(May 10): One year ago, a nonagenarian political veteran swept into power in Malaysia with bold promises to shake out corruption. The stunning feat awarded Prime Minister Mahathir Mohamad all sorts of superlatives, and even catapulted him onto Time’s 100 Most Influential People and Fortune’s list of the world’s greatest leaders this year.
Mahathir’s age, grit and outlandishness have garnered international intrigue; but inside Malaysia, his track record has been more checkered. The unlikely coalition government he oversees has fared poorly in recent special elections, in part because constituents aren't working well together. This raises serious questions about the country’s political and economic stability when Mahathir eventually departs the scene.
After his victory, Mahathir pledged to stand aside after a couple of years to make way for Anwar Ibrahim, now leader of the People’s Justice Party, which has the largest number of parliamentary seats in the coalition. The apparent collaboration between the two men bookends a troubled past: Mahathir fired Anwar as deputy during the prime minister’s first stint helming the country from 1981 to 2003, convinced Anwar wanted to unseat him. The junior politician was subsequently jailed. Now there's chatter that Mahathir may be quietly grooming an alternative to Anwar. This is poisonous.
It’s more than salon intrigue. These fractious politics are getting in the way of economic messaging. The final week in March is usually a banner period for forecasting in Malaysia, with the central bank releasing its annual report and holding a series of public events and briefings. It was overshadowed this year by a coalition kerfuffle about less-than-favorable comments that Anwar's daughter made about Mahathir to Singapore's Straits Times.
Economic conditions today are OK, but not brilliant, as this week's interest-rate cut attests. The talented technocrats that run the central bank are keeping things ticking for now.
Malaysia's economy has changed in the two decades since I was Bloomberg’s bureau chief in Kuala Lumpur. Nobody uses the term “tiger” to describe it anymore, nor any of its Southeast Asian neighbors for that matter. While growth in the country is still solid at about 4 percent, it has never quite recovered from the Asian financial crisis.
Another key change is China's footprint in the region. Mahathir should consider dedicating his remaining time to figuring out a sustainable framework for better economic relations with its largest trading partner. He went some way toward that by reworking a stalled Chinese-backed rail venture linking the east coast of peninsular Malaysia with the more prosperous west coast – at significantly less cost to the country. But that came after the prime minister tried to shelve the project early in his second tenure, amid worries about Malaysia’s indebtedness.
And then there’s Malaysia’s long-term economic prospects. Its education system, an issue dear to the prime minister’s heart, needs revamping. Mahathir was once education minister and tried to claim the job again, in addition to prime minister, but coalition dynamics torpedoed that. He ought to place renewed emphasis on a national curriculum that embraces English, science, technology and math, and find a way to limit conservative Islam in the school system.
None of this will be possible if question marks hang over succession. Better it be done in an orderly manner. Mahathir, a physician, often jokes about his age. He won’t be there forever.
The great irony is that it was Mahathir – in his born-again role as opposition reformer – who delivered power to the coalition that now threatens his legacy. Without him, the government takes its chances.
Let’s just hope Mahathir adds the smooth manner of his departure to the enormous list of achievements during his decades in public life. - Bloomberg