19 November, 2006

Why has Mahathir gone radical?

In an article published recently, former editor of the Far Eastern Economic Review Michael Vatikiotis wonders why a man like former Malaysian prime minister Mahathir Mohammad, "who led his country to such great economic heights, and in the process established global stature for himself" tries to tear it all down in retirement?

In fact, such a question has often been posed since the 1997 Asian financial crisis and consequent developments in Malaysia, including Mahathir's differences with his then deputy and favourite successor Anwar Ebrahim.

In the post-1997 crisis years, Mahathir has radicalised his rhetoric, sharply and openly attacking Jews, the Americans, and Western institutions and scapegoating them for his country's problems. This was in contrast to his long pragmatic policy and realistic view of the world.

But with his departure from power in October 2003, such a trend has become stronger, making the architect of Malaysia's economic miracle and the man once known as the font of all wisdom almost as radical as Iranian President Mahmoud Ahmadinejad or Venezuelan President Hugo Chavez.

In recent months, however, Mahathir has turned his cannons at his old colleagues in the ruling United Malays National Organisation (UMNO), unleashing almost daily public criticism against Prime Minister Abdullah Ahmad Badawi, accusing him of corruption and nepotism, and claiming he did not pick him as his successor.

This, of course, differs from the case of his old sparring partner in Singapore, Lee Kuan Yew, who has, since his resignation, been playing the role of father who would arbitrate quarrels rather than create them.

Attracting media attention

Explaining Mahathir's radicalisation, some analysts attribute it to his hunger for publicity. According to them, those who have long been in power, like Mahathir, find it difficult not to be in the limelight after they leave power.

They, therefore, do anything to attract media attention including the embracement of ideas or roles that contrast with their nature and previous political history.

As far as Mahathir's radical rhetoric regarding his country's affairs is concerned, analysts hold that it has something to do with his successor's policy.

Unlike his expectation that Badawi would not have the necessary power, charisma or determination to initiate changes, the latter has proved the opposite.

Badawi launched a new policy aimed at ridding the ruling UMNO and public service of corruption, eradicating corporate cronyism, investigating the Malaysian police's violation of human rights and bringing into government young politicians and successful diplomats.

To ensure political stability and national unity, he also tried to put an end to divisions caused by the ignominious sacking and jailing of Mahathir's controversial deputy Anwar Ebrahim, by releasing him.

With such a change, Badawi won a record landslide victory in the 2004 general election and succeeded in minimising the power of the opposition Parti Islam SeMalaysia (PAS).

This new political climate has reportedly irked Mahathir and his many allies and corporate favour-seekers who found themselves turned away from the Prime Minister's Office.

And with Badawi's recent decision to cancel the construction of a bridge that would have replaced part of the causeway between Singapore and Malaysia, a project that would have benefited many of Mahathir's cronies, the gap between former premier and his hand-picked successor has widened.

Concerns about the future

Regardless of reasons behind Mahathir's radicalisation, his quarrel has not only tainted his image but also raised concerns overseas about Malaysia's future.

It has created a state in which the government lost its focus and the country seemed to be slipping out of sight in the region. As put by Vatikiotis, "the entire country comes to a standstill and fear stalks the land".

Badawi, a soft-spoken, gentlemanly figure who lives by religious values and preaches tolerance, is not expected to fight back or challenge his old boss.

He is likely to compromise at the expense of his reform programme, especially with the fact that Mahathir still has powerful friends in high places, and that several prominent figures in UMNO, particularly Deputy Prime Minister Najeeb Razak, wish to take the reins of power.

It has been said that Razak, the eldest son of Malaysia's second prime minister Abdul Razak and nephew of the third prime minister Hussain Onn, is favoured by Mahathir's cronies to replace Badawi.

Razak is ambitious and not easy to be controlled by others, but like Mahathir's allies, he and members of his family are deeply involved in business. Moreover, despite his open support for his boss, there is no love lost between the two long-time cabinet colleagues according to UMNO insiders.

