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FT: 3 in 1 - Mahathir distrusted by Malays
By Kapal Berita
7/10/2000 9:51 am Sat
Makluman: Ada tiga rencana Financial Times Dalam Mesej ini.
1) Mahathir Attacks US Pressure
2) Mahathir FT Interview
3) Mahathir's Last Stand
Rencana ini panjang sangat dan bukan rencana reformasi.
Saya hantar ke forum ini untuk di buat kajian.
Dia menyebut beberapa perkara yang akan diteruskan
walaupun tidak mendapat sambutan - termasuk projek mega.
JIka anda baca sampai habis, anda akan dapati diktator tua
ini nak sambung lagi projek Bakun.... patutlah JJ diletak
Mahathir attacks US pressure
>From The Financial Times, UK
Mahathir attacks US pressure
The US is quietly putting pressure on Asian countries to limit the
scope of their efforts at co-operation in the economic and monetary
sphere, according to Mahathir Mohamad, the Malaysian prime minister.
Over the past year, the 10-member Association of South-east Asian
Nations, Japan, China and South Korea have moved towards closer
collaboration to help rebuild their economies in the wake of the 1997
Issues include currency swap arrangements to help protect against the
speculative flows that sparked the crisis, which leaders in Asia feel
would be helpful given the absence of broader international monetary
reform. But Dr Mahathir said US pressure would ensure that
achievements would be modest.
"We are able to discuss minor issues, but we have not made any real
progress. The idea of an Asian Monetary Fund has not taken off.
"We are talking about swap arrangements, but that has not been
finalised either. So we get the sense that some people are being
forced to drag their feet," he said.
Dr Mahathir recalled that Washington had objected to his call in the
early 1990s for the formation of an East Asian Economic Caucus that
would have excluded the US.
In response, the US pushed to set up the Asia-Pacific Economic
Co-operation forum to ensure it had a say in economic matters in the
"Although other areas in the world can form their own unions, we are
not allowed to talk to each other," Dr Mahathir said.
Malaysia would not remove its capital controls or currency peg until a
new financial regime was in place that eliminated speculative activity
in financial markets, he said. The impetus for such change had
diminished as the crisis receded.
He added that western countries that wanted greater transparency in
developing markets were applying double standards. "Countries that are
rich and do not feel they are at risk feel that everything is OK, and
they're making a lot of money."
The formation of Apec had, meanwhile, undermined Asean, Dr Mahathir
In general conversation while the interview was being set up the Prime
Minister made the point that the markets had lumped everybody together
during the Asian crisis. Malaysia had huge savings and low interest
rates and didn't need to borrow abroad, he said. Indonesia had high
domestic interest rates which had encouraged foreign borrowing. When
Asian currencies fell Malaysia did not have to wrorry about foreign
debt. Its banking system was stronger than that of Thailand or
Indonesia, or even South Korea. It was not that desperate, but it
still suffered continuous attacks on its currency.
He said that if Malaysia had practised corruption and nepotism like
people in the markets suggested it would have gone down much sooner.
It had resisted going to the IMF because it thought it had control
over its own economy.
At this point the formal interview started and the transcript follows:
Financial Times: You say foreign borrowings were not a problem, but
the Malaysian economy was over-borrowed and there was a large domestic
debt problem, which meant you had to restructure your banks. Is that
Mahathir Mohamad: The banks have merged now. We want bigger banks.
Then the management of the banks needs to be improved, and there are
lending policies and and they must follow certain guidelines...The
banks must learn to manage their funds better, but the banks are very
reluctant to lend money, especially for new ventures. They like to
finance the construction industry. You find people still complaining
that they can't get loans.
