Malaysia’s Back-to-the-Future Reform Wave

At the beginning of 1997, Malaysia appeared to be one of the world’s great success stories. Economic growth had topped 9 percent in eight of the previous nine years (and was 8.9 percent in the other one). Foreign investment had been pouring in. The world’s tallest building had just topped off in the capital, Kuala Lumpur, and a spectacular new toll expressway now ran down the Malay Peninsula from the Thai border in the north to Singapore in the south. Prosperity was broadly shared, with income inequality down since the 1960s as the country’s Malay majority gained ground on the more affluent Chinese minority thanks to one of the world’s most ambitious affirmative-action programs. Life expectancy had risen sharply. School enrollment too. By just about every development metric, it seems worth noting, Malaysia was the runaway leader among Muslim-majority nations, petro-states excluded.213

Things were looking up on the political side as well. The long-ruling United Malays National Organization, in charge since independence from Britain in 1957, showed no signs of ceding power, but Prime Minister Mahathir Mohamad, in charge since 1981, was preparing to hand over the reins to his brilliant deputy, Anwar Ibrahim. Anwar had been a student activist as a youth, and had even been arrested for protesting against the government on behalf of poor farmers. As a minister he railed against corruption. His rise seemed to presage an opening and maturation of Malaysian politics. As he was a devout Muslim with a unique ability to charm and reassure Western leaders, it seemed like it might presage even bigger things than that.