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PAtGRAVE MACMILlAN Palgrave M3Cmillan In the UK is an imp"nt of
Macmillan PubUshen; Umited. registered in England, company numbef
185998. of Hourw:lmills. Basingstoke. Hampshire RGZ16XS. Palgrave
MiICfTli!lan in the US is a divisfon of St Martin's Press LLC, 175
Fifth Avenue. New YorlIt least by the Straits Timls. An editor
called him to the paper's offic(.>$ in Singapore and asked if
hl' was intt're:.t('(] In a job as a journalist. No, he was not.
Singapore gave birth to an urban myth, Ihat Mahathir thought of
himself as an Indian when he elllered university. The story was
relold in several gossipy versio ns, losing no nc of it~ appeal
across the decad('s. Academics, diplomats and even a former
cabin('t COlleague delighted in passing along the dNails, all
completely untru(>. Mahathir's father considered himself a Malay
and he l'nsured that illl his l'hildren were nothing else but
Malay. Politicized by WilT (I//(/l'l'II((' 1:1 In hi$ writings,
which began before he went 10 Singapore, Mahathir identified
totally with the Malays and show('ti he was intimately familiar
with their customs, social life and problems, whether it was
education, fish, ing or pudi plimting. His more overtly political
Wlltrihutions were polem ical, and uncompromising in dcf(>ncc of
Malay rights. Foreshadowing the nationalist stance Ihat would make
him a hero to many Malays when he enter('(1 Parliament, he
criticized the colonial administration, l'alled for the
re-introduction of Malay as an oflicial language, alongside
English, and made tht' case for "retarding progrt'ss" sometimes in
order to help tht' Miliays advance. Well ahead of his time, hl'
also advOt'ated women's rights, argUing espt"'Cially for women to
be given opportunities In education and employment.H At the same
lime, Mahathir began to reveal critical opin- ions about the
Malay'S themselves that would be, their "low aver;lge intelligence
quolienl...~~ After graduating, Dr. Mahllthh spent only four years
in government s('rvin~ in Penang and Kedah befort resigning to open
a private practice, while his wift' was to work as a doctor fo r
the governmellt for 2S years. Alt hough the immediate reason fOr
his quitti ng was the failure of a superior to support his ilppl
iGlI iol for a posting to study In a teHching hospital in Penang to
be a surgeon, h(' also wanted to remai n ncar his aging parents.
Borrowing money from a brother-in-law. he opcnl'l' indulged in an
orgy of killing, looting and lJurning in Kuala I umpur. Although
the Alilanre government retaIned a majority In Parlla ment, UMNO
lost Mof its 59 scats, on(' of thelll Dr. Mahalhir's. The oppos
Itlon won 14 urban scats, 13 of thcm at tl(' cxpen!>C hands.
Chin('S{' and IndIan opposition ~upporl('rs paraded through the
streets of Kuala Lumpur in cciebrdtion, taunting and insulting the
Malays. Fearful that they were losing their last refuge, political
dominan('(', the Malays retal- Iated. The} slaughtered each otllt'r
with an assortment of f'c"alI.'d the Tunku when ['AS called him
"the son of Siam " - a rd- er('nce to hIs Thallllothcr - which
impllt'd h(' was unfit to be the leader of the Malays. So, Dr.
Mahathi.r said, h(' expectc(1 that the Tunku would have defended
him, despite his having "two spoonfuls of Pakistani blood in my
body". Having withdrawn earlier at the merest hint of a brush wilh
Tunku Abdul Rahman, Dr. Mahathir chose Ihe extreme opposite tack
this time: frontal assault. 11 was all or nothing again. And it was
hugely risky for anyone hoping to climb the political ladder,
though it was almost certainly carefully calculated. As would
become clearer later, Dr. Mahathir rarely, if ever, made a
pOlitical move without weighing the likely consequences. All Hllrly
Itrl ro.JlldiOiI I I) IJmtll/ /'ulitic.... 27 Mort' than most, he
realized how deeply unpopular the TUl1ku had become .1I110ng
Malays. Ihe Tunku was doubly furious to fi nd that Dr. Mahathir's
letter was Itt'ing read throughout the country. While student
sympathizers passed on ,nples, til{' letter was systematic;tlly
distrihuted by a group that included It,lz,lk's Ili of higher
learn- ing were agitating for his removal, making it necessary for
the National Operations Council to ban "any meeting, proc('ssion,
demonstration or puhlic utterance to get Tunku Alxlul Rahman to
'>tep down from offlcc". Dr. Mahathir's letter wa!> abo
formally banned. with printing, selling or dis- tributing It
punlsh..ble Ily thrre ycar~ Imprisonment and a rille of RM2,OOO.
Witll this son of protectiOn, no outsiders could force till' Tunku
to quit, Ihough iu~t itS surt'ly he would Ita longer iJave the
final sayon m thai Tunku Ahdul Rahman wanled to detain him, but
they persuaded the Tunku it would o nly make a martyr of Dr.
Mahathir.21 Too late: IIe was already a hero In Malay eyes. rhe
rapid seq uence of shattering events - a traumallc election
c.1mpaign, his defe,tt, th(' "May 13" violence, the I'unku leller,
double expulsion - gave him an al lllost cult-like following In his
community. As political '>Cientist Khoo noo 1elk said, "It
trilllsformed him from being a failed elecloral Gtlldidate into a
living symbol of Malay nationalism."l4 III no siage during his
almost three years in thc politiCal wi ldcrttc~s did Dr. Mahathlr
lose interest In shaping the debate on MalaYSia'S future. III
addition 10 running his clinic and inve....ting, he stepp{'( up his
writing. In early 1970, he publishl..'d hi~ best known hook, 71'1'
Malay DiI(,III/1/(/,.!5 vhich was promptly banned in MalJysla,
remaining proscribed until Ill' be maverick image without the
contents of Ih(' book remaining st.'uN, sinC(' it WitS ilvailable
in Singapore and he ;lc{"cpIed ~pca ldn g invitations and discus~cd
Ihe sub s t;tll("C of it. Two otht'r puhlicatiortS that ilppeilred
a few Yl'ars later wert' ubstant!aily written during this pe riod.