FT: What are your views about reform of the international financial
MM: I think we're not back to normal yet. I think the international
financial architecture must be changed in order to get rid of
unnecessary speculation, or even manipulation. In fact even Soros
admitted that you cannot leave things to the market. The market is not
perfect. What we need to do is to have proper rules and regulations
even for speculative activities. At the moment there seems to be
absolutely no restriction. Capital must be allowed to flow across
borders with no restrictions. While that is good when they are flowing
in and that stimulates economies. But when suddenly it is pulled out
economies collapse and they [speculators] don't seem to have any
regard for the consequences of their operations. They are only
thinking about how much money they can make. And from what I see, they
have destroyed more wealth in order to make just a small bit for
themselves...I don't see why it should be allowed at all.
FT: So does that mean you will not be able to remove your remianing
capital controls and the currency peg at M$3.80 to the dollar?
MM: Till the world finds a new financial regime that eliminates the
kind of speculative game that these people play, I think we shall have
to stick with our exchange controls. Because we can't leave it to the
market, the market is totally irresponsible and all they can think of
is how much money they can make for themselves.
As far as capital controls are concerned, people can bring money in
and out of Malaysia quite easily now if they want to invest in the
stock market. The only thing that they are asked to do is pay a 10 per
cent tax on the profits that they take out of the country. That is
all. And that is very minimal because profits are not very big. There
is no tax on capital gains. So they make a lot on capital gains. So
there is practically no restriction on the flow of short term capital.
As far as investment in productive capacity is concerned there is no
control whatsoever. People can come in and invest and take out their
money if they want to.
FT: So what exactly needs to be done?
MM: I believe that speculation in currencies needs to be regulated.
That is entirely possible. This is one area where they tell us you
must be transparent, but they themselves are far from being
transparent. You don't know where they are. You don't know how much
money they have, how they are operating, what actually they are doing,
how they manipulate these things. You don't know. It should be open to
everybody and banks should not give such huge leverages. It can be as
much as 200 times. In the case of LTCM it ran into trillions of
dollars. It's ridiculous that banks could risk so much money with
these funds and as we can see things can go wrong. When they go wrong
their cronies have to move in to help them out.
FT: Is there any sign at all of reform in the financial architecture
or have people moved on?
MM: I think that people are now quite comfortable. They don't seem to
see it as urgent. And we find that the IMF is quite resistent to it,
although, strangely, people like Soros did mention the need to have
some regulation of the currency markets. But the general feeling among
countries that can be subjected to attack is that there should be some
regulation. But countries that are rich and do not feel that they are
at risk feel that everything is OK and they're making a lot of money.
FT: Can anything be done at a regional level? What about the growing
collaboration between Asean and Japan, China and South Korea?
MM: I think we can [move at regional level], but there's been a lot of
resistance towards the Asian countries coming together to do anything.
When we proposed the East Asian Economic Caucus, there was open
objection. Although other areas in the world can form their own
unions, we are not allowed to talk to each other even. Now, of course,
we have to call it Asean plus three but even then we feel we are being
watched and, off on and on, somebody suggests that developed countries
from other regions should also be a part of the whole thing. I don't
see why we should always have the presence of other countries when we
are talking about matters affecting our own region.
FT: You're talking about pressure from the US?
MM: Yes. The US objected even to what I was wearing. Mr [James] Baker,
[former Treasury Secretary and Secretary of State] didn't like my
wearing Malay suits and told the Japanese as much, and he told the
Koreans that Malaysia did not fight for South Korea in the war. We
couldn't because we were under the British at that time.
FT: But Asean plus three is still an Asian grouping which you must
welcome. What prospect does it have for making real progress in these
MM: We are able to discuss minor issues but we have not made any real
progress. The idea of an Asian Monetary Fund has not really taken off.
We are talking about swap arrangements now, but that has not been
finalised either. So we get the sense that some people are being
forced to drag their feet.
FT: So the US is putting pressure behind the scenes?
MM: It looks like that.
FT: What are your views on the role of Asean and its importance?
MM: When APEC was proposed, we were not too keen on APEC because we
thought that it would overshadow Asean, and in fact that is what has
happened. Because of APEC, Asean has now taken a back seat. Asean in
APEC does not function as a group. It functions as individual
countries and therefore we were not able to coordinate discussions
within APEC for the benefit of Asean.
