There's little doubt these are exciting days in Malaysia and that Mahathir Mohamad is giving investors myriad reasons to cheer
Malaysia’s Mahathir Mohamad is having a quarrel with his younger self, and it’s a beautiful thing.
In promising a “new Malaysia", the 92-year-old is even panning his first stint as leader that ended in 2003. Last week, Mahathir said his return to power “should even be an improvement on the period during which I was prime minister for 22 years".
His moves to ally with fierce rivals from that time, most notably his then-imprisoned deputy Anwar Ibrahim, suggest Mahathir 2.0 learned much from the past. It’s time South-East Asian peers did the same to raise the region’s political and economic games.
No one seemed more shocked by Mahathir’s win on 9 May than the man himself. Polls overwhelmingly had scandal-plagued Najib Razak staying in power.
Mahathir got right to work assembling a progressive, reasonably free-market cabinet. He’s cancelling giant infrastructure projects of the kind he once championed. He’s had Najib arrested on corruption charges.
There’s little doubt these are exciting days in Malaysia and that Mahathir is giving investors myriad reasons to cheer. It’s equally interesting, though, to consider how events there might reverberate in a region where democracy and forward-looking policymaking have become scarce.
The message Philippine President Rodrigo Duterte might take away is that the will of the people matters. At the end of the day, the powerful political machine that supported Najib was no match for the wrath of voters fed up with his cronyism.
Duterte, too, might soon experience a backlash of his own making. In June 2016, Duterte took power with a mandate to raise living standards. From 2010 to 2016, predecessor Benigno Aquino strengthened the national balance sheet, attacked graft and boosted accountability enough to win Manila its first-ever investment-grade ratings.
Duterte’s job was to accelerate upgrades and go further to eradicate poverty.
Instead, he pivoted to a bloody war on drugs that’s drawing rebukes from human-rights groups. His autocratic ways are running afoul of investors. Increasingly, voters too.
The takeaway for the military junta ruling Thailand is that complacency is dangerous. The four years since general-turned-Prime Minister Prayuth Chan-ocha grabbed power have been dangerously reform-free. Even before his soldiers grabbed Bangkok, Thailand had been losing ground competitively speaking.
Since then, Prayuth and his men have given a bad name to coup leaders. Their power-grab rationale is normally to restore order and get big things done.
Instead, they’ve slow-walked moves to open and internationalize the economy, clamped down on media and failed to strengthen human capital.
By focusing on stimulus spending over economic upgrades, the junta is ensuring that Thailand suffers a lost economic decade and gets ensnared in the “middle-income trap".
In Jakarta, President Joko Widodo should study Mahathir’s focus on where his economy wants to be 20 years from now—not where it was two decades ago.
Granted, Indonesia has come a long way since the 1997-98 Asian crisis. Since October 2014, Widodo, who’s known as Jokowi, has worked to extricate the economy from that chaotic period, the one that saw dictator Suharto ousted by epic street protests. The web of corruption he built over 31 years, Suharto Inc., continues to keep the fruits of rapid growth from reaching the masses.
The lesson from Mahathir is that leaders must reorient their economies for an information revolution.
China, for example, is investing trillions of dollars to lead industries from software to energy to transportation to robots. That makes the economic nationalism with which Jokowi is grappling increasingly self-defeating.
There are Mahathir messages for China, too. For years, Beijing took Malaysia’s allegiance—and South-East Asia, too,—for granted.
Now that Xi Jinping’s pal Najib is gone, China must work for Malaysia’s affection. That goes for the rest of the region amid Beijing’s escalating land-grab in the South China Sea.
Vietnam should beware as it tightens the noose around the media. Cambodian leader Hun Sen also should think twice about taking away more personal freedoms and decimating opposition forces.
Entrenched and absolute state power are nice things for a leader to have—until citizens pounce. Malaysia is Exhibit A for how public anger catches up with underperforming governments, forcing them to change for the better. Who’s next?
William Pesek, based in Tokyo, is a former columnist for Barron’s and Bloomberg and author of Japanization: What the World Can Learn from Japan’s Lost Decades.
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