Mahathir’s Malaysian magic
Dr. Mahathir Mohamad stated that there was no special magic formula for attaining economic development. Confidence, hard work and political stability he said helped Malaysia develop since her independence to become a developed country. There were many other aspects of political leadership he pointed out that enabled the country to avoid communal problems and political instability. There can be no doubt that Dr. Mahathir's leadership and those before him were huge factors in moulding the country and moving it to the economic heights she has achieved. He also advised that the country's economic policies, especially with respect to foreign investment, should not change with changes in government.

Perhaps there is no other country that shares similarities with Sri Lanka as Malaysia. Their sizes are somewhat comparable, they were both export import economies dependent on plantation exports and they had a multiethnic population composition. Malaysia was a richer country than Sri Lanka at the time of their independence in the 1950s. However their economic performances have varied and could be rightly termed contrasting scenarios. It is not only that Malaysia's economy has grown and her per capita incomes are high, but she has also succeeded in reducing poverty to less than 10 per cent of the population and is a full employment economy. The reasons for the widely varying economic performances are complex. They encompass political, economic, cultural and other factors.

We cannot possibly do justice to evaluate these adequately in a brief column. Yet some factors that Dr. Mahathir himself did not point out adequately are as relevant as the ones he did. One of these was the differing impact of international prices on the two economies. Both began as significant primary producing countries. This had a somewhat different impact on the two economies. Sri Lanka suffered heavy deteriorating terms of trade owing to the prices of her main exports, tea and rubber facing declining international prices.

Malaysia too had to face an adverse trend in prices for rubber. However at the same time prices of tin rose to cushion the adverse rubber prices she experienced. Malaysia also had the foresight, and perhaps some luck as well, to diversify rubber lands into palm oil. Malaysia also took early steps to use its earnings from primary exports to improve her infrastructure, one of the fundamental factors that enabled her to move into new industries. While Sri Lanka got bogged down in inward looking economic policies, Malaysia turned its eyes on exports. It did so at a time when international trade in labour intensive industrial exports were growing. Sri Lanka was a late entrant after 1977. Further Malaysia encouraged capital inflows and foreign direct investment. The political stability, consistency in economic policies and good infrastructure were among the advantages Malaysia enjoyed. In brief, Malaysia pursued economic policies that were advantageous to it. This was to a large extent owing to the visionary leadership it had since independence.

An important contrast of paramount significance for economic development was that while Malaysia contained its communal tensions, Sri Lanka's politics inflamed it. Malaysia adopted an openly discriminatory ethnic policy. The bumiputra policy was backed by a strong will of the government to suppress any ethic eruptions. The discriminatory policies also worked owing to economic reasons, the pragmatism of the Chinese and the political system. The discrimination in jobs, government positions and in land settlement, among others, did not cause much discontent as the Chinese, who constituted nearly half the population, concentrated on the economic opportunities and thrived as a community in business, commerce and trade despite the discrimination. The Chinese circumvented some of the discriminatory policies by co-opting Malays into their business enterprises. Consequently the Chinese were the engine of economic growth in Malaysia and appears to have been reconciled to the treatment they suffered. In stark contrast Sri Lanka was embroiled in ethnic conflicts and a civil war that had a horrendous impact on the economy.A contrasting development was brought about by a contrasting set of policies.

The most significant difference in the two countries is that they attempted economic development in widely different political cultures and contexts. Malaysia was no democracy of the type we are accustomed to. It was a country without press freedom, limited trade union rights, intolerance of political dissent and limited political freedom. The imprisonment and harassment of Mahathir's own Deputy Prime Minister is evidence of this. Malaysia has consequently never had a change of government. This authoritarian regime no doubt assisted in her economic growth. Sri Lanka's political and economic policies have been pursued within a framework of what some commentators have called "excessive democracy". The pertinent fact is that there has been a tremendous trade off between political freedom and economic attainments. This fact must never be forgotten in any comparison between the two countries.

Sri Lankans have a penchant for getting foreign leaders to come and tell us what we should be doing. Audiences listen with rapt attention and admiration for them and regret that we have been unable to do the same. The story they tell is a half-truth and not easily replicable in Sri Lanka. Sri Lanka's problem is not that of not knowing what to do but being unable to do what needs to be done. We are also burdened with an ideological baggage, an unworkable constitution, a tendency of the country's leadership to truckle to the multitude than follow needed long-run political and economic policies and an inability of political parties to arrive at a consensus with respect to fundamental policies.

With little prospect of changes in these factors, there is little chance of the country achieving rapid economic growth. What others tell us about what should be done is like pouring water on a duck's back. We would certainly continue to have a vibrant and robust democracy. That is unfortunately a hindrance to economic growth.

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