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Malaysia in transition

In his own words: Mahathir Mohamad speaks to the Nikkei Asian Review

Malaysia's leader discusses China deal, TPP, North Korea and succession plan

Prime Minister Mahathir Mohamad speaks about his diplomatic strategy and domestic reforms to the Nikkei Asian Review in Tokyo on June 11. (Photo by Keiichiro Sato)

Starting his second month in power, Malaysian Prime Minister Mahathir Mohamad recently spoke to the Nikkei Asian Review on two separate occasions, including on the sidelines of the Future of Asia 2018 conference in Tokyo, and articulated his diplomatic strategy which includes touting a new regional pact to China and prioritizing domestic reforms. He said Malaysia would honor treaties made with foreign parties by the previous government but might also request deals are reviewed to ensure his country's best interests are served.

Q: How different is your current time in power compared to the first that ended 15 years ago?

A: The new government is finding out a lot of things that it did not know of before. The damage [in terms of numbers] done to the government, institutions, banks was larger than we thought. There is not much difference in policies but the problem this time is that we have to correct many of the damages caused by the previous government.

We still want to have friendly relations with China, for example, but we will have to reform or reduce some projects, which required a large sum of money borrowed from Beijing. We have to reduce it by renegotiating, or we may have to stop some of the projects with the understanding of the Chinese government.

Q: Some people say you practiced a “developmental dictatorship”, aimed at restricting political freedoms and prioritizing economic growth. What do you think of such a label? 

Well, developmental dictatorship was not really what happened during my time [in power]. Of course, [as] we have a multi-racial population, we need to ensure that there is no conflict between different races. In order to do that, we need to ensure that all the communities benefit equally from independence. It is a process to correct the imbalance [in income] that we had to enforce. Despite some objections, the majority of the people actually supported the government policies, which was why we won each election. I led five elections, and we won by a two-fifths majority each time. But when the next prime minister took over, support for the government immediately dropped. It is because it did not follow the policy that was beneficial to the country. You may call it "dictatorship," but a certain need for stability must be there if you want to develop your country.

Q: Will Malaysia remain committed to the TPP, which has now been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership?

A: This government must review all agreements entered into by the previous government. We will honor treaties made in the past, but when there is a need for reconsideration, we will appeal to our partners to give us a chance to take into consideration the situation we are in. We want to rectify [it], but we want to modify the agreement in such a way that there is fair competition between the members of the TPP.

Q: How would Malaysia or its neighbors engage with an increasing influential China?

A: We are dealing with a very powerful country. We need to have friendly discussions on matters affecting both parties. We should also concretize the idea of East Asia Economic Caucus because we [need to include China in discussions over what will benefit] the whole region, not just any one country.

Malaysian Prime Minister Mahathir Mohamad speaks to the Nikkei Asian Review in Putrajaya, Malaysia on June 8. (Photo by Takaki Kashiwabara)

Q: But China's militarization in the South China Sea has also raised concerns.

A: Malaysia does not want to have too many warships in the South China Sea and the Straits of Malacca. We do not want to have any tensions and the possibilities of fighting in these areas. We know we cannot deny China access to the seas in Southeast Asia because the seas there are a passage between the east and west. But it should remain as such, not controlled by any nation, neither America nor China. We would like to see some cooperation in term of policing. Policing doesn't need big battleships. We need small ships to control piracy, for example. We want to keep the straits and South China Sea free for all the ships of the world, not for any particular countries.

Q: How would you cooperate with Japan?

A: We want to revive the "Look East" policy and make use of Japan to acquire knowledge and skills. The Japanese work ethic and value system contributed to their recovery [after World War II]. That is what we want to learn.

Q: Malaysia's Proton is now owned partly by a Chinese company. Would you consider buying back the carmaker's shares sold to the Chinese?

A: Actually Malaysia still has the majority share of 51%. I don't know what is the agreement reached between the buyer and seller. We had hoped that we would be able to market the car in China. But the company believes that Malaysia [can] produce only a right-hand drive car and it should confine itself to the right-hand drive market, which means we have no access to the huge market in China. That will limit our growth. We hope, of course, to be able to produce a new car which will conform to the Euro-5 or Euro-6 emission standards, so that we can have access to the world market, even if we cannot penetrate China.

We are looking at [creating] a different company and we are also looking to Japan for some cooperation at initial stages. Like the first national car [brand], which started with only 18% local content [and cooperation from] Mitsubishi Motor, we were able to master the whole process of building the car, from design to clay-model and test car. Today, modern technology is based more on sensors and other things. We need to acquire that also. But initially, we want just to build a car first for the Malaysian market, and then for the world market.