FT: So is that a fundamental weakness?
MM: Asean is still sticking together, but as you know APEC and even
the composition of Asem [Asia Europe Meeting] in terms of not
recognising some of the countries - Myanmar - means we are not there
as Asean. We are there as individual countries.
FT: But hasn't ASEAN been weakened by the crisis? It doesn't look as
though Asean is really pulling together. Does this worry you?
MM: Well it does, although we have achieved our target of having all
southeast Asian countries in. All ten of them are now in. On the other
hand the newer members are rather weak economically and even
politically. And then we were all hit by the financial crisis and
instead of being small tigers were are just reduced just some
struggling economies, like Indonesia for example. There are many
factors which are affecting Asean now. You cannot see things with the
same perspective. Each one has got his own problems.
FT: Can you overcome that?
MM: Given time, yes. But it will take quite a long time because many
of the countries are still not out of the crisis yet.
FT: And is it wrong to think of APEC as anything more than just a
MM: It's just a talking shop, and it has effectively undermined Asean.
FT: What is your view of the Asean Regional Forum? Does it have a
MM: I think it has. We would like to keep up discussions with [our ARF
partners] because then we would know where we stand but there is
nothing very concrete coming out of it, just something that enables us
to talk to countries outside the Asean region , countries which have
some impact on what's going on in Asia.
FT: What do you hope for out of the ARF?
MM: To make people understand the problems faced by developing
countries in the Asean region. I think if we can get their
understanding then we may be able to get some cooperation....
FT: Turning to the domestic economy. The stock market is weak and
there is concern about invstment flows. A lot of people say you
haven't gone far enough in dealing with the corporate restructuring.?
How do you react to that?
MM: This applies to the stock market of the whole region. They're not
performing well either, but if you look at the performance of the
Malaysian stock market since the turnaround, it has done much better
than all the other stock markets in the region. But course sometimes
we will reflect what is generally happening in other stock markets.
I'm not really familiar with what moves the index, but it seems to me
that a lot of people are waiting for things to happen and I don't know
what it is that they expect from the government. Maybe they want to
see the budget, or they want to see the figures in terms of economic
performance. We were told for example that if Morgan Stanley would
re-admit the Kuala Lumpur index, then things would move up, but in
fact the figures went down....
FT: Some people blame it on weakness of corporate governance and say
they are waiting for corporate restructuring.
MM: That is their perception, but perceptions can be wrong. A lot of
things have been said in connection with Malaysia which, in the end,
have been proven untrue. So, when people have some idea about things
and they get carried away by that.
We are trying to improve corporate governance. We have looked into the
banking system to improve that too. We have done quite a lot. One has
to remember Malaysia had been much better regulated before. We even
had our bankruptcy laws a long time ago whereas other countries have
just begun to put that in place. So in terms of improving corporate
governance, there is not that much that we can do.
FT: But isn't one thing which is holding this process back is the
reluctance of owners to see the companies broken up and perhaps sold
to foreigners? Do you want to keep the big companies for Malaysia?
MM: We still maintain that we need to keep control over some of our
companies You must remember that foreign banks have been
operating...Malaysia has been open to 100 per cent-owned foreign banks
for a long, long time. But there are certain things that we clearly
have a need to keep for ourselves. Otherwise we would be merely
workers for foreign companies We don't know what policies they might
adopt and they might close down facilities here because they are
producing elsehwere much more efficiently. So we have to look into
that kind of thing too.
FT: Does this mean that you would never sell Proton?
MM: We'll sell a far share of Proton to foreign companies, but to just
cut it off and let foreigners decide what automobile production would
be in Malaysia, I think would be detrimental to Malaysia.
FT: Isn't another part of the problem that owners are reluctant to
realise losses which remain hidden on the balance sheet?
MM: There is that element, too, but there are other means of turning
these companies round. We can do something else besides just selling
off at firesale prices.
FT: What will be the drivers of economic growth going foward?