I'mu/HfIllI)l'IIiasa Kt'ril, publiSht'd in 1974, appeared in
English in 19M5 as GI/;/lt' (or SIl/(/lIlJltsillt~~SIll(,II. It
adviScopie of Malaya, and should be accepted as the "tlt'lmitive
rac{'''. II rejl'cled lion-Malay claims to political, linguistic
and lullUral parity with the Malays. but not o n the grounds Ihat
the Malays 't're ~uperior in any way. Just as count ries sud ) as
the United States and utralia required a certain minimal
assimilatioll of migrants to their own n.ttional culture, the
Malays had a right to expect the non.Malays to do the ,Hnl.'. The
aim was "not dl.'Slgned 10 IX'Tj>ctuate the privileges of the o
ri- /olillotl ddlnitiv(' race to thl' exclusion of thl'
II{,Wimmigra n t races...sell i(-rs willing to conform to !ttl'
characteristics of the dl;'fmitive citizen will in fact IIl'uJlll(,
definitive citil.('Tl!'> and will excTcist lill;' s,11lle rights
and privileges". III praCticc, they would l1,-,ed to ~ peak Malay
.md b(' ed ucated In Mal.lY, Iitough thcy would 11m be required to
adopt lsliHlI. Ihe book defillctllb titi(o: "The Malay dik'lllma is
whether they should 'lOp trying to help Ih('IIl~l'lvC5 in order
that Ihl'y .should IX' proud to be the t)f.)()rcitil.ens of a
prospion from a deputy position, he served in a coalition
government that had been broadened by Prime Minhter Razak heyond
the original Alliance to becon1l' the multi-party National Front. M
PAS had renamed itself l'Mti Islam Se-Malaysia and jOined the
administration, Dr. Mahathir could not contest his old seat, but
moved instehlp for tht' (:mllltr)' before ht, died. As the UMNO
General Assembly approached in 1975, Ra7..ak called In Alxlullah
Jhmad to discuss tanics for Ihe ell'Clion of tlue1 Apart from
working the ground at divisional level to get the votes and avoid
last-minute defectioTllo, Abdullah plarHlt'd to have Razak
Inlluencc the outcome of the et'Cllol1 hy endorSing his
thr(>(> preferred candlda('s in his op('n ing speed1. Alert
to that possibility, Tunkll suppo rters o n the Suprell1c Council,
at Its last [l(>('tillg before tlte General Assl'mbly, warnC'd
him not tu mention pNsonal prefl'rclLces. As (I plOY, Raz.1k
suggested that Senu Abdul 1~'lhma ll . UMNO's secretary g('neral
and a known Tun ku ally. chcck a draft of the speech, which
Abdullah had prepared. Senu left tht' room and retuTlwd 1.hout half
an hour later to r Ihe three Wl'J'(' duly elected, and in Razak's
preferred order. (;hazali Shafle, who saw himloelf as a rutu rt.'
prime minister, was parti- l ularly upset by his failure 10 win a
'ic(' president'S slot. Indeed, the dynamiC (.hazan, a former
JX'rmancnt s(lucation and socilll gracl'S, ami was not comfortable
speaking Lnglish. Tengku Ra7.aleigh was, in many ways, h b ideal:
royal. sophisticated ,md dependable. Uut, as Tengku 1t:'I'Alleigh
hilll'iClf 'olunteidents, got the nod. Not close to lIussel n, Dr.
Mahathlr wa as surprised as anybOdy. He spec- ulated Ihat Hussein
('ould have' r('lll'd o n sOllie advice an ill l~a7.A1 k gave 21.
him. Dr. Mahilthir said lhat whtn he W('nt to ~l'e Hussein, as
Kazak was being trl'gan to (cd the heat. The arrest of the two
del)lIty ministers "in itself was allacking tiS, indirtly," Mus.1.
:lld later.'" GhazaH was abk to jail so mallY people with no rcal
('vid('lIce because 11(' had an unwitting accomplice in Prime
Minister Husseill Onn. Upright. honest ami 1l1suitl'{l to the rough
and tumble of Malay polit iCS, Hussein did not effectively mlltrol
the UMNO he ullexpt'ctedly inhNited, Gha1.ali wa.~ one of two
cabilll..'t III('mbt'rs Ilussein r('lied Ilcavily 011 for advice,
tlH.' ot] Il'r bel rl~ Flll(lnct' Mill iSh,'r Terlgku Roring
protests by f;mllers at Baling in Kl'ep around the d ock for [warly
Ihr~ days and nights, wilh ouly brief breaks, by teams of Special
nr;mdl officers who focu$Cd 0 11 his socialist leanings and
possible communist links. Olle officer spat on his face repeatedly,
Then. whl'n lIis head ached ,mel hl" was al his mm t vulnerable, a
fTl'Sh interrogator switched subjects. "Syed: he said. ~We kno'
that you have connections with the underground. We know Ihat you
.....ere the interm('diary betwl'Cn ullderground elements with Dr,
Mahathir ,lIld MuS-.:I Hitam, You Illllst tdlus alx>ut this."H
At the timl', Syed lIusi n All was puzzled why the police wantell
him to implicate Dr, Mnilathir and M u~a . Only llIud} laler, after
he had spent !oix yea r~ in detention aC( lIst'u of helpill!- the
Communist Party ill"ld dis- )l'minating subversive ldt'a5 ccn a
giant step closer 10 the prime ministership. Although the
ilntj.communlst campaign fizzled after Ihe death in early 1977 of
Syed Jaafar Alhar, Dr. Mahathlr I1vt.'d in ~ collstant fear of
being :trrested on the orders of his hillden enemlcs" imd his
""ucccssion "remainl-d uncertain even when he was ver), nearly
thef{'H, ilCcording to an associate.'>'! Gha/.ali ll1 Time!>
jJublishing group. Dr. Mahathir had a fairly miSerable five year:.
