Why Mahathir Mohamad is Malaysia’s best hope, and Najib’s worst nightmare
William Pesek says the newfound Mahathir-Anwar Ibrahim coalition could lead Malaysia out of economic stagnation and, even if Najib Razak plays tough, the good news is it can no longer be business as usual
Twenty years after the financial crisis that devastated Asian economies, Malaysia’s Mahathir Mohamad still hates currency traders. But the deputy prime minister he fired, and later jailed, during that chaotic period? Not so much.
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Mahathir’s 180-degree turn on Anwar Ibrahim is as disorienting as any bromance Asia has seen. What otherworldly force was enough to reunite the 92-year-old firebrand who ruled Malaysia for 22 years and his nemesis? A shared disgust for current Prime Minister Najib Razak, whose corruption scandals have Malaysia in the global headlines for all the wrong reasons.
Since 2009, Najib hasn’t just tarnished the national brand at every turn – he has pursued an agenda ensuring a lost decade for a resource-rich economy that should be booming. Cronyism isn’t new to Malaysia; there was plenty during Mahathir’s 1981-2003 tenure. When Malaysia hit a wall in 1997 along with Thailand, Indonesia and South Korea, its culture of patronage, political ties over merit, and weak institutions sent currency speculators, including George Soros, pouncing on the ringgit.
Mahathir hasn’t forgotten that episode, during which he pegged the currency and imposed capital controls. He called Soros a “moron”, while the financier called Mahathir a “menace”. In recent interviews explaining his return to politics, he said currency dealing “should not be a business at all” and is “causing a lot of poverty” around the world.
Najib hasn’t just tarnished the national brand, he has pursued an agenda ensuring a lost decade
Najib is now the menace, in Mahathir’s view. Studying his gripes about Najib, another protégé turned arch-enemy, Mahathir seems less perturbed by the stench of corruption than the reek of economic backsliding. Malaysia’s population, like those of Japan, China and elsewhere, will put up with dodgy governance practices so long as living standards rise. The ends tend to justify the means if bellies are full and bank accounts grow. But as Indonesia, the Philippines and other neighbours move forward, Malaysia is regressing in dangerous ways.
When Mahathir left office 14 years ago, Malaysia ranked 37th on Transparency International’s corruption perceptions index. It’s now 55th. Since Najib grabbed the reins, Malaysia has stagnated in competitiveness and innovation rankings. He’s huge on buzzy conferences heralding Malaysia’s success in raising its game, but the facts belie the hype.
Then Malaysian deputy prime minister Anwar Ibrahim (left) flicks dust off prime minister Mahathir Mohamad’s sleeve during a press conference in February 1997. The pair fell out the following year over allegations of corruption and sodomy against Anwar, who was sacked by Mahathir. But they have now reunited to take on Najib. Photo: AFP
Najib pledged to dismantle the affirmative-action policies his prime-minister father implemented in 1971. Those productivity-killing quotas favour the ethnic Malay majority for jobs, education and government contacts, and scare off foreign investment. Once scandal hit, Najib went the other way – backward – and expanded what can be best termed apartheid economics.
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Many of those controversies surround 1Malaysia Development Bhd (1MDB), the state fund Najib created in 2009 to burnish Kuala Lumpur’s image as a financial centre. Instead, it’s been a national embarrassment, sparking money laundering investigations from Singapore to Zurich to Washington, and pulling Hollywood, Leonardo DiCaprio and Miranda Kerr into the fray. There’s also a little matter of US$700 million that found its way into Najib’s personal accounts (he claims it’s a donation from rich Saudis).