MM: We're still a big manufacturing centre for the world. Our
manufactured goods are increasing and our exports of manufactured
goods are 82 per cent of our total exports. On the other hand, of
course, we are not troubled by petroleum prices because we have our
own supply of petroleum. We have traditional commodities as well and
the demand is still there but we are putting in a lot of effort in the
IT industry and that is attracting a lot of investment. Ericsson has
invested a huge amount in producing mobile phones in Malaysia, and
other companies are looking at this. We are still a very good centre
for investment in productive facilities and manufacturing.
FT: And you have a competitive currency?
MM: Yes we have. The cost in Malaysia is very low. It's about one
third of the US and less than in Europe. People know that they will
get a friendly business conditions.
FT: What are your expectations for economic growth for 2000 and 2001?
MM: We think we should be able to achieve at least six per cent.
FT: One feature of Malaysia in the past has been its predilection for
large infrastrucrture projects. Do you still believe in this approach,
or has the crisis changed your mind about projects such as the Bakun
MM: In Malaysia we invest for the future. We don't invest for the
immediate needs. When we want to do something we look into the future.
For example when we wanted to build the new airport. Siting a new
airport is always a big problem....If you build an airport that will
last for the next ten years, 15 years or 30 years, you're going to
have a problem at the end of that period finding another site and you
have to be further away and it's not easy to get the land.
So to build this new airport for example, we looked into a hundred
years from now, Supposing the number of passengers would increase to
100m, we would need a very big airport. So we reserved 25,000 acres of
land for the new airport. At the moment we have facilities for 25m
Now we learned our lesson when we built our previous airport in 1964.
It was designed for 400,000 passengers a year and we thought that it
was a very big number. At the end of the period we moved to the new
airport, we were handling 17m passengers.
If you plan an airport that can handle just 20m or something like
that, then you're going to be landed with a lot of trouble. So it is a
big airport, but it is very cheap. By comparison it cost us M$9bn.
Even at the old exchange rate of M$2.50, it was about US$3.5bn. But
Hongkong airport was built for US$20bn and it is much smaller than our
airport. So how can you call it a big project? It is an essential
project built at a very low price. And if we were to build now or
later, it would cost very much more.
It's the same with all the projects that we build. We are now clogged
up in Kuala Lumpur. We have to move elsewhere and we chose an area
that is between Kuala Lumpur and the airport and it's only 10,000
acres of land. It will take us 20 or 25 yars to build.
At the moment we have put in the infrastrucrture and the value of the
land has increased tremendously. We can sell. We can make a profit on
that. Actually, over a period of maybe 20 years we can make a lot of
money on that, because land is going to appreciate. The value of the
whole property will go up. It is an investment. As much as developing
a piece of land would make money, we'll make money out of the new
administrative capital. It's an investment and we need it because we
cannot stay in Kuala Lumpur anyway and we can sell our Kuala Lumpur
properties, if we want to, and make very substantial returns on that.
It's a business proposition.
Some people call that mega projects. This is a term invented by
others. To us it's not mega at all. It is within our means. We didn't
borrow from anybody to build all these things.
We have the money. The money is generated internally, and it has
boosted the growth of the economy also. It has contributed to the
growth of the economy.
People keep on saying 'ah, these mega projects.' Mega is actually a
comparative term. If you spend something that you cannot afford, yes,
it is a waste. But we are spending money on things that we can afford
and we need.
FT: And can you afford Bakun?
MM: Bakun too will have to come. If we wait the price is going to go
up. We will need power at some time or another, and to build this
Bakun project will take us five years. Demand for electricity is very
great. It's going up at a very rapid rate. Unless we plan sufficiently
we will not be able to get cheap electricity, and Bakun is a source of
cheap electricity for us.
FT: Turning to politics, what are the outstanding jobs that you have
to complete before you retire?
MM: My first job is actually to ensure that the party is strong enough
to continue. We have to be revamped. We have to have younger people
support the party, and after the party has been strengthened, I think
I can leave.
I think we have put the country on the right path. We know we have
long term plans. Most of our plans have been very successful. We think
we know the direction that we are heading....