a!> deputy prime minister, quite apart from dodging Ghazali's
hullet~. Although Hussein Onn had cho~en Dr. Mahathir as hi~
deputy, he did not ~e-cm to tikI.' him personally lind often
ignored him. In Dr. Mahathir's a~sessrnent, Hus~ein treated Ghazali
5h3fie and Tengkll Hazaleigh Hamlah ilSde facto deputy preT11icr~,
consulting Ghazali on defence and security. and Tcngku Ral.aleigh
on ccon- omiD, finance and party affairs. ~1! rheoretically the
S{'cond most powerful man In Malaysia, Dr. Maitathir found his
title (.-ouoted for almost nothing with Number One. Under tll('
impressron that "I had innuence with him", Dr. Mahathir went to sec
Hussein to persuade him not to proceed with till' IlrOSl'cution of
Harun [dris for corruption . "lIe took out the file from his safe
and banged it on the table." said Dr. Mahat hir. "Then I realil.ed
that. although I may be the deputy prime minister, my standing is
not thal hi ~h . " lIusseln got IUSl as ilngry when Dr. Mahathlr
tried to persuade him to re-examine Abdu llah Ahmad's case.S'I At
times, relations between Jiussein ilnd IJr. Mahathlr almost broke
down. Musa Hitam ree;lIl('d visiting the deputy prime minis- ter's
office when Dr. MalhJthir was complaining about Hussein. ~ I lifted
the phone and :iaid, 'Talk to him. YOu're the deputy. Talk to him'.
No, no, no. He never did."(l It was extremely lru:itrating for I)r.
Mahathir, who was already bursting with many of the ideas that
would mark his leadt-rship. He advocated a freewilYto run the
length of peninsular Ma12. 50 close to the pinnad{', 1Jr. Mahathlr
was slill treated e allowed to go to the Cabinet for other
ministerial opinions. "And, of cour~(', he agreed. you know,"
T('ngku Razalcigh said. "You go up to him and explain to him
nicely, he'JI accept il." That I('ft Dr. Milhathir "very unhappy
with me", Tentku R(ll.1Idgh said. ~ lIe thought that he being
deputy prime minister couldnt gct t hillg~ through, but I (QuId go
and whislX'r to Ilussein (lnd everyth ing was OK."6-1 Not only was
there no personal chem istry betwet>n leader and deputy, tlley
ilbo had starkly contra~ting stylc~. Wher{'as I)r. Mahathlr was
ke{'n 10 remake the country from top to bottom, Hussein was
caullolIS to the point of dithering. When reading a !)rid, he
underHm'd key words three or four times. Loath to make a tough
decision be/ore consuillng all parties, he would usually agft'e to
"consider it" a:-. a way of postpOning an out- come. One of his
favourite expressions was, "OK, I'll slt-ep over it."/o-l 11('
onc(' advi~ed Dr. Mahathir that ~when yOll have a problem, illst
don't do .rnything"; It would go away, he ~aid.b~ Even when Hussein
reached a decision, he might haw second thought... For example, Dr.
Mahathir per~uaded him that MalaYSia should strengthen ih claIm to
part of th!' disputed Spratly Island~ in the South Chi na Sea by
llCl"Upylng Amboyna CIY. With the navy ready to move in, Hussein
"changed his mind one wel'k later", said ])r. Mahathh/!6 The
VietnamesE' beat the M(llaysians to the purtell and established a
permanent preSence on the cay. In a cabinet shuffle in 197M. Dr.
Mahathlr relinquished the education portfolio and bec,1me minister
for trade and Indll~try, where he was happy to proceed with some of
his plans that did not require govermnent policy changes. He
established II heavy industries corporation within his minbtry, and
minim ized his unhappiness with Hussein by spending time abroad
~clli ng Malaysia. Dr. Mahath ir'S fOllr years as education
minister were remembered for the tough stand he had taken agai nst
Hudcnt and acad- emic protests. Ill' forced ~cholarship holders to
loign guarantees that Ihey would not bc(:Ollle involved in
politics, and amcndl'd the Uni vcrsilie~ ;c1 to give the
gov('rnmcnt cxtensive diSCiplinary powers over staff and students
who were politically actlve.61 L~ventua lly, Husscl n fell victim
to his own philosophy. /s Ihe work piled up, elements in UMNO
defied his weak l eadcr~h ip by forcing the readmis- sion of
lIanlll Idris to UMNO, after Hussein had insisted on his expulsion
followillg his conviction Oil corruption charges. Although Harun's
nmrt :Ippeals fa iled In early 1978 and he '('nt to jail, liussein
was being prl'ss(>d to pardon him. At the 1978 UMNO Gencrill
Assembly. Hussein was humil- Iated by being challcngC'd for the
presidency of the party by Sutaiman Palestin, the UMNO publicity
chief, who ~ecured just over one-fifth of the VOtes. While Sulaiman
was not a S('riollScontender for nalOllil1k'adership, his candidacy
was ;m act of defiance by Ifllflm supporters. As a friend of 24.
Slliaiman who OPI)()sed I larun's prOset'yond what previously had
I:>een acceptable behav- Iour in MalaY!ilall politiCS - att
ributes they wert' pleasl,(j to report they I(lckcd. Musa, who
scrwd as Dr. Mahathir'~ fITst dcputy prime Illini~ter before quit-
ting in aCrimony, butl'nded up on comfortable terms with Dr.
