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Mahathir Mohamed reveals (some) secrets of success

Eager to hear why Malaysia has succeeded economically while so many other Third World and Islamic countries have floundered, more than 1,000 people turned out at the Bibliotheca Alexandrina on September 5 and 6 to hear Mahathir Mohamed, former Malaysian president, speak about human resources development and intercultural integration.

From the standing ovation – given by some – when he first took the podium, it was clear Mohamed was speaking to a crowd sympathetic to library director Ismail Serageldin’s characterization of him as “a man who knows how to stand tall and say ‘no.’”

Evidencing the sort of feistiness Serageldin was referring to, Mohamed, on the first night of the event, said, “I was asked recently by an American whether I was certain the Malaysian formula would work. My reply was that I wasn’t certain that the Malaysian formula would work, but I was certain that the IMF [International Monetary Fund] formula would not work.” Still, for such lively comments, the audience – which included ministers, members of the business elite and leading economists, as well as students and the general public – had to wait until the longer-than-expected question and answer session that followed.

Mohamed dedicated his first lecture, on human resources development, mainly to a schematic account of societies’ transformations from agricultural to industrial production, mentioning specifically the challenges to Islamic morality posed by such a shift.

As for the particular secrets of Malaysia’s success, though, he dropped only the odd hint. “One of the reasons Malaysia has been successful in attracting foreign direct investment is the fact that Malaysians understand English – even though most cannot speak it well,” he said.

When discussing skills development, Mohamed gave greater attention to his country’s achievements than to the particular means of realizing them. “[Some] Malaysian workers have reached the level where their design skills are used by multinationals to produce new products for the international market,” he boasted.

Why exactly Malaysia has succeeded in this respect where others have failed, though, was left unclear, particularly given that workers and engineers at multinational operations in developing countries more often engage in implementation rather than design. When asked at a press conference the day after the lecture series what Malaysia had done differently, Mohamed was no more forthcoming, adding only that many Malaysians had used their experience at multinationals to start their own businesses.

During the September 5 question and answer session, however, which lasted more than an hour (double the length of the lecture), Mohamed was more informative. When asked how Malaysia had managed to maintain social expenditure while it was going through economic crisis, he said, “One thing about Malaysia is that we aren’t bound by any ideology.” Elaborating, he added, “The worst thing is to be committed to just one system: If you’re committed to a socialist system or a capitalist system, then you find that you cannot react when things aren’t going well.”

Referring to criticisms leveled at Japan for its enthusiastic support of the private sector, he defended his own government’s position on private capital. “Why is it a bad thing to work with the private sector to help it succeed? Twenty-eight percent of their profits belong to the government [in the form of corporate taxes],” he said. “We’re working for our 28 percent.”

Still, he argued, such efforts can only bear fruit if they are directed towards specific goals. “Fixing a target is very important. We had one: we wanted to become a developed country by 2020. By fixing a target, you know where you’re going. If you don’t have a target, it’s very difficult to get people to move in a certain direction.”

Price controls, Mohamed added, were another ingredient of Malaysia’s economic success. “Our inflation rate is low because we have had price controls since the last war [WWII].” These measures have led to a high rate of savings, which he put at 40 percent of GDP. “When inflation is low, people will keep money. And when people keep money, we have a lot of local sources of finance,” he said.
Nevertheless, the availability of financing alone is insufficient, Mohamed said, returning to the cultural aspects of economic development. “When you borrow money and you don’t pay it back, you don’t hurt just yourself. You hurt the whole community,” he said to considerable applause.

Meanwhile, anyone looking for anti-Israel tirades went home disappointed. Although Mohamed, during the question period on September 6, criticized Israeli treatment of Palestinians, he also struck a conciliatory note. Mentioning an interview he gave recently to an Israeli reporter, Mohamed conceded, “He asked rational questions… Even among the Jews there are rational people.”
The comment that garnered the biggest reaction from the audience, though, came on the first night, when Mohamed was asked why he had resigned last year, after running Malaysia since 1981. “There was no pressure on me to step down. I think 22 years is a long time,” he said, receiving thunderous applause with a perplexed smile, seemingly unaware that, these days, the rotation of power is a particularly hot topic in Egypt. Seizing the chance to play to the crowd, he added, “I didn’t want to be thrown out.”

Willa Thayer

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