FT: What about the ethnic divisions in Malaysia?
MM: We still have this disparity between the different ethnic groups.
The indigenous people are still way behind and they suffered more than
the others during the crisis and there is a need to put them back on
track and to make sure that they will be able to continue to get their
fair share of the wealth of the country. The non-Malays, they
appreciate and they believe that it was because we made the necessary
adjustments in the distribution of wealth that during the crisis there
was no outbreak of racial violence in Malaysia.
FT: But have the Malays risen to the challenge and exploited the
opportunities you have given them?
MM: It is a problem of having to change the culture of the people. The
indigenous people are not monetised. To them money is mere convenience
that they carry in their pocket to exchange for goods. They don't look
at money as capital. You have to change their mindset. I have found
that people in communist countries are just like that too.. They don't
know how to handle money as capital. We have the same problem with the
indigenous people. We give them money as capital and they want to use
that money spend on whatver it is that they want. We have got to
change their culture and that is going to take time.
We have succeeded to a certain extent. Otherwise the disparity would
have remained bad and there would have been racial clashes during the
downturn. We have turned it round. But a lot of that depended on
institutions that we set up.
Of the 20 per cent of the economy which is now with the indigenous
people, only seven per cent is with individuals. The rest is with
institutions that the government set up to take up shares in companies
or even to start new companies.
It's not what we want because we don't want to lead. We want
eventually to sell off what is held by institutions to individuals and
when we find a suitable candidate we will sell off the entity to them.
But then we get accused that we are selling them off to our cronies.
They are not cronies. They are the people who have been identified as
capable of managing. That is why they were given a chance.
If we just sell to anybody who makes a bid, the chances are that the
company will be sold off to the other races and that is not going to
serve our purpose.
FT: You must be a bit disappointed that it hasn't moved further?
MM: You can say that I am disappointed because I keep on telling them
'look, you have to learn how to manage better.' They don't look far
enough ahead. They think of today's wealth They have some money, and
they spend the money.
FT: So is there any more you can do?
MM: We were devising new ways all the time. We're talking to them,
explaining to them. And people don't change that easily their system
of values. It's very, very difficult. But even then I would say that
we have succeeded much better than most other countries.
FT: What were the political consequences of the Anwar issue?
MM: Well it had the maximum effect in the 1999 election when the
picture of Anwar with his black eye was paraded across the country. I
was blamed as being the one who inflicted it and a hate campaign was
carried out. This resulted in people turning to PAS, but we have now
been able to explain to the people that this had nothing to do with
the party. This is something that happened and we could not control
it. People have now accepted that he has done something wrong.
It's ridiculous to suggest that we should have had a conspiracy, which
is what he keeps saying. He never defended his position, he merely
said it was a conspiracy on the part of the government to deprive him
of becoming the next prime minister. Why should there be a conspiracy,
when I have been the one who has pushed him all along and wanted him
to be my successor? His behaviour has not been acceptable in our
FT: Has it made it harder to attract young people to the party?
MM: Yes it has, because people find it hard to believe that he could
indulge in such things and the theory of conspiracy was quite
attractive, and he has during his years in the government been able to
create cells of people in various organisations who are his personal
supporters even outside the country.
FT: So what do you have to do to get the party bck into shape?
MM: Well we talk to them. We we'll show evidence that we did not have
a conspiracy. And a lot of them have now accepted that there was not a
FT: But the Malay community is quite divided, isn't it, and racial
tension is increasing?
MM: Well, this thing has been going on for the past three decades and
we were not very fast in understanding what is being done by the
opposition Islamic party.
They have been sowing hatred against the government, hatred against
the government leaders, even amongs the kindergarten students. They
used to give pictures to these children to spit on, to step on, to
just curse. We didn't think much of it because we didn't want to
disturb schoolchildren or kindergarten children, or even people in
Our belief is that we should leave them alone so that they can study
and come back and serve the country. But all along the Islamic party
has been sending people, even to England. They come here. They stay
with the students, they sleep with the students and then they sow
hatred of the government, making all kind of accusations, like this
government is not Islamic, that it is anti-Islam - all kinds of
As a result, the students have become very much anti-government. Even
when we say, 'look, we provided you with the scholarship, with the
schools and all that', the opposition Islamic party says, 'any
government would have done that. If we had been in the government, we
would have done the same.'
