The Financial Express

Malaysia: An inspiration or lesson on dev?

| Updated: October 24, 2017 09:00:45

Kuala Lumpur's Petronas Towers Kuala Lumpur's Petronas Towers

Uttering the name 'Malaysia' conjures up a cornucopia of images in the mind of even a layman and quite conceivably some of them will be associated with the country's landmark tourist destinations like the Petronas Tower, Putrajaya, Kuala Lumpur and Langakawi island. The 'Malaysia Truly Asia' slogan has been a trademark as well as a torchbearer of the Malaysian culture of hospitality, thanks to its thriving tourism sector that continues to attract thousands of travellers every year. Tourism revenue in Malaysia has consistently seen an upward trend, averaging RM 43,181.87 million from 1998 until 2016, reaching an all-time high of RM 82,098.20 million in 2016.


From being one of the most profitable British colonies occupied in the late 17th century to an Asian Tiger economy, the Malaysia that we see today has indeed come a long way. The journey has not been very smooth however, rather one that was plagued with unprecedented obstacles and challenges. Two of the most pervasive factors that have had a profound impact on Malaysian political economy as well social tapestry are deeply rooted in history, its multiethnic/multicultural identity and its colonial legacy. Unarguably, Malaysia has witnessed an unparallel gamut of socio-economic transformations over a span of three to four decades, most of which have been catalysts for the tremendous economic growth it has always desired. Malaysia has had its fair share of failure as well, renewing fresh debates about whether its ascendance to development has threatened the perpetual struggle to establish values of democracy.


The question of whether or not to postulate Malaysia as a 'development model' for Bangladesh is a contemplative one, which at the very beginning requires an exhaustive analysis of how one interprets the normative dogma of development. Is it just the absence of poverty and deprivation; a combination of soaring per capita income and GDP (gross domestic product) growth fuelled by modernisation and industrialisation? A broader definition of the ever-changing paradigm of development encompasses much more than all of the aforementioned aspects which almost all developing nations somewhat fail to succeed in. At the same time, it is important to contextualise development against the backdrop of unique historical, cultural, economic and political experiences of respective nations. It must be remembered that not all policies work in the same homogenous pattern for every country.


Malaysia's identity as a 'tri-ethnic schema' has always been an overarching influence on its socio-political, cultural ideologies as a state. Its ethnic mosaic merges the Indians, Chinese and the Malays into one nation, who, while adopting ingredients and elements of one have retained their individual ethnic values and ethos. Both the Indian subcontinent and Malaysia have been a part of the colonial dynasty of the British, yet their colonial experiences are somewhat disparate. Where the British quite tactfully executed the 'divide and rule' policy by pitting two religions (and religious groups) against one another on the eve of India's independence in 1947, they contrarily proposed a unitary Malay Union Scheme for Malaysia, which involved the sharing of power between the three ethnic groups. Perhaps the British foresaw their dominance even after Malaysia was liberated in the tacit form of economic lobby, which was observed in the British share of exports and businesses, and the need to protect their economic interest incited such a political move. The British invested heavily in the tin mines and rubber plantations of Malaysia, the result of which was manifested in the form of huge capital flight towards the west (which amounted to around RM 1.8 billion in 1958).


Daim Zainuddin, a Malaysian scholar, emphasised the importance of inclusive policies in fostering political stability and social harmony, and its concomitant relation with economic development of a nation. Drawing on the example of 'consociational' politics, he referred to the fact that Malaysia's success as a pluralist society lied in the belief of its forefathers in the importance of sharing political power, exemplified by the Alliance and later on, Barisan. Despite its colourful ethnic fabric, religious intolerance has never been an issue of major concerns for Malaysia, and national unity was restored shortly after sporadic ethnic clashes in post-election period in 1969. Social harmony therefore contributed to a relatively stable political infrastructure, thus allowing the economy to expand. Despite the coexistence of three ethnicities in Malaysia, there is little integration between them, with each group being fiercely protective of their own culture. Bangladesh, on the other hand, has always been characterised by communal harmony, but recent events involving indigenous communities have raised a serious question.


The end of British Raj marked the birth of East and West Pakistan, and finally Bangladesh was born through a bloody, devastating war in 1971, a penniless, starving nation heavily dependent on foreign aid and relief. Our political history is fraught with military coups, revolutions, assassinations, uprisings and also strewn with failed leadership which only paved the way for dictators and autocrats. After the mass movement in 1990 Bangladesh witnessed a democratic electoral process for the first time. The 24-year-long setback suffered by Bangladesh (then East Pakistan) after 1947 cannot be ignored, because when East Pakistan was being oppressed by its neighbours, Malaysia was laying the foundation for a robust economy. As per statistics, per capita income of East Pakistan grew at a nominal rate of 1.3 per cent from 1950-70. At this rate it would take 1500 years for the per capita income to double (from Rs 310). Yet, per capita income of Bangladesh doubled during the period from 1975-2005.


