Indonesia and Malaysia Create Prosperity to Restrain Radicalism : When Asians Put Islam To Work for Development  
International Herald Tribune
June 11, 1993
Michael Richardson

Starting over

Restructuring businesses and economies. A continuing series of articles. - Indonesia and Malaysia, seeking new ways to avoid the human and economic costs of sectarian strife, have emerged as models for Muslim nations that want to modernize rapidly to compete with the West. While remaining under pressure to make greater concessions to Islam, secular governments in both countries appear to have defused demands for more extreme action, including creation of an Islamic state. Instead, by keeping religion largely out of politics and harnessing Islamic values for national development objectives, Indonesia and Malaysia have restructured their economies. They have mobilized huge amounts of investment capital and loans in recent years for industrialization, employment, technology transfer and rapid growth. "This represents a different kind of Islam that the Western world knows little or nothing about," said Douglas E. Ramage, a visiting Fulbright scholar who has been studying the role of religion in Indonesia. He said that the moderate, nonconfrontational Islam of Indonesia and Malaysia, if coupled with continued economic dynamism and increasing political openness, would help to combat Western stereotypes about Muslims caused by religious and political extremism in the Middle East and North Africa. An example of such problems is Algeria, where the socialist government failed to take effective steps to diversify the economy when oil prices collapsed in the 1980s. The result was growing unemployment, hardship and frustration that provided a breeding ground for Islamic extremists. They are now locked in conflict with the Algerian government, undermining prospects for economic recovery. Indonesia, with a population more than seven times Algeria's, also used to be heavily dependent on petroleum for export income and state revenue. But as oil prices plummeted, the Indonesian government moved quickly to deregulate its economy and attract investment into manufacturing industries that generated jobs and exports. The petroleum sector's share of Indonesian exports dropped to 30 percent in 1992, from 56 percent in 1986. Malaysia was also forced by the oil price crash and recession to revamp its economy and liberalize investment. It reduced reliance on petroleum and agriculture by developing an increasingly modern manufacturing and service sector. Economic growth has not occurred without problems. Rapid development has put a severe strain on basic services, such as power supplies and roads, and created shortages of skilled workers and managers in both Indonesia and Malaysia. Yet, Mr. Ramage said that pragmatic leadership in Indonesia and Malaysia had shown that Islam could be "pro-development and a friend of the West, while at the same time offering Muslims jobs, better living standards and a rich spiritual life." With about 90 percent of its population of 185 million professing adherence to Islam, Indonesia is the world's largest Muslim nation. Just over half of Malaysia's 19 million people are Muslims. Improvement of education, training and employment opportunities for Muslims appears to be a key factor in restraining Islamic radicalism in Malaysia and Indonesia. A case in point is the Malaysian government's sponsorship of courses for Muslim clergy on modern economic development at the National Institute of Public Administration in Kuala Lumpur. The program includes familiarization visits to Malaysian industries where many Muslims, including women, work. Opening one of these courses, Mahathir Mohamad, the Malaysian prime minister, said that preachers had a duty to instill a positive attitude toward worldly knowledge. He warned that excessive emphasis only on prayers and religious rites "will ultimately result in a weak Muslim society which could not compete effectively against developed non-Muslim countries." While both states guarantee to protect the rights of Christians, Hindus, Buddhists and other religious minorities, this does not prevent tension and occasional violence between Muslims and non-Muslims. Anwar Ibrahim, a former leader of the Muslim Youth Movement of Malaysia who is now finance minister, said that economic growth and job creation were inextricably linked with religious tolerance in a multiethnic country such as Malaysia. "How do you distribute the wealth of the country to the poor, and provide facilities for health and education, if you don't stimulate economic growth?" he said. "How do you stimulate economic growth if you don't convince Muslims and non-Muslims that each have a place in this country?" he added. Indonesia has been particularly firm in suppressing radical Muslim groups. Now, officials said that Malaysian authorities are considering a ban on one messianic Islamic sect, known as the Arqam movement, and are closely watching the activities of a small but militant minority of Shiites in Malaysia. Almost all Muslims in Southeast Asia follow the Sunni branch of Islam. Wardiman Djojonegoro, Indonesia's education minister, said that one of his top priorities was to have the country's schools, colleges and universities produce more of the technically qualified and science-based students needed by an industrializing nation. Mr. Wardiman, a Muslim who trained as an engineer in West Germany, said that he was seeking private sector support to expand an apprenticeship system in Indonesia. Analysts said that the determination of both governments to keep religious extremism in check was reinforced by knowledge that the overwhelming majority of the investment they needed would come from non-Muslim sources, including ethnic Chinese companies and Western and Japanese corporations. According to figures compiled by the Asian Development Bank, foreign investment in Malaysia in the six years to 1991 amounted to nearly $9.3 billion; the figure for Indonesia was $4.5 billion. But in Indonesia, investment by local companies, many of them controlled by Chinese, far exceeded the inflow of foreign capital. Edward Tilling, vice-president of the American Malaysian Chamber of Commerce, said that U.S. companies had invested substantially more in Malaysia in proportion to the country's population than in Mexico, South Korea or Thailand. "If you add the amount of investment planned by existing U.S. companies in Malaysia and the value of new projects approved, total American investment in Malaysia will grow by about 18 percent annually over the next three years," he added.

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