These people actually believe that any government would have done the
same thing. So the sense of gratefulness is completely eliminated.
Instead it is replaced by a sense of hatred, just hatred for no
reason....For example, they look at me as a dictator. It doesn't
matter that they don't see anything that I do which is wrong, but they
look at me as a dictator, that in my cabinet nobody can say anything,
that nobody has any freedom to say anything, that I dictate.
And then, of course, comes the Anwar incident and Anwar makes good use
of that. He's a very clever operator. So he makes use of that to
increase the hatred towards the government. Now we have to counter
How do we explain to the people that all these conditions are wrong?
We have seen recently that the hatred has built up so much that one
group was even willing to try and overthrow the government by force.
Of course they have been arrested now. They face normal charges in the
courts. But among the followers of the opposition, hatred of the
government is the one thing that makes it difficult for us. They will
not listen to us at all.
FT: This must be a disappointing after your efforts to maintain racial
harmony. Do you think you should leave when the problem is getting
worse? Should you stay and sort it out?
MM: I'll try to sort it out before I go. It is amazing that I started
by being disliked by the non-Malays and they distrusted me. Now I am
finding myself being liked by them, supported by them, but distrusted
by my own people, but I think it can be overcome over time. It may not
be overcome completely, but as far as I can see there are a lot of
very rational people among the indigenous people and they still
support the government strongly.
FT : Mahathir's last stand
>From The Financial Times, UK
Mahathir's last stand
Towards the end of an hour-long conversation, Mahathir Mohamad makes a
surprising admission. He is amazed, he says, that when he started out
in politics, it was the non-Malays who mistrusted him. Now, it is the
other ethnic groups, such as the Chinese, who support him, and he is
distrusted by his own people.
It is the mark of a shift in Malaysian politics since the divisive
trial of Anwar Ibrahim, Dr Mahathir's former deputy as prime minister.
The trial, which finished in August, split the Malay community,
unleashing a more strident brand of Islamic politics that enabled PAS,
the main Malay opposition party, to make inroads in last year's
elections. Since then, Dr Mahathir, who has said he will stand down
before the next election in three years time, has been under unusual
It cannot be comfortable for a Malay politician to depend on ethnic
Chinese support. The prime minister certainly seems quieter than
usual. Gone are the diatribes against financiers such as George Soros,
though he does reveal a long-harboured grudge against James Baker, the
former US Treasury secretary, for complaining about his penchant for
Malay suits. In place of the invective is a more considered view of
the world, but the old prickliness still shows, and he is determined
to stand his ground.
Dr Mahathir still believes that speculators did great damage during
the Asian crisis. Unlike Thailand, Indonesia and South Korea, Malaysia
did not have excessive foreign borrowing, but it was lumped together
with these other countries and subject to a relentless speculative
onslaught that destroyed much wealth. The rules of the game, are
one-sided, he argues. Developing countries such as Malaysia are told
to have transparent financial regimes. Yet nobody regulates the
speculators, and when they run out of money, like Long Term Capital
Management, they are rescued by their cronies.
Malaysia cannot lift its exchange controls or abandon its currency peg
until this changes, he says, but the prospects are slim, because
people in the west have become comfortable again now the crisis has
abated. "The general feeling among countries that can be subjected to
attack is that there should be some regulation. But countries that are
rich and do not feel they are at risk feel that everything is OK and
they are making a lot of money."
One possibility would be reform at a regional level, but, again, Dr
Mahathir is sceptical. He welcomes closer collaboration between the 10
countries of the Association of South-East Asian Nations on one side
and Japan, China and South Korea on the other. It is reminiscent of
his attempt some years ago to forge an East Asian Economic Caucus, to
have excluded the US.