Mahathlr, sOWt'r, they were usually considered no more than
irritants. nUl with UMNO diVided, they were providing ammunition
for Dr. Mahathir's factional rivalsY Chandra MUlllffar, 40, a
political scientist who founded and Il'd thl' mul ti- racial reform
Illovement Aliran - small but influential and based in Penang - was
probably tht' most sllCCt'SSflll [n stirring broader aWaretlt'SS 01
ice of stag- ~crilJg the (ctetltions over many wC!eks and nabbing
people at all hours of Ihe day and night deliberately to spn!ad
fear ducation minister in the late 1970s, he had supported the sup-
pression of the student mOVl'ment and introduced legislation that
ended university autonomy. As deputy prime minister in 1979, he had
no hesit- ation in using the ISA to detain unionists in a dispute
with state-owned Malaysian Airlines System. The rewrd showt'd that
the "growing atllhorltarianism" of Dr. Mahathlr's leadership
actually began almost the day he too.: over as prime minister.so
Constitutional amendments in 1981 empowered the king - in practice,
the executive - to pro("iaim a state of emergency even "before the
actual occur rence of the event" that might threaten s('curity,
economic lik or public order. And his prod,Hllation could not IX'
'Iut'sUoned in court . 11 was a dra:;tlc departure from til(' 1957
Constitution, whkh stipulated that Parliament should decide when an
emergcncy ('xisted. Dr. Milhathir also tightc11(!d regulations
affecting press freedom sewral timl's bctw{'{'n 1984 and 1987,
strcngthe.netl the Official Secrets Act in 1984 and moved to head
off any possible political Challenge, espt'Cially from civil
socie.ty groups, outside th(' political party system. Under an
amendment to the Societies Act, an organization had to register as
a "politicill SOCiC'ty" to (otU[J1t'lIt on the polides or
activities of the government. Otherwise, the Registrar of S(1in
1982 and 198:~ to accommodate incre(1int'1("t.,I If tllerli' wa:; a
liberal gloss to the 2-M administration it was provided by Musa,
and his departure left Dr. Mahathir free to indulge his autocratic
instincts. Jlaving ta.:en over the Home Ministry from Musa in 1986,
Dr. Mahathir would keep it firmly in his grasp for 13 years, usiug
the ISA From Oll/(m/ IQ l'I('5;(/e-two split iuds menl 'IllSa
reminder of the e.'l:ecutive's vulncra billty iJeforl' an
independent judiciary. J High Courl judge orde.red the release of
Karpal Singh, Lim's lawyer, ruling thaI his twoyear detention order
- approved by Dr. Milhathir as home affairs mlnister- was "made
without care, caution and a proper "fnsc of responSibility".
Shamelessly, a~ one critic oommentcd, the polin' re.arrestcd
II:arpal undcr the ISA it couple of hours aftef he was frcd. The
TengJ...u Razalelgh supporters Sl't'king to oV('rturn Dr.
1I.!ahathir's el{'< lion got more than they bargained for when
the High Court 111 FE'bruary declared UMNO, the backbone of
Malaysian politics since 1946, :1Il illegal organization. While
tll{' ruling created consi(fralJle confu~lon and aPIX'arl'fore the
Gen~ral Assemhly that Ghafa r had no choice but t'O step down.
Anwar not only ~ame vil.x' president unopposed; he also brought to
power a slatl' of three vice presidents known as the Vision Team,
while other followers captured most seats 011 the Supreme Council.
f rom Ollle,,!>t to 1'"."sil/t1lf/lt/ [>rrmil!"f 79 Thl'
results signalled danger for Dr. Mahathir, though also a warni ng
for anyone tempted to try and exploit the situat ion, for Dr.
Mahathir had shown he was politically astute, even lethal, when
seemingly cornered. ;nalySI$ calculated th,1I Anwar probably had
enough control of tht.' party to fo rce Dr. Mahathlr Into early
retirl'mcIlI before long, If he so chose. Dr. Mahat hir was testy
when asked by journalists if he wa ~ lo~iT lg his grip on UMNO.
"Would yOLI like to lx-t?" he retoned. He made his point about
still being boss by wailing a month before officially making Anwar
deputy prime minister. ITI another move lO circumvent Anwar's
advancemelll, he aplX)illted Muhylddin YasSin, who lOpped Ihe vice
presld{'ntial poll for Anwar's team, to a Junior portfolio. Clearly
nut confident, though, Or. Mahathir invoked party unity as it
highl't cause than democracy and insisted on a "no conl('S1"
agrccml'nl wilh Anwar for their positions before 1999. Although
their relations were strained al ti me~, Anwar was still Oil track
to succeed Or. Mahill hlr as of early 199H, but complications thai
arose over the deelx'nillg effects of Ihe Asian economic crisis
wrecked transition plans. On 2 S('ptember, II day after introdUCing
capHal controls, Or. Mahath ir sacked Anwar as deputy premier and
finance minister, claimi ng he was morally llrlfit. The real rcason
was that he believed Anwar was trying to ta..e advan tage of the
l'COllomic upheaval to unseat him. On 3 September, the UMNO Supreme
Council compiled with Dr. Mahalhir's demand lhal Anwar be stripped
of his deputy presidency and party membership. On 20 September,
/nwar was arrested under the ISA and hcld without access 10 a
1.lwyer or his family. When he appeared in COUft at the ('nd of the
month, charged with ahuse of power and sodomy, he had a blal"k eye,
the result of being bashed in custody. I)r. Mahathir had learned
from 1987, when the ruling political elite fractured over the
Tengku Rilzaleigh-Musa challengl'. Ry relTloving imme- diately any
pmsihility that Anwar could makt' a return to UMNO politics, Dr.
Mahillhir was able to CMry the party's top leadership with him. But
lower level leaders and the party rallk and fi ll', as with Malil)'
society oots o n. Anwar supporters began deriding him as "prime
minister for life". Dr. Mahathir s hatter~1 the irresolution In his
closing address 10 the UMNO General Assembly In )Ull{, 2002,
abruptly depart ing from his text to .say he was resigning "from
UMNO and all positions in the National Front~. As he broke into
sobs, supporters mobbed him at the podium, some of them also In
lears, imploring him to remain - all live on TV. Dr. Mahathir W,IS
taken to a back room, and his deputy, I bdullah Badawi, appeared
:Ifter an hour to Say he had been persuaded to stay on. Laler, it
was annoullced thilt ill' WOuld rctirt' at the end of October 2003.