Some observers also argue that Badawi may call a snap national election in a bid to consolidate his power before problems unravel further and ahead of UMNO party elections, which are scheduled to be held next year.

(By Abdullah Al Madani, Special to Gulf News)
Dr Abdullah Al Madani is an academic researcher and lecturer on Asia affairs.

An article in an Australian newspaper The Age ridiculing Malaysia and calling Malaysia “bodoh” (stupid) has left International Trade and Industry Minister Datuk Seri Rafidah Aziz unperturbed.

“What do we care? Obviously, this person doesn’t know Malaysia. He is an outsider and he can say what he likes. I don’t really care about what others say – as long as it is not a Malaysian saying it,” she said.

The Nov 15 article by Michael Backman said it was time Malaysia grew up and stopped arguing about what proportion of the economy the Chinese and Malays owned.

The Government was more interested in stunts like sending an astronaut into space when the country’s inadequate schools could have done with the cash, the writer said, adding “that's not Malaysia Boleh, that’s Malaysia Bodoh.”

“What do we care? Obviously, this person doesn’t know Malaysia. He is an outsider and he can say what he likes. I don’t really care about what others say – as long as it is not a Malaysian saying it,” she said.

So,if it was a Malaysian who had said that, what is she going to do, charge him under ISA ??

Mind you, Michael Backman will write another column about Malaysia soon, keep an eye on it, Rafidah ! he is not a Malaysian !!

The response to my recent column 'While Malaysia fiddles, its opportunities are running dry', published in The Age
newspaper on November 15 has been overwhelming. I've received hundreds of e-mails and messages, many from
Malaysians both in Malaysia and outside, of which perhaps 95% have been supportive. Thank you for these. It
seems that the column has given voice to concerns that many Malaysians have.

I'd like to emphasise (and as many of you realise already), that I wrote the column as constructive criticism. I like
Malaysia very much. I visit often and have many Malaysian friends of all races. I've also written a lot that is positive
about Malaysia in the past, most notably in a previous book of mine - The Asian Insider: Unconventional Wisdom for
Asian Business, which has no less than five chapters to explain to people outside Malaysia why I feel that Malaysia
should be given more credit than it gets.

There have been many achievements. There is much about which Malaysians can be proud. Malaysia, for example,
is far more politically mature and developed than is Singapore. The media is more open too (but of course not as
open as it could or should be.) Malaysians are more entrepreneurial too. AirAsia started in Malaysia and has
revolutionised air travel across Asia. In Singapore, there is very much a sense that the government has to do

I also believe that the NEP, which has seen special advantages given to bumiputeras over other groups, has been
important for Malaysia. It has been essential for nation building. Malaysia is peaceful and while the various groups
may not mix much there is clear mutual respect between them. That is a huge achievement.

However, the problem as I said in my column, is waste. And also the use of statistics that are blatantly wrong.
Malaysia also has a big problem with transparency. Too little account is made of how other people's money is spent.
The police too are way too corrupt for a country as developed as Malaysia. The rote learning that is practiced in the
schools also needs to be done away with. Generations of Malaysian children are missing out on an education that
should teach them how to be creative and critical - this is what a truly modern, boleh country needs. Again, my
comments are meant to be constructive. And I make them as a non-Malaysian largely because many Malaysians
feel rightly or wrongly that they cannot say these things themselves in their own country.

Since my column was published, plans for a new RM400 million Istana have been announced and the Agriculture
Ministry parliamentary secretary has told Parliament that Malaysia's first astronaut will be playing batu seremban
and spinning tops and making teh tarik while in space. There are countless scientists around the world who would
give anything for the opportunity to go to space and do real experiments. For the Malaysian government to send an
astronaut into space to play Malay children's games serves only to re-emphasise my point about waste. Not only
that, it makes Malaysia look infantile in the eyes of the rest of the world, which is a great pity when Malaysia has
made so many real achievements. The world is getting more clever, more competitive and more dynamic every day.
There are too many in Malaysia who don't seem to understand this.

