were using the fiscal reserves, wouldn’t it be contradictory to have the absolute debt rising at the same time?

    I agree with your conclusion about Mahathir, but I’m a bit skeptical about the part on reserves.

  2. I totally agree with you Dan Slater.Malaysia is going down the drain and will will not see the light if we don’t change the current UMNO leadership

  3. Mahathir successfully implemented currency control in 1998 to save Malaysia from financial collapse. Many have applauded Mahathir for this success. Common sense says that a trading nation cannot implement currency control unilaterally. Also, a country with little foreign reserve can’t embark on such a risky path. Yet, Mahathir did and succeeded. What were Mahathir’s secrets? Was he supported by some very powerful allies? Did he receive billions through secret oil or other deals? Can someone shed some light on Mahathir’s secret formula for currency control.

    • Not quite the case. He closed the barn door after the horse has bolted. The currency control was imposed after the worst was over. The only thing he did right was to peg it at 3.80 to the USD as that was the the level after the bashing. That’s why he did not have to prop up the ringgit after the peg.

      The peg was unnecessary as the ringgit has already being bashed to a sustainable level. The peg was to save his sons’ and cronies businesses. Because of the peg, Malaysia’s recovery from the AFC was much slower than that of Thailand, Korea and Indonesia who bite the bullet.

  4. So the missing millions of dollars and Allantuya and Ambank founder murders are also due to him?

    Are you even aware the ruthless tactics Najib has aided and abetted?

    What about the even more super iron fist ruling of the country by Najib against anyone in the country who stand up to him and show evidence?

  5. He was in office for 2 terms / 6 years. Prior to that Badawi was in power. With the executive power and control they have, both Badawi and Najib could’ve corrected everything their predecessor did wrong. So were they truly incapable or chose not to?

    • They were incapable and would not have been PM if Mahatir didn’t kick out Anwar. Now Anwar is coming back in GEs to haunt the beloved party of the person that kicked him out.

  6. To certain extent I agreed it has been a mess. But who has worsened it instead of fixing it? Think twice. Problem solving and not finger pointing.

  7. Malaysia only had 2 prime ministers that were t the rest who are or were either self-seeking individuals or someone with zero capability.

  8. I do not agree with this view. We Malaysian citizens know better then outsiders even though they maybe wellknown intellectuals. Their views were based on the subject that they look into..while we as Malaysian citizens we see from every angle and matters that happen and arise everydays…we know better. Tq.

    • And would you like to express what you disagree with exactly or what it is that you know better? Or is saying “I disagree” enough?

    • Hi Azam.. please tell me what do you know? and What have you done to stop Najib? even the Malays can’t do anything about it… the way Najib is riding all of us.. if you say you know about Malaysia .. please explain .. maybe the other Malaysians are missing out on what you know…

  9. The ruling coaltion led by the United Malay National Organisation (UMNO), a raced based party is the longest ‘democratically’ elected government in the world. Unbroken rule for almost 58 years since independence from Britian in 1957. There are of course 2 other parties I can think of that have reigned longer, the Communist Party of China 1949, and North Korea’s Workers Party 1949. Raced-based policies, playing the religion card, and a backward looking culture. Need I say more?

  10. Sorry to say this is the most biased piece of article I have read from this forum.

    Blaming a close to nonagenarian and in many ways a successful founding leader of a country for scandalous transgressions of the current leader, is completely devoid of logical tracts, whatever the supported historical reasons.

    One can only conclude that the roots of cronyism and power have already spreaded too widely and deeply in this country, covering out all living lights of reason and justice.

    History points to an implosion situation.

  11. Its most unfortunate and ironical the so called most moderate islamic country on the planet has now fallen to a almost police state where people are arrested/investigated the moment they speak out against the government, unfortunately malaysia is falling backward now and looks more likely to fall more behind before it gets up and moves forward compared to its neighbours..

  12. Mahathir is certainly one of the culprits. But not the root cause.

    Differential fertility rates and population momentum between Chinese Malaysians vs Malay Malaysians have destabilized political arrangements.

    Democracy is a numbers game, and as Malaysia becomes more Malay, Chinese and Tamils are being pushed out, and talented people are emigrating to Chinese majority Singapore that is safer and cleaner.

    To save Malaysia the fertility rate should be reduced to less than 1.5-births/female, and women should be educated and freed. This will mitigate the harsh effects of ethnic politics and mobilization.

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