For 16 mont hs Dr. Mahathl r s{,lyed on in the pOSition he had
vowed to avoid, as a lame duck priml' minister, making arrangements
so that Malaysia would be run for the foresccable fulUre by his a
nointed leaders. IIC' ellsurl"d that Abdullah faced no contest in
UMNO elections beforE' he ht.'datory they were '>Ometimes
depict('s. Their prizes included ,Ill office block ami
convention centre for UMNO, a new hl'adquarters for the National
Equity Corporation, and a 55-storey tower for state-controll('(1
Malayan II.Ulking 13M. None (:aust'(( more offence than the RM3 13
mi ll ion contrart awarded by the gov~nllnent to twoJapancse
wmpanles to build the sprawling Dayabumi (."omplex in Kuala Lumpur,
then MalaYSia's most expensive building, even though a local
company bid RM7J million less. Dr. Mahathir's dcfenC(', that the
jap.1nese would Introduce new management skills and modern build-
Ing techniques, proved hollow. The bumiputra ('ngineering company
that the japanese were required to work with subsequently
complained that its japanese part ners were using II merely 10
maintain good relations with the government, and said that no
technology transfer was taking place. 1l Complaints that Malaysia
was reaping few ta ngibl~ benefits from "ook bast extended into
Hade, investnU'nt, management and shipping. After nearly three
years, Malaysia's trade dellcit with Japan had widened sharply, and
the Malaysians had little success in persuading th(' Japanese 10
buy more of their manufacturi..'(1goods. japanese companies were
slow to invest In skill-intensive industries in Malaysia, and even
slower to transf('T new tcchnology to their Malaysian units and
establish research and develop- ment facilitil'S in the country.
They also tended 10 bypass local contractors and suppliers and
acquire components, materials and services from japan_ Japanese
manufacturing cmnpan i~ employed more expatriate managers and staff
than most other foreign investors, locking Ma laysians out of
decision-maki ng functions ancl itLhihitln!l. their career
dt;veloprnelll. With appea ls to Japan to use more Ma laysian
vessels for their bilateral trade going unheeded, the shipping
imbalance contributed to a large and widen- Ing deficit in their
invisible trade as weil.1.l In a hard.hitting speech in August 1984
that reeked of embarrassment, Dr. Mahathir registered his
unhappiness over the way Malaysia'S relations 51. 9 4 Mulil)'Sic/ll
,1,wl:'ri(/c with japan had f..lled to c:volve. Accusing Tokyo of
conductil1g a colonial economic relationship, he said the Japanese
('(:onomy was extremely pro- teclionist, and the Japanese were
guilly of "improper behaviour" over air rights while engaging in
"the dishonest and tension-generating" practice of transfer
pricing, by which companjes show minimal profit, or even losses, to
avoid taxes. "We cannOt and will nOl remain merely as hewers of
wood and d rawer~ of wlwsll(lS- at least six were formed in the
early and mid-eightles - also wt'nt nowhere. Malaysia lacked the
close l-onnections between the banks, government and industry that
were nec'O),('d. Mtl'r a liHl'('fold increase in export earnings
between 1975 and )9S0, the country's e{"Onomic planners had
forecast t'xports to top IlM63 billion by 19H5. They failed to
reach nM38 billion. Dr. Mahathir blamed rapIdly advanc- ing
technology as well as manipulation by thl' developed counlrl('S for
thl' collapse, and dcclart'd that "Ihere is no future in
commodities". As trad(' and industry minister as w~1I as d~puty
premier from 1978 to 1981, Dr. Mahathir had sold Malaysia to
American, European and japanese multinationals as a platfo rm on
which to manufacture industrial products lor overseas markel$. But
as prime minister he argued that eXI>orIorien ted
IIlanufacturing was insufficiellt. "W(' do nOI want to be grounded
in the mediocrity of mere assembly operations," he said. Although
the world was entering a recession that would incvitably affa "
Malaysia, Dr. Mahathir pUSIH.'opuiation - 14 million in IYIB - cars
and steel esp('clally we're unlikely to be profi table in the
dOlllestic IWlrket unless sheltered behind protectionist walls or
sub- lcliLed. Either way, it would lx, a burden on local consumers,
who enjoYl'd t'asy acc('SS to imported manufactured good producers
in fields already threatened by global oveHOIp..1city. Dr. Mahathir
would have none of it. 1-1(.' regarded h('avy industries as an
cxpre~:.ion of nationalism that would show how Malays could advance
beyond the economic limits previously sct for Iht'Ill.)9 1-1(' was
thinJ.;ing beyond indiVidual products, prices and market sharl' 10
the next stage of industrialization, as in South Korea. Seoul had
Ignored convenlional adviu' and refused the temptation to conll nue
buyi ng steel clwaply frOIll JaIXIIl, Dr. Mahathir said, and now
the Soulh Koreans were sclling steel to japan. Ill' was certain
heavy industry would bring similar substantial benefitS to the
Malaysian onomy through technology, )kills and numerous spin-offs.
