Financial Times

Political stability essential for economic growth - Mahathir
Former Malaysian prime minister Dr. Mahathir Mohamad stressed the need for political stability in the efforts of poor countries to industrialise and develop when he delivered the keynote address at the CIMA Global Leaders' Summit last week.

Malaysia did not emulate any developed countries, because they were greedy, lost their morality and culture as they developed and did not hesitate to enrich themselves at the expense of others, including the very poor, he said. "In 1991 the government launched vision 2020 to become a developed country in our own mould by 2020 and we wanted to avoid greed and to develop gracefully and develop in our own mould," he said.

"The most important factor with regard to industrialisation and development of the country was political stability," he said, adding that without this "nothing could grow".

Mahathir's keynote address was titled "The role of vision, entrepreneurship and professionalism". The CIMA Global Leaders' Summit drew about 800 delegates from all over the world and was aimed at helping young professional managers achieve excellence.

Mahathir said that a newly independent and deeply nationalistic Malaysia which did not have industrial knowledge, capital, management skills and knowledge of the market to sell products had to swallow its national pride, become foreign investor friendly and invite foreign industries to start labour intensive industries.

When Mahathir took over the premiership, Malaysia's per capita income was US$ 450, which he increased to US$ 9000. "We were an agricultural country with a per capita income of US$ 200 at the time we achieved independence and it would have been unrealistic for us to want to become a developed country at any time in the future," he said, adding that the country was modest, 'merely' wanting to create jobs for its people.

"We realised that agriculture will not create the jobs, because on ten acres of land only one job could be created, but on the same land, the manufacturing industry could create a thousand or more jobs," he said, explaining that the choice to industrialise at this instance was an easy objective.

He said that in keeping with Malaysia's new economic policy to eradicate poverty irrespective of race and eliminating the identification of race with economic function as a way to equalise the distribution of wealth, absolute poverty has been reduced to less than one percent, while relative poverty reduced to five percent from 50 percent at the start.

The Malaysian economy presently is the world's seventeenth largest trading nation, with US$ 200 billion worth of trade. Dr. Mahathir said that because government companies continuously lose money and require injections of capital constantly, Malaysia decided to transfer them and some functions to the private sector by privatising them. "In some countries privatisation means selling government-owned services like telecoms, power plants, airlines etc to foreigners in order to earn foreign exchange with which to pay foreign debts, but in Malaysia privatisation is about transferring government business to Malaysian private sector, though a small percentage may be sold to foreigners," he said.

"We didn't overprice or under price state assets but offered it at attractive prices so that it is viable and profitable for the private sector. There is a tendency for politicians and government workers to think government should be in business. This is not correct because it could lead to monopolies and create fear among the private sector to compete," he added.

"Our experience and the experience of others have shown that government is not good in business, because when government goes into business the tendency is to seek monopoly and to use the leverage of government power and no one wants to compete with a government company because of these reasons."

Meanwhile, at the business forum organised by the Board of Investment Dr. Mahathir said the Malaysian government encourages private sector investment because the state literally does not have to do anything but collect taxes from them.

"We collect taxes from them and we don't have to do anything. I think that is good business," he added. Responding to a question, he said that democracy is not a panacea for all ills. "One must understand the workings of democracy. When you don't, after every election you see the supporters of the losing party going on strikes and trying to bring down the elected government.

These people must realise that even if the election was not fair, the elected government should be given its rightful tenure to govern." He said five years is not enough for a government to develop a country. "The first two years, the Prime Minister is new to the job. The third year he learns the job. The fourth year he is trying to implement. The fourth year he is out of job."

On a lighter note he said that Malaysians were very kind because they gave him 22 years.

Back to Business