Of course my views are just that: my views. But I have spent most of my adult life analysing and writing about Asia. I
am direct and critical; I do not veil my criticisms because I don't want to waste my time or yours with readers trying to
guess what I really mean. Open debate is absolutely critical for all modern, dynamic countries. The free flow of
ideas and information helps to make countries rich. Political leaders cannot do everything on their own be they in
the UK, Australia or Malaysia. They need help. Otherwise they make mistakes. And when they do, whose fault is
that? Those who prefer to stay quiet? And should I as a non-Malaysian be commenting on Malaysia? Of course.
Malaysian political leaders and commentators routinely comment about other countries. That's how the world is now,
an inter-dependent, global world. And the world is much better for it.

I will write another column about Malaysia soon.

Michael Backman
November 17 2006

The ‘Tun issue’ made the news in an unexpected manner during the Umno general assembly, writes JOCELINE TAN, The Star.

INSIDE the glittering Dewan Merdeka, the debates were fiery and the Malay discontent almost palpable as one delegate after another spoke on the Malay Agenda.

But a drama had unfolded outside around the rather unlikely figure of Datuk Mukhriz Mahathir.

The second son of Tun Dr Mahathir Mohamad had caused a stir with his remarks on the party president's policy speech. While most Umno delegates had praised the speech, Mukhriz said he was disappointed that there were no new ideas in it.

The “Tun issue” had been quite successfully managed throughout the three-day debate.

Delegates who made references to the discord had generally taken the stand of full support for Datuk Seri Abdullah Ahmad Badawi and respect for Dr Mahathir.

But Mukhriz, 40, seems to have taken the issue to another level.

Was he reacting against what he perceived as slights against his father or was he merely speaking his mind when asked about the presidential address?

“He threw caution to the wind when he opened his mouth like that,” said an aide to a minister.


France's Peugeot to bid for Malaysia's ailing Proton

Top officials from France's PSA Peugeot-Citroen will meet with Malaysian finance ministry officials to place a bid for troubled Malaysian auto maker Proton, a report has said.

The two auto manufacturers recently signed a letter of intent to evaluate and study possible cooperation. The first round of talks began in September.

PSA Peugeot is the second-largest European car manufacturer, posting a market share of 14.5 percent in 2005.

The Business Times newspaper said top PSA Peugeot officials would next week brief senior staff from the finance ministry, Proton and the government's investment arm, Khazanah Nasional, which has a 43 percent stake in the local car maker, on its plan.

Talks would centre on the possible entry of PSA as a stakeholder in Proton's manufacturing unit and on technical cooperation, it said.

Proton officials could not be reached for comment.

PSA's move comes after Malaysia said it would make a firm decision on a potential strategic tie-up between Proton and foreign car makers within three months.

Second Minister of Finance Nor Mohamed Yakcop last week said Malaysia was also talking to Volkswagen of Germany, Europe's biggest car maker, to ensure the survival of Proton.

Nor Mohamed said Malaysia "will do whatever it takes to make Proton viable".

"If, in the nature of things and the context of circumstances, it is necessary to bring in a foreign partner, we will bring in a foreign partner," the minister said.

"Our mind is open," he said, adding that the decision would be based on which party could best serve Proton and the nation's interests.

Analysts say Proton needs to find a strong foreign partner to help revive its fortunes -- it reported a 58.6 million ringgit (15.9 million dollar) loss in its first quarter to June.

The company's market share has fallen steadily in recent years as the auto market has been liberalised to allow greater foreign competition.

At the mean time, General Motors Corp., its market share shrinking at home, is turning to Asia to boost its profits, and aims to capture 10 percent of the region's market by 2010, the U.S. automaker's regional chief said Friday.

GM aims to sell 1.3 million vehicles in Asia this year to grab a 6.5 percent market share, two-thirds of which is expected to come from China, he said. Last year, GM's sales hit just over 1 million units in Asia for the first time, giving it a market share of 5.7 percent.