Q: What will be the next engine for the growth? Under the previous prime minister, Najib Razak, e-commerce was promoted through collaborations with Chinese companies, in particular Alibaba.

A: We think working with Alibaba was a good idea, but we need to look at other places for new technology. We see in Silicon Valley, California, there are a lot of new ideas that have come up, making use of IT and sensors used in building driverless cars. We also see remote-control [systems] being developed to such an extent that you can actually fly a plane without a pilot. And we have many new ideas coming up with regard to medicine and other fields.

Q: Would Alibaba's presence in Malaysia's Digital Free Trade Zone remain?

A: That will remain.

Q: How do you evaluate U.S. President Donald Trump?

A: Well, Trump is very difficult to understand. So we really cannot make any assessment on his policies because he changes his mind. Sometimes he says one thing and then changes and changes back. That makes it difficult for us to understand whatever policies he proposes.

Q: What is your expectation for the U.S.-North Korea summit?

A: If North Korea promises to abandon nuclear weapons, there will be less tension. Pyongyang cannot waste money on war gestures as if it is going to war. It is spending far too much money on the armed forces because of its fear for the Americans and South Koreans.

Yes, North Korea has a right to have some of its own interests [upheld], as much as the U.S. has its own interests to take care of in any negotiation. We shouldn't be skeptical. When you [are suspicious], then you cannot work with people. We should take North Korea at face value and get it to participate in international negotiations to moderate the rigid attitude it had before. We should take it as genuine, and try to establish a good relation including a trade relation with North Korea.

Q: Would you reconsider reopening the Malaysian embassy in Pyongyang?

A: Yes, we will reopen the embassy.

Q: The Association of Southeast Asian Nations has been around for five decades. What kind of goal should ASEAN reach in the next 50 years?

A: Well, It should consolidate. It should become more solid in structure, and try and achieve the same policies for all ASEAN countries. And of course we want all of us to remain democratic. But the changes in the leadership are something that is very disruptive. Whereas before, I was very comfortable with the leaders of the ASEAN countries. Every time I went to a meeting, I would see the same people. Now, when you go to a meeting of ASEAN, you are likely to find different people. You need to cultivate friendship [among] ASEAN leaders, because it contributes towards bringing the countries closer to each other.

Q: Can ASEAN maintain the pact's neutrality between major powers?

A: We will be as neutral as we can. We don't want to side with any party. We want people to make use of the passages through Southeast Asia for trade between east and west, and trade with us. We want everything to be open. No restriction on movement of ships, except for warships.

Q: Your government has been cutting spending to reduce debt. What else can you do?

A: Well, to [make] the people understand that they cannot expect lavish spending by the government in return for their support. We don't have that kind of money. They must accept that in order to overcome corruption, they have to pay a price too. This is one message we have to get out, otherwise some people will continue to believe that they don't have to work because the government will give them money.

Q: You have canceled the proposed high-speed rail to Singapore to cut spending. But if Singapore is willing to negotiate for a scaled-down version, would you consider?

A: There will be a need for high-speed rail in the future, probably right through the peninsula. But we cannot afford it at this moment. So we actually postponed the implementation of that project. High-speed trains are most effective where the distance is very long. But where the distance is short, it doesn't contribute much. So we need to rethink high-speed rail. We cannot say we will never have high-speed rail in Malaysia. What we can do is we can postpone the project because it is far too costly at this moment.

Q: Your government has ordered that politicians can no longer sit on the boards of government-linked companies. What other reforms would you like to take on GLCs or sovereign funds?

A: Many of the GLCs are badly run. Some chief executives and chief operating executives are there because of politics. Their ability to do business is very minimal. As a result, we see not only losses incurred by the GLCs but also corruption. So, we need to have professional management. That is why we feel that politicians with no qualifications should not be in these institutions.

Q: You have said that you would only govern for one or two years before handing over power. What do you wish to leave behind?

A: We want to restore Malaysia to the democratic nation it was before, and not a kleptocracy, the label given by the international community to the regime led by Najib Razak. In the next two years, I hope to be able to deal with the debt we have, deal with the destruction of the government institutions, then build new institutions, and return to the rule of law and democracy. I think if I can do that, I think that will be something worthwhile contributing to the nation.

Q: Is one or two years enough?

A: Well, we need more, yes. But it all depends upon the people. If they want me to serve longer, I will serve, but as I have promised, I will step down after two years or so and Anwar Ibrahim will take over.

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