WHAT COULD WORLD LEADERS LEARN FROM NAJIB TODAY EXCEPT HOW TO STEAL: WHEREAS DURING DR M’S ERA, EVEN IMF SOUGHT HIS INPUT

Tun Mahathir is more than capable of defending himself and his track record.

I just thought that maybe it would be useful to share a little of my perspective of him because he was a minister and later, prime minister during most of my working life.

There were occasions when I was very angry with him. He bulldozed decision-making in government and he always seemed to favour certain businesspeople.

He had his favourite projects, from privatising MAS (Malaysia Airlines System), to setting up Sogoshosha, Perwaja and Proton etc.

Later, he had his Formula 1 circuit, the Petronas Twin Towers and Putrajaya. Perhaps he too had his hands in commodity and forex trading fiascos.

Many of the “mega” projects, including the North-South Highway, Kuala Lumpur International Airport, privatisation of TM (Telekom Malaysia) and TNB (Tenaga Nasional Berhad), the establishment of Independent Power Producers, at the time of their conception, were viewed quite negatively. But today, they are in fact quite necessary.

There were monies wasted in the sense that many of these projects could have been implemented more equitably and efficiently.

But to be fair, I don’t think there was any stealing or pilferage by wilful design or deliberate intention. To put it simply, I don’t think Mahathir set up Proton or Perwaja to siphon money, but money was nevertheless lost.

Mahathir was meticulous in his work. I remember him talking about “transfer pricing” and “marginal costing” in a meeting about foreign investments in Malaysia. I could sense that half the people at the table could not quite understand what he was talking about at the time.

During the 1997 financial crisis, he was willing to take unorthodox measures to contain the meltdown of the ringgit. Later, even the IMF, the great architect of free market and unfettered capital flows, acknowledged and praised Malaysia’s unorthodoxy.

We were successful in handling the crisis at the time because Malaysia depended on foreign direct investment mainly in the manufacturing sector, not massive foreign borrowing as in the case of South Korea and Thailand. That was why South Korea and Thailand went the “IMF way” while Malaysia did not.

In foreign direct investment, the foreigners took the risks, including profitability and currency fluctuations. In foreign borrowing, the borrower i.e. the Malaysian government, took all the risks, including investments turning out to be white elephants.

I think this is one of the major concerns right now given our massive foreign borrowing to fund projects, the feasibility of which has remained a big question mark.

This, in essence, is moral hazard – the lenders do not care about the viability because the government has guaranteed the loans.

In this regard, I would like to urge Penang Chief Minister Lim Guan Eng not to be too hasty in borrowing money from abroad, unless the proposed projects are really viable.

The Exim Bank of China will go after the Penang state government, failing which, the federal government, if the proposed projects fail.

During Mahathir’s time, the salaries of government servants were kept under control. However, by and large, most were able to get by reasonably well.

The cost of living then was in line with the wages earned. I remember Mahathir saying high income was useless if prices increased faster than the income earned.

Today he is still saying the same thing if you care to listen to his many “campaign” speeches.

Now we have “high income” as our policy objective. I really wish things could be that simple i.e. as if we can “talk up” our income.

As far as I know, a higher income is the consequence of sound macroeconomic policies diligently implemented over time. We can’t have a policy that says we want to have higher income. That is too simple and too idiotic despite the assertion by our highly paid Pemandu executives.

I think slowly, we are seeing the consequence of our “high income” policy today – the escalation in the cost of living far outstripping the wages we earn.

Mahathir did put Malaysia on the world map. When travelling abroad during his tenure as prime minister, I noticed other countries did respect us as one of the “tigers” of Asia.

Some sought to adopt our development model. Even the IMF and the World Bank acknowledged and solicited our input in regional conferences and meetings.

I am not sure of the situation today. What could other countries learn from us today – how to avoid our pitfalls perhaps?

The above are just my views based on anecdotal observations and experience. Maybe I am a little nostalgic of the past – the good old days after we came out of the commodity crisis in the mid-1980s and the go-go era of the 1990s.

If you disagree, you are most welcome to write your own account. I won’t be defending my piece.

– FMT