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

triggered a stock market meltdown in Bangkok and rattled other Asian markets. Just 24 hours after being imposed, the provision applying to the purchase of shares was lifted, though the controls remained on bonds and other debt instruments. The lesson from the botched exercise was that the use of capital controls continued to carry enormous risks.

By focusing on defects in the international system, however, Dr. Mahathir succeeded in diverting attention from domestic flaws and his problems with Anwar. Almost desperate by his own later admission, he was forced to contemplate the elimination of the state-supported conglomerates, the heart of his cherished vision for the Malays and Malaysia. Capital controls for him were both a political and economic solution. As political scientist Khoo Boo Teik observed, "He had no orthodoxy to defend, only interests to protect. He had no theories to prove, only a project to preserve. And, if it needed saying at all, he had his career and reputation to save."[88]

By locking in foreign funds for a year, Dr. Mahathir prevented any fresh flight of capital that might be unsettled by the shock of Anwar's dismissal. The restriction was eased after six months to allow funds to leave on payment of a graduated exit tax, before expiring on 1 September 1999. Dr. Mahathir's insistence on blaming greedy currency traders and stock market manipulators alone for the regional crisis strained credulity. The government tried to hold Anwar responsible for all inappropriate Malaysian responses, when clearly they were mostly collective decisions until his ouster. Dr. Mahathir and Daim were primarily responsible for the nepotism and other types of cronyism, involving the use of public funds to resuscitate local business, which undermined investor confidence in Malaysia.

The personalized way business and politics intertwined under the Mahathir administration was highlighted when Daim abruptly resigned from the government and as UMNO treasurer in June 2001. Although nothing was said officially, it was known that a rupture had occurred between him and Dr. Mahathir.[89] Daim's protégés came under immediate financial pressure, just as did those owing allegiance to Anwar Ibrahim when he was sacked in 1998. With Daim's departure, Dr. Mahathir "exercised the political will to tackle the problem of corporate debt" among formerly protected companies. In quick succession, three of Daim's closest associates lost control of their conglomerates, which were taken over at public expense and restructured. "The targets, timing and remarkable haste of the takeovers" implied that Dr. Mahathir "was politically rather than economically motivated".[90]

Affirmative action in combination with Dr. Mahathir's distinctive economic policies, including breakneck growth, had a profound affect on Malaysia and Malaysians. The results were mixed, although a growing band of critics argued that the NEP should be modified or scrapped altogether. During the general election in 2008, the opposition led by Anwar Ibrahim made unprecedented gains, drawing support from all communities by proposing a Malaysian Economic Agenda that focused on needs, rather than ethnicity, to replace the NEP.

Absolute poverty, which claimed half the population in 1970, was reduced enormously, plunging to 5.1 per cent in 2002. Rural poverty fell to 11.4 per cent while urban poverty shrank to 2 per cent. Malay poverty, much of it in rural areas, dropped from 64.8 per cent to 7.3 per cent in the same period. The incidence of poverty among Chinese and Indians also declined markedly.[91] Altogether, it was an outstanding achievement for one of the NEP's two main aims, even though the income threshold used for the poverty line was unrealistically low and underestimated the residual problem.

Considerable progress was also recorded in another key objective, to enhance bumiputra participation in the economy and reduce the gap between the Malay and Chinese communities. The ethnic income disparity ratio in peninsular Malaysia narrowed from 2.29 in 1970 to 1.74 in 1999, though it widened again during the boom years before resuming its positive trend. By its own reckoning, the government failed to boost bumiputra ownership of share capital, just 2.4 per cent in 1970, to the 30 per cent target by 1990. Officially, it rose to 19.2 per cent in 1990, before dipping slightly to 19.1 per cent in 1999. But the government's methodology underestimated the amount — for example, by using the par rather than market value of shares and excluding stakes held in trust for bumiputras — which made it easier to argue for a continuation of affirmative action. According to one independent academic assessment, the 30 per cent bumiputra equity target was achieved as early as 1997.[92] The 30 per cent figure had become so politically charged that a serious study showing the bumiputra corporate share was about 45 per cent in 2004, rather than the official 18.7 per cent, caused a national uproar and prompted the resignation of the director of the group that produced the figure.[93]

Affirmative action, however, also sharpened inequality in Malaysian society, and risked a backlash the longer it stayed in place. As the gap between bumiputras and others was closing, fissures were opening within indigenous ranks. As one analyst put it, bumiputra gains "have not been widely shared", and inequality had "reared its ugly head again".[94] In 1999, the average monthly income of the bottom 40 per cent of bumiputra households was RM742, with the corresponding figure for rural areas RM670, compared with RM865 for the bottom 40 per cent of all Malaysian households.[95] Individual inequality in Malaysia, as measured by the World Bank using the common Gini Coefficient, was the worst in Southeast Asia,[96] widening from 0.452 in 1999 to 0.462 in 2004.[97]

Malay dissatisfaction was starting to build as better-off and better-connected Malays benefited disproportionately. The majority resented the use of public funds to rescue wealthy Malay cronies during the regional economic crisis. It was also a source of anger that Malay millionaires, for example, could take advantage of a 5 per cent housing discount for bumiputras. Small-scale, mostly Malay farmers and fishermen, who did not fit into Dr. Mahathir's idea of a modernized economy, were being comparatively marginalized in a countryside where pockets persisted