Large manufacturing enterpriS('s nceded SUPl>Orting indu5lrie:-.
and services, which ITlU~t be provided mainly by locals. "Tht'
spillover is literally t(('men- dous,~ Dr. Mahathir said. echoing
his primary school teacher's message. "Whole Il("W towns spring lip
where lndu!>tries arc located.. .new ~ervices and tr,ldl~s
spring up." 4( Dr. Mahathir conceded lhal Glrs, for example, could
he imported cheaper, but i n~ i 5t'ed lhc capacity to produce whid
es was a necessary component of Malaysia's industrialization. Ill"
was fnl5 tfilted that marly MalaYSians dId nOI shan.' his
enthusiasm about building a great nation and, worse, some did not
('ven bt'lieve it was po~ si)I('. lie urged them to "overcOIII(,
tile mental block which condemns liSto being the produccrs of
primary comm(xlities to 52. fuel til(' growth of the industrialized
coumrie:park an economic take,ofr. Two cement plants, onl" tn Pcrak
state and the otll('r on I.ion ma({' as his ofliclal car. Proton's
logo Initially featurl'd the crest from Malaysia'S l'oat of arms.
and sub- ~l'qu('tcd profitability. But Prawn's success came at a
heavy cost 10 MalaYSian consunH'rs: taxes ranging from 140 per
L'ent to 300 per Cl'nt on impo rted vehicles, anti up 10 40 per
cent on cars locally aSSl'mblcd from imported kits. Built in to the
proteCl ion, and little known to the moto ring public being
slugged, was an opaq lll' import-lin'mi ng systl'm for foreign
cars. Int rod lKed in the mid- 1970s to encourage bumiput ras to
enter the vehiCle dist ribution bU5i l11.':;S, titen do mi nated by
foreign companies and hliSill('ss groups owned by Chinese
Malaysiam, the :.ystcm covered trucks and motorbik s as well as
car). With the lTcation of Proton, the licensing system was blended
with ta riffs 10 protect the national car. Licensees were grantl'd
permits, which (,>very vehid e man ufactured or assembled o
utside Malaysia had to secure before it could be imported and sold
locally. The Ministry o f internalio nal Trade and Indust ry issued
the permits to co mpanies controlled by bu mi- putra investo rs.
They d id not have to hid op('n ly, and nor d id they have to pay a
.~i llgle cent for a permit, ma king perm its, tn effect , a
licclln ' to print mo ney. Licensees typically SOld the use o f
thl'ir rights to distri butorships for between RMIO,OOO aml
ItMSO,OOO per ve.hicle, depending on thl.' make and model. This
dassic tOllgate operation put more than RM 1 billion iI ye,lr in to
the pockets of the well-connecteu permit holders and yielded no
benefit to the govern mcnI.4Q ~You can buy a home in Malaysia
cheaper than you can buy a car," one ,Inalyst wrote in 1 9~9. ~)
Malaysian car owners were generally paying th ree times the price
of a similar modd i.n the United States. Not o nly Wl're rivals
Iloncr It'lll of Proton, were guaran teed handsome ret urns
regardless of the vell- Ilre's protitabilily. They were paid to
provicll' the teCh nology, components _Hld trai ning, as well as
collecting patent, design and other fees. Dissatisfi ed with Proton
's performance in 1988, the Malaysian government repl,lCed the
company's bumlpulra management with Mitsullishi executives. Mitsu-
hl~hi's wilhdrawal from Proton, through the sale of sh;u('S to
other investors, l.'Ilt'Cted the Japanese companies' diminished
role in Malaysia.5.l Over the pre- 'Iolls decade, Proton had CUI
its dependence on Mitsubishi by acquiri ng auto- englnecri ng
companies stich as Ikitaill's Lotus Group International. Proton ,do
~tart ed making its own cllgines, which it previously purchasl'(i
fro m MllSlIbishi ,md ig Japanese suppliers. But it was not {'a~y
iOT I'roto n to strike out on its Own. Proton's day of reckoning
neared as Malaysia met its obligations ullder an ..)I?AN Frl'C
Trade Area pact, which required tariffs on all manufacturi.-,d
gecame one of the first serious pOIntS o f contentio n bl.'lween
Dr. Mahath ir and his succc~sor, Abdullah Hadawi. To rt:vivc
Malaysia's flagging economy, which had bc,.I0~ The one Malay who
made the top ten in ForIH:S'j rust Malaysian rich list in 2006,
Sycd Mokhtar Alhuk- hary, was a T('ialiv(;, l;tlecomer, a
businessman who had dilllied wit h Arlwar and in whom Or. Mahathir
invested heavily aHer becoming disillusioned with Dairl!
Zalnuddln's prot~gb. H>fo Some l"ConomlSIS argued that
affirnliltivc action as a means to redistribute wealth more
equitably hindered groWlh and competitiveness, I.:lting Malay-
sia's rclililve dedlne in Ihe EaSI Asian region: When the NEI' was
introduced In 197 1, Malaysia ranked thi rd only to Ja pan and
Singapore in terms of GDI' per capita; by 11)90, it had fallen
behind South Korea, Taiwan and lIong KOI~g as wcll.I01 And the gap
continu",'d to widen, despite Dr. Mahathlr'S denials, leaving
Malaysia scrambling to com pete in a globalized world, where China
and India were 5Ctllng a sizzling pace. Malaysia'S population, at
more than 23 million in 2003, had almost doubled since 1981 while
simultaneously being urbanized and ethnically reconrlgured. The
portion designatl'd urban swelled frorn just over one-third 0
almost two-thirds. I{esp:>nding 10 incentives offered when Dr.
Mahathir set his 70-m ilIIon goal, the birthrate dcfll..-'d
established international patterns and did not decline as
prosperity increased. Malaysia became one of Ihe youngcst count
ries in the region, the envy of others saddled with geriatric
liabilities. :r~e Malay birthrate was double that of Chinese and
Indians, for Malay fam- rlres could coun t on scholarships and Jobs
for their children as well as tax breaks for more than two kids. l~
C.onstituting less than half the p:>pulation in 1981, Malays
became a clear and growing malority, without the need to be
grouP('d among bumiputras to achieve nalional majority
status.)().lngJaya: International lnvl'Slmenl Consultants.
undatcd), p. 38. 61. 1J4 MCI!IIy:.iulI MclV('rick 9 Cilrotyn
Iiollg. "Muslims first, Mal~yslan ~ St~ond". Sim iis Time~. 21 Aug
ust 2006. 10 Khoo 1100 Td k. I'''md()u.~ o{ ,'>fa/mlilifislll;
All IlIldlt Conw. IllSt Served': I'rllatizatiun Under M~ha th ir",
in Ikfflioll~, p. 283, citing Radin SQc:narno At Iial and hiinal
Mnam YuwL 1'w I;xpl'ri("ncc of Malaysl:' ~, in "1'rll'lti1.
