Can M’sia reform and discriminate?
(FMT) – PUTRAJAYA: Dr Mahathir Mohamad sits at a vast desk cluttered with work, hands clasped before him and looking at his visitors with a slight smile.
Dr M, as he is popularly known, was prime minister of Malaysia from 1981 to 2003, the first commoner to ever hold the post in a land with nine sultans. His demeanour suggests the country physician he once was, ready with a frank diagnosis – and in his first interview with the foreign media in five years, he doles out prescriptions for what ails his nation.
The man who made Malaysia part of the “East Asia Miracle” with a massive inflow of foreign direct investment (FDI) doesn’t think much of it today. The former miracle economy, now a muddle, needs a new policy direction, he says in his office in Putrajaya, the administrative capital he built on old plantation land in the 1990s.
“We should not be too dependent on FDI anymore,” says Mahathir. “We’ve come to the stage when locals can invest. They have now the capital. They have the technology. They know the market. And I think they can manage big industries.”
His thinking is at odds with government policy. But it gets to the heart of a debate over the future of Malaysia, a former emerging market star now in danger of becoming an also-ran, stuck in the dreaded “middle income trap”.
Foreign investment has been dwindling since the onset of the 1997-1998 Asian financial crisis. Capital outflows have even exceeded inflows in four of the past five years. This has been accompanied by an alarming “brain drain” of emigres voting with their feet against Malaysia’s prospects.
Malaysia is counting on foreign investment to provide a quarter of the investments needed to fund projects under its “Economic Transformation Programme”, which aims to turn the country of 28 million into a fully developed nation by 2020.