The company also plans to strengthen its presence in South Korea and Southeast Asia, especially Malaysia and Indonesia,Reilly told The Associated Press in an interview on the sidelines of a regional business forum here.

Also in the news, a unit of the Shanghai-based China Shipping Group, the world's sixth-largest shipper, is in talks with two leading Malaysian ports on the possibility of buying a stake, a news report said Saturday.

China Shipping Terminal Development Co. Ltd. may acquire at least 20 percent in the Port of Tanjung Pelepas or Wesports, the New Straits Times quoted its general manager, Fang Meng, as saying.

The company is also considering setting up terminals at either of the ports, Fang said.

"We are now looking at the options available to us and doing a feasibility study on investing in either PTP or Westports," Fang was quoted as saying after meeting PTP officials in Malaysia.

China Shipping Terminal has invested about US$200 million (€156 million) in ports, mainly in China and the United States. It has joint ventures to operate container terminals in eight ports in China and the Los Angeles port.

PTP, located across from Singapore, and Westports, near Malaysia's largest city, Kuala Lumpur, are both 70 percent owned by Malaysian companies. The remaining 30 percent stake in PTP is held by Danish shipping giant A.P. Moller-Maersk A/S, and in Westports by Hong Kong-based Hutchinson Whampoa Ltd.

The report did not identify the companies that have been approached to sell shares to China Shipping Terminal, and Fang could not immediately be reached for comment

Meanwhile, Badawi says APEC hijacked by security, urges return to ecom-nomic issues.

Prime Minister Abdullah Ahmad Badawi noted that counterterrorism has become a prominent part of APEC deliberations since the Sept. 11, 2001, attacks in the United States.

Although security is crucial for free trade, such issues are best left to the ASEAN Regional Forum, a group set up in 1994 for security consultations, he said.

"APEC should return to its original purpose as an instrument for promoting economic growth through fostering freer and fairer flow of trade," Abdullah told business leaders shortly before APEC was to start its annual summit in Hanoi.

"Its assumption of some security role following the Sept. 11 attacks in the United States has compromised its original purpose and blurred its focus. Security, after all, is the express concern of the ARF," he said.

"Regional cooperation may be said to be still in its preliminary stage in the Asia-Pacific region," he said.

"Among the things we might want to do is to make the APEC agenda more relevant to the needs and aspirations of all member economies and not just a few. Common purpose can only evolve from a sense of shared ownership and this will only exist when the APEC agenda serves the interests of all members as much as possible."


Singapore and Thailand face showdown over Temasek deal

(Wayne Arnold, International Herald Tribune)

They have been careful to appear cordial, but in the polite language of Asian diplomacy, a stubborn standoff has emerged between Thailand and Singapore over how to handle Singapore's purchase of the communications assets of the deposed prime minister, Thaksin Shinawatra, and a legal confrontation between them is looming.

The trouble between the two Southeast Asian neighbors began in January, when Singapore's investment arm, Temasek Holdings, purchased a controlling stake in Thailand's dominant phone company, Shin, for $1.9 billion. That stoked public protests in Thailand over foreign ownership of a national champion and the Thaksin family's tax- free windfall - adding to complaints alleging corruption that culminated in the September coup.

With Thaksin in exile, both governments have emphasized that their relations are on track. Yet the two are now at loggerheads over Shin.

The new, military-appointed Thai government, determined to document the corruption allegations used to justify the coup, is preparing a criminal case against Temasek and its Thai partners over the purchase. It also has signaled that it would like Temasek to voluntarily reduce its stake in order to avoid having to force an important foreign investor to divest itself of the assets.

Such a face-saving solution is anathema to Singapore, however, which denies breaking any laws.

"The two find themselves in a difficult situation," said Karen Ang, an analyst who follows Shin for Citigroup in Bangkok.

