"It's Domestic Development, Silly"

Malaysia's Mahathir built roads. Successor Abdullah Ahmad Badawi's focus will be on human capital, says government adviser Noordin Sopiee

When Malaysians go to the polls on Mar. 21 in national elections, the United Malays National Organization, the party of Prime Minister Abdullah Ahmad Badawi, is expected to win. Badawi, who succeeded Mahathir Mohamad when he stepped down last Oct. 31 after 22 years in power, has proven to be a serious reformer intent on cracking down on corruption (see BW, 3/29/04, "Malaysia's Mr. Nice Guy Is One Tough Cookie"). His actions have helped bring much-needed foreign investment to Malaysia.

Still, more needs to be done. Noordin Sopiee, chairman and CEO of the nonpolitical Institute of Strategic & International Studies Malaysia, is an adviser to the government. He recently spoke to with BusinessWeek's Asia Correspondent Frederik Balfour about Badawi's vision for Malaysia. Edited excerpts of their conversation follow:

Q: How would you contrast the new Prime Minister's style with that of his predecessor, Mahathir?


Dr. M is an introvert, and Badawi is more of an extrovert, more of a people person. He is more consensual, whereas Mahathir was confrontational. He loved to debate, while Badawi is less interested in that. And of course Badawi is more diplomatic. He was the longest-serving Foreign Minister, while Mahathir was never a diplomat.

Q: What challenges does Badawi face in continuing Malaysia's economic development?


Mahathir had to build hard infrastructure -- ports, roads, schools, hospitals. The new Prime Minister has to concentrate much more on soft development. For example, we have spent an awful lot of money for buildings at universities, but nowhere near as much as we should on staff and people.

Badawi must go much more into social development. We've seen massive urbanization -- with industrialization, people have been drawn to the cities, and rural areas have been depopulated. In many parts of country there are only old people and children. This has had massive costs [to society in the] weakening of family, of social control. Urban values are less of a caring-and-sharing culture.

Badawi has to build a post-industrial economy. As a percentage of gross domestic product, Malaysia is the second most-industrialized country (45%), after China (48%). Badawi shouldn't abandon industry, but [at the same time, he should pursue] services and agriculture.

Q: What about his role internationally?


So far, he has said practically nothing on foreign policy. This is strange, because he was Malaysia's longest-serving Foreign Minister. In the U.S, Bush knows "it's the economy, stupid." Here, "it's domestic development, silly."

However, I think he will make certain innovative openings to some countries. I think there will be a huge opening to China, where there are already massive exports, and to India, and a very creative policy with respect to Australia, the U.S., U.K, Europe, and East Asia.

Q: How do you see Malaysia's role in the Islamic world?


We are trying to position ourselves to be the center of Islamic banking. We just extended licenses to foreign banks in this as well. We are [way] ahead of anyone else in world. We defacto invented Islamic banking. Viirtually all banks in Malaysia have an Islamic window.

We are [branching out into] the Middle East. There is so much money that doesn't want to be put under the microscope in some countries. A lot of that money will move to other financial centers, and obviously we should get some of the action.

Q: Isn't there money from the Middle East backing Air Asia [Malaysia's new discount airline expected to list on the Kuala Lumpur Stock Exchange]?


Yes, Air Asia, the aluminum smelter in Sarawak, and others. There are a lot of these [investments] the Arabs don't want too many people to know about.

Q: What's Badawi's position on teaching English in schools? [A year ago, Mahathir reversed a decades-long policy requiring that all teaching be done in Malay and allowed English instruction in math and sciences].


It's an issue where the opposition party has been criticizing the government. But the new regime can say Mahathir did it, and we can't [reverse his decision] without damaging the future of our children.

Q: What's the future of the Bumiputra policy [affirmative action for ethnic Malays]?


If you look at the Barisan National election manifesto, it talks about excellence, glory, and distinction. Excellence is a code word for merit. But if you favor meritocracy you cannot have affirmative action. Let's face it, supporters of affirmative action constitute 60% or more of the population, and they carry a lot of clout politically. In any election there is always a big fight for the Malay vote.

Q: Will Badawi be able to keep up the momentum in his fight against corruption?


He's going to meet a lot of resistance. You have to take on so many people and so many interests. But once you open the Pandora's box, it's hard to close it again. Many of the investigations and trials that have begun can't be stopped -- and they will open even more boxes.

If the election results are terrible and Badawi doesn't have the political clout and weight to carry it out, the anti-corruption drive will dry up. But I suspect he will have a very big victory. There will be enough support from the people that he will be able to say they are with him. He has been very courageous. This is a man of steel. He looks like he's made of bamboo, but he's very resilient and strong.

Q: What's his stand on the global fight against terrorism?


It's very clear: We don't want terrorists to attack this country, so we will have to take strong measures against potential terrorists. We have to take creative diplomatic steps in foreign policy, political policy, and we must continue our massive penetration of terrorist cells, and our struggle for hearts and minds. We did this in the fight against communism [in the 1960s].

But no one should expect us to solve other people's problems at a terrible cost to ourselves. Of course, our national interest comes first.

Q: It seems the opposition doesn't have a very strong platform.


The opposition is having a tough time [finding things to criticize]. So far, they have said he was not imam [prayer leader] at his mother's funeral.

Scomi [the company controlled by Badawi's son Kamaluddin, which manufactured nuclear centrifuge parts seized by the U.S. in October on a ship bound for Libya] is something they want to make an election issue, but what is this company guilty of? Making parts and not knowing what they were for? Bush walloped us so hard [on that], it's difficult for the opposition to wallop us.

Edited by Patricia O'Connell

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