The fourth prime minister of Malaysia Dr Mahathir bin Mohamad started his active political career in 1945. He became prime minister in 1981 and ruled Malaysia for over two decades. Born in 1925, he was a medical officer before entering into politics. Popularly known as the father of modern Malaysia, Mahathir had been instrumental in increasing growth by 20-fold in two decades and increasing living standards of Malaysian populace. He turned the highly agrarian economy to the industrial economy with economic reform and foreign investment. Mahathir is in Kathmandu as a key note speaker for Nepal Business Conclave 2014. Excerpts of his interview:
Malaysia's situation was like current day Nepal, when you took over as prime minister. How did you catapult the economy within two decades?
When we became independent in 1957, our founding fathers decided – since we were a multiracial country with indigenous Malays, Chinese and Indian –we should share the country, the wealth of the country and political power. Likewise the government must be shared between the communities. Share not equally but fairly. And because of that Malaysia was stable, there was no conflict. We were able to set up strong government, which was supported by all the communities. Being a strong government and a stable country, we were able to plan for our development.
How is it possible to share wealth and political power?
Nepal today is like Malaysia before independent. It was a multiracial country no one near to the other. But we decided to join together. It is very similar. You have different tribes. We have different races, we also have tribes. But they all accept the idea of sharing. The main thing is there should be no conflict. Because conflict destabilises the country. If the country is destabilised,nobody wants to invest, nobody wants to develop. Everything begins with political understanding of sharing the country between the three races, and later on other tribes. We decided to form a coalition and field our candidates. We won with majority. We were able to have a government with two-third majority. That made us very strong. When we are strong we find that we can develop the country. Once there is stability, then economic policy becomes easy to design, develop, plan and implement. Once you start implementing, you need educated and skillful people. Because the country was stable, people invest and start businesses, pay taxes to the government. The government has more money so we can prepare ourselves. We provided training. We sent students to allover the world to study in all areas because we wanted to industrialise.
You are saying that stable politics is very important for economic development.
O yes, stability is very very important. Without stability nobody will invest, neither local nor foreigner. We had to depend upon foreign direct investment. We had to provide environment which they can rely upon. If there is a stable country with no policy changes, investors will believe. Any policy changes should be for reform not to destabilise. We need to be business-friendly. The business people are the wealth creaters. They are the goose with golden egg. You don't slaughter the goose that lays golden egg.
Would you please explain the idea of sharing and importance of politics in economic development?
If politics is most important thing for you and you consider yourself more important then you cannot share. Sharing means you have to make sacrifice. Supposing the economic cake is a small size, we decided to share slices. When the economy big size, our slice will also be bigger than the original size. You benefit from sharing. If you want to take everything for yourself, it won't grow but it will shrink. That's why sharing is much more important in making the cake larger. We must make the economic cake grow. Of course you don't get everything you want. You have to give way to other people's need too. I also went through the similar situation like in current Nepal of all making demand. But I inherited a system, which enables us to talk to each other and make sacrifice. The newly found democracies, they are very fond of democracy because of the freedom. But we have to limit ourselves also because if you exercise freedom without responsibility, the democracy will not work. The most important thing is democracy is accept losing, wait for the next election and win. Everybody likes democracy, if they win. If they lose, they think the other side has cheated. Politics of race, tribalism will take country nowhere.
Lately, there has been various comments on the role of private sector in economic development in Nepal? Likewise, Nepal government has added a third pillar – cooperatives – as one of the key pillar. How is the experience of Malaysia?
Generally government is not good in business. Also because the people working for government will not get any benefit for running the business better. They get their salary only. But if we transfer it to the private sector, then the workers, and the people who invest will work very hard. They oversee, business goes properly. For example, telecoms. In Malaysia, telecom was a government department. Every year the government had to provide 200 million to help telecom. At the same time, the government had to employ and pay the salary of staff. We decided to privatise it, the first thing that happened was the government need not pay $200 not do we had to pay salary of the staff. That reduced government's burden. That resource could be used for other things. The private sector is better run because people own it. They put money so they want to make sure that they get their money back. They make profit and pay tax. So the government gains by reducing its allocation by not having to pay workers but also get portion of their profit. For the government it was a good deal.
Nepal government has recognised cooperatives as one of the pillars for economic development. Is it a better model for economic development?
The theory is very good. But implementation is not so good, the management is not so good. A private company can pay very high salary. It can even increase the pay of the workers, and they also make profits. Between cooperative and company, I think company is better. But in Europe the cooperatives worked very well. In Malaysia, I am afraid, we failed. We failed because members of cooperatives, they took advantage. They take goods from the cooperatives in lower price and sell it to the private sector. They get the cash. In the end the cooperatives went bankrupt.