How Mahathir Wrecked His Tech Dream

It wasn't long ago that the world's high-tech CEOs believed in Malaysia--and in the vision of its Prime Minister Mahathir Mohamad. Mahathir, eager to leave a legacy as the father of modern Malaysia, planned Asia's version of Silicon Valley, a 50-kilometer-long stretch through the old palm-oil plantations south of Kuala Lumpur. It would take persistence, pluck, and lot of foreign investment to make a small developing country a real player in the global economy. But Mahathir, a consummate politician, had these and more. When he traveled around the globe in 1997 to promote his vision for a Multimedia Super Corridor (MSC), he persuaded Microsoft Chairman Bill Gates and 40 other high-tech titans to pledge their support, investment, and advice.

That was before the Asia crisis, of course. After it hit, Mahathir made what looked like a 180-degree turn to foreign investors. He launched a war of words with investor George Soros, blamed Jewish conspirators for Malaysia's recession, imposed currency controls that cut off his economy from the rest of the world, and arrested his one-time protege and deputy premier, Anwar Ibrahim. Amid the political and economic turmoil that followed, investors began curtailing their plans for the MSC. They simply didn't trust him anymore.