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FAC: "How Successful Have Mahathir's Economic Policies Been?"
5/9/2001 12:05 am Wed
FAC News - 3 September 2001
"How Successful Have Mahathir's Economic Policies Been?"
Yesterday marks the third anniversary of Anwar Ibrahim's sacking. Mahathir
justified his (Anwar) politically motivated prosecution by blaming Anwar for
the economic calamity Malaysia was facing at the time. He even went on to
self-proclaim how his 'economic prowess' was responsible for lifting
Malaysia out of the vicious financial crisis of 1997.
Almost four years on, many begin to wonder whether Malaysia is on the
right track to recovery. While stock markets in neighbouring countries gain
points throughout last year, Kuala Lumpur Stock Exchange consistently
paints a very bleak prospect of Malaysian market.
In fact many say that if not for the few blue chip companies controlled by
the government, KLSE would have performed even worse.
To highlight the reality of Mahathir's 'economic miracles', FAC asked an
analyst, who wished to remain anonymous for security reasons, to replenish
readers with comparisons of how Malaysia fares with its neighbouring
countries since 1998.
"How Successful Have Mahathir's Economic Policies Been?"
For over three years the people of Malaysia have been fed a steady dose of
economic propaganda by the Mahathir spin control machine. Namely, that
Mahathir's courageous decision to reject IMF advice and to impose capital
controls have put Malaysia's economy back on the track to success. Even
President Arroyo of the Philippines wants to learn economic wisdom from
Mahathir, according to the usual suspects in Malaysia's press.
Day in and day out, Mahathir's mouthpieces in the government and the
press trumpet the genius of Mahathir's go-it-alone economic policies. True,
our economy is slowing down now, but that is because of the downturn in
the American economy. Nothing is ever Mahathir's fault, you see. You never
lose points in Malaysia by blaming America, the West, the IMF, the Jews, and
so on. You only win.
So what is the truth? People can lie, but economic statistics don't. So here
are the latest statistics from the Economist magazine of September 1,
comparing Malaysia with the three countries that worked with the IMF.
Maybe we should ask ourselves why we haven't read this in the Business
Times. And perhaps the Business Times should ask itself whether its refusal
to report the economic truth to Malaysia's businessmen is why the paper is
losing both money and circulation.
In other words, the countries that worked with the IMF are now
experiencing growth rates 3 to 7 times higher than Malaysia.
Four years after the financial crisis hit Asia, who is better off? The countries
that worked with the evil IMF to turn around their economies and make
reforms -- or Malaysia, which was forced to follow the Mahathir "My Way
or the Highway" approach to economics? (actually, "Either Follow, or it's
The numbers speak for themselves. This is not a commercial for the IMF --
rather, it is a dose of economic reality. The IMF's economic policies, despite
their shortcomings, have produced better results than "Mahathironomics."
Maybe that is because they understand the way the world economy works,
and Mahathir does not. Maybe it's because they have experience around the
world in dealing with financial and economic crises, and Mahathir does not.
Maybe it's because they listen to expert advice, while Mahathir listens only
to himself. Mahathir shouts and screams at the world economy, while the
IMF and the World Bank try to understand it. So why should we be
surprised that foreign investors listen to the IMF, but not to Mahathir?
Don't Blame America or the "IT Glut"
It is easy to blame the economic situation in Malaysia on the downturn in the
American economy and the global information technology glut. But if that is
the reason, then it should affect all the countries in Asia, from China to
Thailand, because they also depend on exports of electronics, especially to
the US market.
So why is Malaysia's economic performance so much worse than its
neighbors in Asia? (China's growth rate, by the way, is + 7.8%, which is
almost 16 times as high as Malaysia's.) Clearly there are other factors at
work besides the downturn in the United States.
Foreign Direct Investment (FDI)
And if foreign businessmen are now convinced of Malaysia's great economic
success, as Rafidah and others trumpet so loudly, then why does foreign
direct investment (FDI) in Malaysia fall so short today, compared to its
neighbors? Compare these World Bank statistics for foreign direct
investment in the four countries in 1996 (before the crisis) and 1999:
Another article of political faith in the Mahathir propaganda mill is that
strong and stable governments are good for economic growth. Since the
financial crisis began, Korea has had one change of government, and
Thailand and Indonesia both have had two. Their changes all occured
through democratic processes. If political stability is good and change is bad,
then why does Malaysia have the worst economic track record among the
four countries? Why have the more democratic, "politically unstable"
countries, those with freedom of press and speech and assembly, grown
faster? Meanwhile, why does Malaysia, blessed by the enlightened stable
authoritarian rule of Mahathir Mohamed, have the worst economic record of
Two Final Thoughts
(1) President Gloria Macapagal Arroyo says she wants to learn economics at
the feet of the Great Master, Mahathir Mohamed. Yet the Philippines
economy is growing at 3.3% a year, compared to Malaysia's 0.5%. Its
industrial production is up by 11.2%, while Malaysia's has fallen by 9.9%.
That's a 21% gap. The Philippines has replaced Malaysia as the world's
largest exporter of semiconductors. Who should be teaching whom?
(2) It is often said that one of the reasons Mahathir got rid of Anwar was
because Anwar listened too closely to the IMF's advice. Mahathir said that
was bad for Malaysia. Three years later, the numbers speak for themselves.
The "IMF economies" are beating Malaysia badly. The worst thing that has
happened to the Malaysian economy is Mahathir. If Anwar and his
professional economic advisors had been able to implement their expert
policies, Malaysia would be one of the leading economies in Asia today.
Instead, thanks to "Mahathironomics," it is one of the laggards.
Perhaps it is Mahathir who ought to be in jail.