(arrcsSl:'l1 27 May 2CX)61. 17 Fau....az ,bdul ,ziz, - Mahalhir
Vt'nt:'l Frustration ,In I)VD~, II Mily 2006 (art'C"SS(>d 27 Mav
20(6). 16 intervll'w with Mabathir Mohamad, 20 March 2007. 19 Greg
Felkcr, -Mahalhlr and the l'olitiC'S of f..;onom ll' Policy in
Mal(IYSi,''', in Hff',cliOl.s. p. 2M . 20 Intervle.... with Mahat
hir Mohamad. 20 March 201)7, 2 1 IHIC'rvl{'w ....lth D..lm
Z:llnmldin, 18 October 2007. 22 IHtcrllcw wit h M..halhir Moh:'mad,
14 August 2007. 2:i Chl'Ong Mi Sui and Adilmh Amin, /Jelim; '11/1'
,f(m Iff/lind II", C"i.~II/(1 (f'etaling Jaya: f'" Time..~, 22
Sc:ptcmber 1997 (Jccessro 24 March Z009). M ter he retirl..'(i, Dr.
M;thathir 1m" with $oros In Kuala Lumpur and acC('ptl'(l that the
rmancicf was not rl'SpOrl)lhle for tin' Asian flnan cial crisis. ~
M;L (ay.sia'~ Former I..eader M.,h:nhlr 8LrI('S Ihe I latchet with
Bnancler Georgl'Soros", CIIi,l I'()I'I, IS IkcemlK'r 2006
(acc('!S(' (ac("('ssed :ll August 20(8). '}3 Koon Yew Yin,
~Whatls Wrong with the NEI'~. iIIircts and ChallC'ngl's Under the
Ninth MJlaysla Plan" . 950 Lt'(! IIwok Aun. "Tlw NEI', Vblon 2020,
and Ik M Societies Act 1966, UMNO was not permitted to h(-' in
business. To conc('al its a~scts, the party us~'(llhe common
practice of lI()minee mmpanies o r (',('(:utives, or alternat
ively, trusted individuals, prominent ollsin('sSmell who
~urreptitious ly held stakes in various COIll- IltInies on UMNO's
behalf. The traj] could lead tllTOugh a bewildering maze pbrOlher
also d(>Cided 10 sell his 20 per cent stake - was transferTl'(l
in 1974 to rIcot prices soaring to a peak of 8,970 pounds a tonne,
and set off a global scr(l like they were gOing to make a killing,
the sta kl's Wl'Te soaring drama- tically and Maminco hecame
dangl'rollsly l"XIKlSl,ecial occasions. While Bank Bumiputra wa~
being used to buy tin on a grand seall' in London, a wholly owned
subsidiMY of the 1>.1nk was being abused in even more
breathtaking fashion for l>er~onal gain in colonial liang Kong.
Iuml- putra Malaysia Finance Ltd. (IIMF), puty l'rime Minister Musa
IIitam_Dr. Mahathlr wanted his own man running a major financial
arm of the governlllcnt.21 The details of BM F's decp('nlng
troubles were disciost'curc loans, when they were secured at all,
was being eroded seriously by the dOwnturn, exposing 13M Fto such
large losses that the financial health of Bank Bumiputra ibelf
might be at risk. With liM P operating almost autonomously, the
lines of responsihility led back to Kuala Lum pur.2~ BMF's lending
decisions were made by its own two-man board: Chairman Lorrain
[.sme Osman and Mohamed Hashim Shamsudin were both prominent
directors of the parent bank. Lorrain was a member of Or.
Mahathir's l>allel of economic advisers, while Hashim was Bank
BlImiputra's exccutiv~ director, a post that rankw second in the
bank's hierarchy. Ibrahim Jaafar, who ran IIMF's day-to-day
operations in 1I0ng Kong as genemlmanager, reported directly 10
torrain and Hashim. In an IncriminlLting turn, the Hong Kong-based
press dis("overed that two of thes(' three executives, who had
controlled 11M!' from its in('('ptioH, had outside business
collnections with customers. Ibrahim held large personal overdraft
facil ities in lIong Kong banks thai were guaranteed by Carrian.
lIashim became a dirt'Ctor of a small company thr(.'C days before
it received a cheque for nM 1.1 million from the wife of the
chairman of Eda, iust as UMF loaned the group USS40 million _~ As
the controversy swirled through Southeast Asia with each fresh
round of revelations in Hong Kong, the Malaysian authorities
remained tight- liplX.'e groups. "It Is not prudent, but you
must rem('mber the ,ltlllosphere in Hong Kong at that time. Hanks
were anxiOUS to lend money Simply because the ('(onomy was booming,
and when somebody who Is established comes to YOll to borrow money,
you don't look too doscly, although by rights you should," he
s'lid. "This was their mistake." Dr. Mahathir sidestepped the
question of accoulltabilily, promising that Malaysia would "take
action" if malpr;lClh.:es were uncov('red, but said the emphasis
was on trying to salvage overdue ell'blS. not on "wilch hunting".
lie Sas('(! Capri Trading Corporation, fi led a lawsuit in the
Ullited States claim- ing it was denied a fa ir share of the
proceeds frolll the sale of the propen y.t;; The suit aill-ged that
Bank Burniputra ami its senior officers at the time acted "in
('oncert and in conspiracy...to frauduli.'ntly cO[1('ealtht.'
lootingN of the prop('tty from Carrian's minority shareholde r~ and
credi- tors. It claimed they engaged "In a pattern of rac"eteerin~(
by paying Jess than one-third of the prol>C'rty's market va[lI{"
deprivi ng millority share- holders of aeJe and continued
lending to Goorgl' Tan and Carrian. To avo id (il'tComething we
couldn't ovetcomeH .ll'1 In fact, b.lsed on incomplete public
information, RM I5 billion was a con- servarivt' estimate of
Pcrwaja's losses. Similarly, I~an k Bumiputra dropped at least RM
10 billion. Bank Negara's foreign exchange forays d rllillL,,atc
1.0011 Scandal Tuliay"'. A W 51, 11 March 1986. Dr, Mahalhir',
(,OI1lIl1CIII$ we-r(' containC'C1 in t'C(rnlx.'r 1984. 42
Raph:lel l>Om, ~Malaysla n Banker'S Murder ~:SC" lah.">
Scrutiny on Loa ns~, AWSf, 2.') July 1983. '13 Raphael I'u ra.