Yet he believes the US is putting pressure on some Asian countries not
to go too far in collaboration. "We feel we are being watched, and,
off and on, somebody suggests that developed countries from other
regions should also be part of the whole thing. I do not see why we
should always have the presence of other countries when we are talking
about matters affecting our own region."
He emphasises that the arrangements under discussion are not as
ambitious as some had hoped. "The idea of an Asian Monetary Fund has
not really taken off. We are talking about swap arrangements now, but
that has not been finalised either. So we get the sense that some
people are being forced to drag their feet."
Asean, once the showcase for south east Asian collaboration, has
itself has been undermined by Apec, the Asia-Pacific Economic
Co-operation forum, which groups most Pacific Rim countries including
the US, Canada and several Latin American states. Dr Mahathir was
never very keen on Apec, which aims to liberalise regional trade,
because he thought it would overshadow Asean. Now Asean does not
function as a co-ordinated group within Apec, although he admits that
this is also because it has been hit so badly by the economic crisis.
If his views on regional collaboration are bleak, Dr Mahathir is
adamant in defending his record at home. He is proud of Malaysia's
multimedia corridor - including the latest in film animation studios -
and of the country's economic growth record. The economy grew at near
double digit rates in the run-up to the crisis and, even this year, is
expected to grow at 6 per cent.
He brushes aside concern at the slow pace of corporate restructuring
and the weakness of the local stock market, which, he says, has
outperformed others in the region. "We are trying to improve corporate
governance," he says. "We have looked into the banking system to
improve that too. We have done quite a lot. One has to remember that
Malaysia had been much better regulated before [the crisis]. We even
had our own bankruptcy laws a long time ago whereas other countries
have just begun to put that in place."
Corporate restructuring does not extend to breaking up Malaysia's
large companies and selling parts off to foreigners. "There are
certain things that we clearly have a need to keep for ourselves.
Otherwise we would be merely workers for foreign companies."
Similarly, he is cautious about the need for key companies to
recognise the losses lurking in their balance sheets.
Nor does he see any reason for backing away from the large projects
for which Malaysia is famous. Kuala Lumpur's new airport is cheaper
and bigger than that of Hong Kong and designed for a long life. The
government would eventually make a profit from moving the capital to
Putrajaya, outside Kuala Lumpur, because it had put in infrastructure
and land values would rise.
Even the Bakun dam, one of the most controversial projects, would
eventually go ahead because Malaysia needs power for the long term. By
waiting, such projects cost more. "If you spend something that you
cannot afford, yes, it is a waste. But we are spending money on things
we can afford and we need."
Without efforts to redistribute wealth, the country would have faced
racial tension when the economic crisis flared up because of
resentment over the concentration of wealth in Chinese hands. But he
acknowledges that one disappointment is that ordinary Malays have not
exploited the advantages they have been given.
"It's a problem of having to change the culture of the people. To
them, money is mere convenience that they carry in their pocket. They
don't look at money as capital. You have to change their mindset. I
have found that people in communist countries are just like that too."
The shortage of entrepreneurs, he suggests, may be why his efforts to
build up a Malay entrepreneurial class have been misconstrued. When
the government finds a Malaysian to buy a company, it is accused of
selling to a crony, but these are people who have been identified as
capable of managing. "That is why they were given a chance. If we just
sell to anybody who makes a bid, the chances are that the company will
be sold off to the other races and that is not going to serve our
Another disappointment must be the divisions within the Malay
community and between the races, which seem to have become wider after
the Anwar trial. Dr Mahathir says that Mr Anwar had cells of
supporters in various organisations. He also blames some of the
tensions on the PAS, which he claims has been systematically sowing
hatred against the government, even in kindergartens.
Now the task is to put his own party, UMNO, back on track. When that
is done, he will think about stepping down. But he declines to set a
date. "We have to be revamped. We have to have younger people support
the party, and after the party has been strengthened, I think I can
Additional reporting by William Dawkins