Malaysia in search of competitive edge
Malaysiakini.com
Nov 20, 2006

Prime Minister Abdullah Ahmad Badawi has declared an end to the economic legacy and grandiose projects of his predecessor Dr Mahathir Mohamad, in the latest salvo of their year-long feud.

Leaders of the ruling Umno threw their support behind Abdullah and rebuffed 81-year-old Mahathir during the party's annual gathering last week.

Abdullah told delegates he will not pursue the economic strategies adopted two decades ago by Mahathir, who handed the new premier the top job in 2003 but has this year been peppering him with bitter criticisms.

"Merely continuing the existing economic model that we have had for the past 20 years will not make Malaysia competitive in the long-run," said Abdullah.

"Since we want to be more broad-based, we cannot entirely rely on construction and manufacturing. We must look at sectors that can still generate wealth for many Malaysians, especially those in rural areas, like agriculture."

The premier said that in the past, wealth was generated not by innovation and creativity, but by foreign investment, government contracts and privatization. "Now that era is gone," he said.

Mahathir, who turned Malaysia from an economic backwater into one of the powerhouses of Asia, has accused Abdullah of mismanagement and lamented the sidelining of his pet projects.

Vanity projects

While in office Mahathir bejewelled Malaysia with stunning constructions like the iconic Petronas Twin Towers, the administrative capital of Putrajaya and the steel-and-glass Kuala Lumpur International Airport.

But he also sidelined the agricultural sector in favour of mega-projects like the national Proton car, steel manufacturing and the massive Bakun dam.

Many of his schemes are now criticised as vanity projects that are inappropriate and wasteful for a developing country. Proton, for instance, is unloved by Malaysians and faces oblivion at the hands of imported models.

Yang Razali Kassim from the Institute of Defence and Strategic Studies at Singapore's Nanyang Technological University backed Abdullah's new stance.

"The approach that Abdullah is taking actually makes sense," he told AFP.

"It is an attempt to capitalize on the country's competitive advantage at a time when many countries are trying to carve new niches during a difficult period attracting foreign investment, given the rise of China and India," he said.

Economic growth hit 7.2 percent in 2004 but slowed to 5.2 percent in 2005. Foreign investment also fell in 2005 to US$3.97 billion from US$4.62 billion the year before.

Losing the advantage

Economist Charles Santiago from the Monitoring Sustainability of Globalisation group said Malaysia had lost its "competitive advantage" compared to other Asian countries by not mechanising its farming methods.

"Abdullah wants to focus on biotechnology and agriculture. This is definitely out from Mahathir's strategy," he said.

Yang Razali said that in the pre-Mahathir years, Malaysia was an agri-based economy but under Mahathir the country industrialized and developed a strong manufacturing base.

"In the Abdullah years, the country is trying to move up the value-chain by developing its inherent strengths in agriculture, without losing its manufacturing base," he said.

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