"Prime Min i s t('r'~ I'ress Couft'r('lln' ShNls Ught 011 Bumlputra
FIII('Inc(''',A WS/, 12J (ac~"eSS('(. 25J3IIuary 2(06). 48 Raphael
I'ula, "BulI1il'utra I:inantl.' Officials Resign Over J.oan$~,
AWSJ. J NO~'('mbe r 1983. (accessed 4 Scptc,n ix'r 2001:1). I() K.
D,.s, "Tin.' Grl'at Di vide", FeU?. 27 NOVl'1l11x.-r 198] , p. 53.
11 "l'('flOlIL g: Th~ Goldl' ll UmhiliClI1:1.4 Mit ~s Over thl'
5,:a", rTFR. 2i'l August 19H I , p.6-l. 12 Ha tinah Tudd, "Thl
ProtOIl Saga 5:lga". Ncw 11I1t'ma li()II(/li ~l, No. ]95 (M ay
1989), pp. 14- 15. Jj Leslie Lopcz, "'M a lays l ~ !l Gra nd Pri x
Stalls Ou t as 1'.111 5 Pass Up Rare Tid ~ t s~, AWSJ, ]4 M (a
cn's~i'([ 6 April 200':11. Uel' won the auki t Uender..
parJi,llllclltary constitUt'l KYfor tht' I)t'mocmtic ActiOll I'~ rt
y in the 2001'1 gcnt ral (']ect loll. 102. 196 MlI/lIpi,m Maverick
35 M,uika Via/any and Marti" I'ul('h. ~ Vislon 2020, the Multimedia
SlIlX'rCorrldor ;tnd Malaysiau Unlversitil's~, prr>C(,l'd ing)
of 15th Bi('llllia l Confcrl'fK' of the Asian Studies Association
of Justral1a. Canherra. 29 JWll'- 2 july 2004. .16 Ibid. ] 7 Eric
1:',llis, ~I'rutonomin" , FOr/flllt', 10july 2006, p_20_ 38 iLS,
1"lilfW and i)iane K. Mauzy. '''IIII/W~iilli Politin Undn M
allotlii,. (London: It'u tlcdg(', 1~99), p. 174. 39 Chandrafl j,
Dill'mma", In 110 iCtly affecting the privileges, position, honours
or dignities of the rulers ~ ha ll lx' passed without tile conSl'nt
of tlte ConferelK(' of IhLicrs." Without their prior approval,
thi.' amendments mOTe than Hk('ly wert' unconstitutional. As
Ii.'ader of the exduslv later murdered. Government officials
Iinkt..'d PAS 10 both groups, though many Malays believ(.,j
olherwise, ronvinc('(1 that S!..'(urity forces mishandled Ihe
incidents or ,'ere implicatlxi in them."! Even more SllSpeCI was
liIl' crushing of the passive Oarul /rqalll in 1994, a full 26
yl'ars 'Ifter It was fOllnded b}' a charismatic religiOUS teadll'r,
Ashaarl Muhanun('(1. Tilt.' movement followed a tradilionallst
apprOilch 10 Islam, with mcmbers eating Amh-styre, the men wearing
green robes ;lIld turbans and the women in purdah most of till:
time. Fol101...crs cstilbllsh('(j self-contilined COnlllllH1CS with
hOllses, mosques, schools, clinic:. and veg- etable plOIS, their
fac tories prodUCing items for sale: in their own shops.
Nation-wide, DaTUI Arqill1l ran 250 kindergartens and grade
schools, and operated enterprises :.p;mning food processing and
property to tCJ(tile~ and heallh services, with assets of about
RMJOO million.hoI In the years before II was banned, Ihe government
quietly cleared the way for the group 10 expand to counter i'A5.M
When the National "'alwa Council, a governmenI body, declared Darul
Mqam a deviant Islamic sect ils lead('rs WNe dctaint'ctations
alTlong SOTlle Muslims that tilostates and lose their rights as
MusHmsYl5 A 1I10re extreme version of the law, which would have
allowed for the prosecution of a Muslim accused of misleading
fellow Muslims to vOle for an 0PIXlsitiOn party, was considered
during thc dcbatc.106 Johore provld('d for caning and jail
sentences for le~bians, prosti- tutes and pimps, and for those
found guilty of sodomy, pre-marital st'x and Incest.1U7 At a
speI'I('(1on Ihe- diff by dl'Claring Mlilaysia an "Islamic
SI'1l1("'. Although he had Ohl'll saId Ih(' Silm(' Ihing
l>efor(', and he no doubt sought 10 oUlflank PAS tactlcally aher
de-daring ail-oul support for the UnIH.'d Stiltes in 1l(' ~wilr on
tcrror" that follow('{1 "Scptcmbl'r I I", Dr. Mahllthir was serious
this time, l ie made the announcclllent at a m('t'ting of Parti
Gerakan RakY,lt Malay"iil, :11 UMNO coalition partner, and call1'd
a gathering of all National Front members to endorse the move, lie
latef told P:uliament that Malaysia ""' Invasion of Mghanistan,
together with its support for al-Qaeda's Qs.lma bin l.o1den ancl
the Mullah Omar-led Taliban regime, further lJ.luered Ihe p.lrty's
reputation as a respons, ible, democratic Illov{'nl{~nt d