Malaysian Maverick: Mahathir Mohamad in Turbulent Times by Barry Wain (fantasy novels to read .TXT) 📕

rate of return to recipients, stretching over decades, so that profits but not risks were privatized; details were not disclosed to the public and not reflected in the national budget. By 2004, the Malaysian government's total contingent liability stood at roughly RM80 billion.[63]

Much of the debate about privatization ceased after the Asian financial crisis engulfed Malaysia in 1997-98 and devastated the celebrated bumiputra companies. They were too indebted and lacked managerial competence. The government either bailed them out or effectively re-nationalized them, converting private debt into public burden, with no one held responsible for the losses.[64] In five years, the government spent RMll billion rescuing seven privatized enterprises, including RM7.73 billion for two light rail systems in the capital.[65]

Although the NEP officially expired in 1990 as originally envisaged, it continued as Malaysia's defining development framework in other guises — the National Development Policy until 2000 and the National Vision Policy until 2010. Colloquially, it was still called the NEP. The twin objectives — the eradication of poverty irrespective of race and the restructuring of society to end the identification of race with economic function — were to be pursued in the name of national unity, however long it took.

Dr. Mahathir's proposal for Malaysia to be fully developed within 30 years, outlined in a speech in early 1991, was promoted as Vision 2020. Although most of the elements were familiar, drawn from existing plans and programmes, the package caught the public imagination and was the subject of numerous studies, seminars and conferences. It would require the country to grow at 7 per cent annually on average, from 1990 to 2020, doubling GDP every ten years. GDP would be eight times larger in 2020 than in 1990, and Malaysians would be four times richer in real terms.

Dr. Mahathir's idea of a fully developed nation went beyond the material. He outlined nine "central strategic challenges" that must be met to achieve all-round and well-balanced development — politically, socially, spiritually, psychologically and culturally, as well as economically. His single reference to the goal of "one Bangsa Malaysia", usually translated as "Malaysian race" or "Malaysian people", raised the hope for an end eventually to race-based politics. Although Dr. Mahathir probably meant nothing more than a united Malaysian nation bound together by prosperity, non-Malays, especially, saw him as the leader most likely to narrow ethnic divisions.

Although privatization generated lots of buzz around the Malaysian stock market, it was the more dynamic foreign-dominated, export-oriented manufacturing sector that would ease Malaysia out of its prolonged slump and power it to glory. With unemployment at a record high and the economy contracting by 1.1 per cent in 1985 and growing by a feeble 1.2 per cent in 1986, Dr. Mahathir pragmatically liberalized Malaysia's investment climate. He took practical steps to loosen the NEP guidelines for both foreign investors and wary Chinese Malaysians, who had been transferring their assets abroad rather than build factories at home. As early as 1984, Dr. Mahathir signalled a change in attitude by announcing that foreign investors in capital-intensive and resource-based export industries might be allowed to keep majority control. When the Swiss food and drink maker Nestle S.A. restructured its Malaysian operations in line with the NEP, it was able to retain a 51 per cent stake, rather than sell 70 per cent to local investors.

A raft of other measures culminated in Dr. Mahathir's announcement that the bumiputra equity requirements would be suspended for certain new foreign investments and foreign-owned expansions made between 1 October 1986 and 31 December 1990, when the NEP was supposed to end. Such investments committed in that period would not be required to restructure their equity "at any time". Dr. Mahathir's stand took courage, since there was no more sensitive topic than the NEP. He simply told the Malays that distributing jobs was as important as distributing equity. "Obviously, if there is no growth there will be nothing to distribute," he said.

Another near simultaneous structural adjustment a world away held profound implications for Malaysia. Worried by the strength of the dollar, the finance ministers of the five largest industrial countries, then known as the G-5, met at the Plaza Hotel in New York in 1985 and agreed on concerted action to reduce its value. As the Plaza Accord took hold, the sustained appreciation of the yen triggered a rolling change in the international division of labour. To remain competitive, Japanese companies moved up the technological ladder and relocated their older factories to countries with cheaper land and labour. As South Korea, Taiwan and Hong Kong prospered anew from the influx of Japanese investment, their own currencies appreciated and their production costs rose. They in turn relocated their manufacturing operations to China and Southeast Asia, taking the Japanese with them. Foreign investment flooded into Thailand first, then Malaysia and Indonesia, spreading the "economic miracle" southward.

With Malaysia cutting corporate tax rates, the country quickly climbed out of the doldrums and entered an extended period of phenomenal growth. GDP expanded annually by an average of 9.3 per cent for the nine years from 1988 to 1997,[66] with manufacturing replacing agriculture as the leading segment of the economy by the late 1980s, and mining becoming more important.[67] By 1980, crude petroleum exports had taken over the historical position of rubber as the chief foreign exchange earner, and petroleum was contributing 25 per cent of government revenue by 1985.[68] Hundreds of thousands of foreign workers streamed into Malaysia, often illegally and working out of sight on plantations, as unemployment turned into a labour shortfall. Malaysia was among the world's fastest growing economies.

Kuala Lumpur also liberalized the domestic financial sector to welcome portfolio investment, giving little thought to its being the most mobile form of capital, relentlessly profit-seeking and prone to depart as quickly as it arrived. The government sought to take advantage of this "hot money" to expand Malaysia's capital market and transform the country into a regional financial centre. Official statements hinted that Kuala Lumpur aspired to overtake Singapore or displace