The return of Mahathir Mohamad: Malaysia leans on Japan

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August 18, 2018 1:30 AM

As a major ASEAN and regional player, actively reaching out to Japan, re-examining Chinese investments, and being upfront on the South China Sea, Mahathir Mohamad has onset a change in the region—still being tested, but one that has China on the back-foot, at least for now.

The return of Mahathir Mohamad: Malaysia leans on Japan

Much in the manner of the sequel to Star Wars trilogy ‘Return of the Jedi’, the return of 93-year-old Mahathir Mohamad as the seventh Prime Minister of Malaysia in May 2018 captured public imagination like no other. His political resurrection has put a star-spangled banner on how life, and a second innings in political office, can, indeed, begin after 90.

What Dr Mahathir’s second innings (his first being 1981-2003) entails for Malaysia and ASEAN has been a matter of great speculation, particularly with the revival of his 1980s Look East policy. So far, Look East seems to suggest primacy of Japan over China, both major players in the region. Much to China’s chagrin, hefty Chinese investments in Malaysia have been suspended. The shifting political landscape gives us further clues.

Dr Mahathir is the chairman of opposition Pakatan Harapan (PH, Alliance of Hope), which beat the older coalition Barisan Nasional (BN, National Front) that had been in power for decades. But the de facto leader of PH is Dr Mahathir’s former protégé-turned-pariah-turned-ally, Datuk Seri Anwar Ibrahim.

PH completes 100 days in office
In the last 100 days, Dr Mahathir’s return has been something of a political windfall. Not a single day has gone by without his picture splashed in newspapers in the region. After all, Dr Mahathir, with his physical and intellectual faculties intact, has outlived many of his peers and contemporaries in ASEAN, notably Singapore’s moderniser Lee Kuan Yew (LKY), Indonesia’s Suharto and Thailand’s monarch Bhumibol Adulyadej.

The victory was attributed to the interplay of several factors, which ranged from cementing a successful coalition to rising national debt (estimated at $272 billion) to the excesses of former Prime Minister Najib Razak and family, particularly the misuse of funds of the sovereign wealth fund, 1Malaysia Development Berhad (1MDB), about which the Wall Street Journal ran an incriminating exposé in 2015.

Beyond domestic factors has lurked the understated China-factor, whose increased cadence in the region—regional security (South China Sea) and in the Malaysian economy—has stoked anxiety and apprehensions, which Dr Mahathir alluded to several times during the campaign trail.

Addressing corruption
The first issue, corruption, is being addressed—unfolding as Asian dramas do. In the last 100 days, the Malaysian police has seized more than 250 luxury bags belonging to Madam Razak (ex-PM Najib Razak’s wife), including more than a couple of Birkin bags (the ‘Bentley’ of bags) as well as 70-odd bags of jewels and expensive watches, with the media suggesting that Imelda Marcos’ extravaganzas in the 1980s (former first lady of the Philippines) pale in comparison. The swanky $35-million Bombardier Global 5000 private jet and swankier still the Equanimity private yacht pegged at $250 million—owned by Jho Low (the advisor to 1MDB and at the centre of the scandal)—have been impounded.

The China factor
Malaysia was the first ASEAN country to recognise China (in 1974) and China has been Malaysia’s largest trading partner since 2009. Bilateral trade is booming and is expected to exceed $100 billion in 2018. China’s footprint in Malaysia has been on the rise. In the last decade, China has been one of the top investors in Malaysia, with Penang’s prized 24-km-long second bridge built by China (connecting Penang to the Malaysian mainland, 2014), and sister industrial parks namely the Malaysia-China-Kuantan Industrial Park (started in 2013) and China-Malaysia-Qinzhou Industrial Park (started in 2012) under ‘Two Countries, Twin Parks’.

China’s Belt and Road Initiative (BRI, 2013) gained traction with the previous government signing hefty Chinese investments such as the East Coast Railway (ECR) and Melaka Gateway (artificial islands in Malacca, Malaysia). Chinese property developers have swamped Iskandar (at Johor Bahru, which is 21-km across from the Singapore border), with a ‘forest city’ set in an upmarket lush expanse dotted by Legoland and Hello Kitty Mall. Many buyers are foreigners, including Indians and Chinese—and there has been a visible backlash.

Dr Mahathir’s predecessor Najib Razak had inked agreements with China for the ECR, Melaka Gateway, Forest City and two pipeline projects. Of these, the ECR was arguably the most ambitious, envisaged as a 688-km link connecting the east coast (Port Klang) to the west coast (Pahang, Terengganu and Kelantan), as a viable alternative to the busy Strait of Malacca and South China Sea.

The contract for the ECR was being handled by the China Communications Construction Company (CCCC), and for the pipelines by the China Petroleum Pipeline Bureau (CPP). They have been handed suspension notices. The Melaka Gateway project (which aims to be the largest marina in South East Asia by 2025) partnered with China’s state-owned PowerChina International Group is also under review. The new government has clarified that the suspension of contracts has to do with the contractors and not with any country in particular.

Looking east, towards Japan
The China factor has broadly taken on three dimensions. One is by way of the revival of Dr Mahathir’s Look East policy. His first state visit was to the ‘east’, to Japan (in June 2018) where he appreciated Japanese work ethic, knowledge skills, followed by a second working visit (August 2018) when he tweeted about the prowess of the Shinkansen (bullet train). Dr Mahathir has been positive, too, about the revival of the EAEC (East Asia Economic Caucus), with Japan in the lead, and inclusion of India and China. The Japan visit has Japan ‘smiling’, with reports suggesting that the country may consider ‘soft loans’ to Malaysia.

Japan’s ‘smile’ may not be a coincidence—perhaps accruing because of Dr Mahathir slingshots on the South China Sea, which remains a thorny, contentious issue between ASEAN and China. On the South China Sea, Dr Mahathir has said upfront that it is not ‘controlled by any nation’ and that ‘we (Malaysia) are all for ships, even warships, passing through, but not stationed here’, politely adding that it was a ‘warning to everyone’.

The third dimension has been the recalibration of the Chinese investments in Malaysia, particularly as it is elsewhere (Sri Lanka and, more recently, Montenegro and Pakistan), leaving a debt trail.
Pragmatism and change prevail

Dr Mahathir is an old political hand who visited China in 1985 and pegged the Sino-Malaysian Trade Agreement in 1988. Malaysia is a trading nation, a point repeatedly reinforced by Dr Mahathir, and is unlikely to stop doing business with China. But by re-examining Chinese investments, Dr Mahathir hopes to reset the tenor of Sino-Malaysian relations before he hands over office to Anwar Ibrahim in 2020.
Recently, Jack Ma opened Alibaba’s first office in Malaysia, which seeks to create jobs for Malaysians, and this was much cheered. In fact, Ma claimed that the original inspiration behind ‘Alibaba’ was Dr Mahathir’s Multimedia Super Corridor (MSC, a high technology business district inaugurated by Dr Mahathir in 1996). Touché.

How Malaysia sorts its own domestic mess is another story. But as an ASEAN and a regional player, actively reaching out to Japan, re-examining Chinese investments, and being upfront on the South China Sea, Dr Mahathir has onset a change in the region—still being tested but one that has China on the back-foot, at least for now.

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