The stakes are high. Shin's falling share price since January has already added up to paper losses at Temasek of almost $680 million. That could rise if a court ruling against Temasek puts it in the position of a forced seller.

Analysts say Temasek failed to grasp just how political taking control of Shin would be. While cutting its losses now might take the diplomatic sting out of an awkward situation, it presents another problem.

"Selling at a loss would be admitting that, yes, we indulged in a transaction that wasn't very transparent and was legally wrong," said Vikas Kawatra, head of institutional sales at Kim Eng Securities in Bangkok.

The new Thai government, for its part, cannot very well drop an inquiry that has become the centerpiece of investigations into alleged corruption during Thaksin's rule.

"They're very, very worried about him making a comeback," said Bob Broadfoot, managing director at the Political & Economic Risk Consultancy in Hong Kong. "There's no way in the world they can take Shin out of this political equation."

But in challenging the legality of the Shin deal, Thailand's reputation among foreign investors - a major source of capital for development - may suffer.

Building Shin made Thaksin a billionaire. He transferred ownership to his eldest son and daughter when he became prime minister in 2001. But he was fending off allegations that he used his office to benefit the company when Temasek stepped in. After the purchase, Temasek and its partners were obliged to make a general offer and ended up with a 96 percent stake, as well as control of the largest Thai cellular operator, a TV station and a satellite company.

What incensed Thai protesters was that the Singapore government had not only gained control of critical national assets but that it had seemingly helped Thaksin's family cash out tax-free.

Temasek has denied that it knew the deal would be tax-free.

Temasek's chief executive, Ho Ching, has been largely silent, but her husband, Prime Minister Lee Hsien Loong of Singapore, rose to Temasek's defense in early October, saying the Shin deal did not violate Thai laws.

Singapore's influential founding prime minister, Lee Kuan Yew, who is the current prime minister's father and holds a senior position in his cabinet, added his voice. "It can withstand any investigation," he said of the deal. "Nobody doubts that, nobody within the system doubts that."

After meeting with Prime Minister Lee in China in October, the new Thai prime minister, Surayud Chulanont, said the issue would not upset diplomatic relations. But he also said the government would not intervene in efforts to prosecute Temasek and its partners.

Analysts note that Surayud skipped Singapore during his first tour of Southeast Asia as prime minister, a snub shared only by tiny Brunei and the diplomatic outcast Myanmar.

Singapore bought control of Shin through a complicated holding structure, which lawyers and analysts say has been used for years to avoid running afoul of Thai limits on foreign ownership. Among the most prominent examples are the German logistics company DHL and the French supermarket operator Carrefour. Pick at the Shin deal, they warn, and a host of other foreign investments could unravel.

The Thai government has promised eventually to amend the foreign investment law to clear up any confusion over holding companies. In the meantime, regional media have reported talks between the Thai government and Temasek, with the Thai government offering a "road map" for a settlement that calls for Temasek to reduce its combined stake in Shin below the 49 percent legal limit for foreign ownership of a telecommunications company.

Temasek has said only that it plans to sell about 11 percent of Shin to comply with Thai stock market rules. Those stipulate that a listed company must have at least 15 percent of its shares "free floating." Companies that do not conform to the limit, through a merger or general offer, are given a year to comply.

The criminal allegations against Temasek and its partners are separate, and center on accusations that one or more of the minority shareholders in the Shin deal was an illegal "nominee," or proxy, for Temasek, enabling it to skirt the foreign ownership limit.

It is unclear, however, when any criminal case over Shin would go to trial. The Thai Ministry of Commerce handed the case to prosecutors in early October, and Thai critics accuse the prosecutors of stalling for an amicable settlement.

But analysts say time is on Temasek's side; with few potential buyers willing to step into the political hornet's nest, Shin's share price has been rising on hopes that Temasek will eventually sell. With no court date in sight, analysts say Temasek may be able to hold out for the situation to improve.

"If I were Temasek," said Kawatra at Kim Eng, "I wouldn't do anything either."



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