Malaysia entered the 'Drive to Maturity' stage (as per Rostow's growth model) during 1980's, ten years after the New Economic Policy (NEP) was formulated. The NEP could neither be dubbed as a success nor a failure, partly because of its original aim of achieving unity through poverty eradication and reduction of inter-ethnic economic disparities. The NEP, nevertheless, provided a strong economic charter which strongly rallied behind poverty alleviation, wealth and employment restructuring. The poverty alleviation scheme was a clear cut success, with poverty rates showing a sharp decline from 49.3 per cent in 1950-70 to 17.1 per cent in 1990. However, the GINI coefficient records from 1970-1990 show a different picture, one marred with income inequality (in Bangladesh. The GINI coefficient rose from 0.35 in 1984 to 0.458 in 2010). Recovering from the ramifications of a colonial past and blind adoption of laissez-faire-driven market reforms was an uphill task. The Malaysian economic restructuring under the NEP was unsuccessful to some extent, because the benefits of growth were still limited to the wealthy Chinese capitalists, although Malay participation in commercial businesses did rise. Inequality was still a nagging concern despite measures like the Rural Economic Development programme, which sought to increase the yield of agricultural land, thus alleviating poverty and uplifting living standards in the rural areas, where majority of the Malay population resided. It was at a time when Malaysia was seriously reconsidering whether or not the NEP had been a placebo when Mahathir Bin Mohamad was ushered in as prime minister.


Hailed as the architect of modern Malaysia, Dr. Mahathir's 22 years' reign as Prime Minister, which has received a fair share of eulogy as well as well-grounded criticism, has unarguably changed Malaysia's economic trajectory. From a modest growth rate of 6.4 per cent in 1957-1970, the economy expanded at a rate of 8.0 per cent from 1988-1996, bolstered by massive industrialisation and ambitious infrastructural projects (the North South Expressway, to name one). His Vision 2020, which targeted high income as well as sustainability, was a much-needed predecessor to the NEP, helping Malaysia move out of the 'middle income' shadow. Mahathir's tenure, however, also sowed the seeds of cronyism, political patronage, nepotism and elitism, as he promoted mass privatisation. A powerful cobweb of networks between bureaucrats, politicians and businessmen (with UMNO backing) ensured that a vested interest group received shady business contracts for important constructions, trade licences etc. Mahathir has also been criticised for his authoritarian and abrasive political legacy, some of which included repressive media censoring, eliminating opposition to the ruling party, and spearheading constitutional amendments that gave the government the mandate to meddle with judicial affairs. The autocratic regime in Bangladesh under Ershad from 1982-1990 saw the emergence of a New Industrial Policy and a transfer of ownership of public enterprises and operations to the private sector, yet at the same time there was a rapid escalation of corruption and deterioration of law and order.


Malaysia's strategic geographical position puts it in an advantageous position in terms of trade. Its land and maritime borders with Thailand, Indonesia, Singapore and Vietnam have been a blessing, while its 'Look East' policy helped build strong bilateral and diplomatic ties with Japan and Korea in the 1990s, thus attracting Japanese and Korean investments.


As Bangladesh propels itself towards the Vision 2021, it must remember to look forward, towards role models which will encourage it to set bigger benchmarks. Malaysia's phenomenal transformation is indeed inspiring, being driven by not just 'good luck' but good policies, effective leadership and pragmatism. The Malaysian strategy of structural economic change is of particular relevance for us. At the time of independence the Malaysian economy was dependent on production of tin and rubber. But the fluctuating demand for the commodities in the world market and the rising unemployment influenced Malaysian leadership to shift its comparative advantage towards the manufacturing industry. Alongside national treatises like the NEP and Vision 2020, Malaysia's timely investment in education vis-à-vis human resource development and ICT (information and communication technology) laid the foundation for a knowledge-based society. Yet, democratic principles have always failed to be propagated in Malaysia that had strictly adhered to Asian Democracy. Transparency and Accountability, one of the eight pillars of good governance, has crumbled time and again, along with freedom of speech. Bangladesh right now is at a crucial juncture, having shown remarkable improvement in both economic and social indicators. However, the challenges that loom ahead are colossal and replicating the development experience of others will do nothing but exacerbate our problems. We must accept the good, but learn to reject the bad, because even perfect role models are imperfect in their own ways.


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