(A speech delivered at the Bangladesh-Malaysia Business Forum 2004 in Dhaka, Bangladesh, on December 18, 2004)

Much as I would like to take credit for Malaysia’s rapid growth and its transformation from basically agricultural country to an industrialized, I would be ungrateful if I do not acknowledge the very valuable contributions of the three prime ministers who preceded me. Truly they laid the foundations and the principles which made it possible for the extra push to be made during my tenure as prime minister so that the development targets are met earlier.

Tunku Abdul Rahman, the first prime minister, led a unique independence struggle by inviting three major communities in multiethnic Malaysia to participate and to share the fruits of independence. I say it is unique because the indigenous Malays could have gone it alone considering that the treaties with the British Involved only Malay leaders, i.e the Malay Sultans. The Chinese and Indians had no standing legal rights as citizens except in the Straits Settlements of Penang and Malacca which had been ceded to the British.

In all the other countries of Southeast Asia, independence meant returning sovereignty to the indigenous people. In Israel, independence led to the expropriation of Palestinian land and expulsion of the Palestinian Arabs. In many African countries, the immigrants were not welcome. But in Malaysia, unconventional as ever, the indigenous Malays decided to work with the immigrant races. Thus began the unique coalition of race-based parties which has endured to this day. Had the Malays tried to grab everything for themselves, Malaysia would not be the peaceful and stable country that it is today. And as you know economic growth and development can only take place in a stable and peaceful environment.

I must hasten to add that the coalition now known as the National Front is a pre-election coalition, not a post-election marriage of convenience due to no party getting a workable majority. The component parties do not contest against each other. Allocated different constituencies, the component parties help each others’ candidates because in constituencies where their candidates are standing they can expect other component parties to help. And so the coalition wins big majorities in every election. Big majorities are necessary if the government is to be strong enough to carry out its policies, strategies and plans. Governments cannot always do popular things if they want to govern well. Doing the right thing is often unpopular. Only strong governments with big majorities are capable of doing unpopular right things and still survive.

Coalitions of race-based parties are better than single multiracial parties. In a coalition the small parties and ethnic minorities can be heard and represented.

The coalition concept is the key to Malaysia’s progress. Every race and every party must accept the need to make sacrifices for the good of the whole. The races in Malaysia subscribe to the principle that getting a slice of a growing economic cake is better than having the whole shrinking cake. Because the coalition has ensured peace and stability and therefore growth, the slices that each race gets of Malaysia’s economic wealth are far bigger than the whole of the economic wealth of Malaysia at the time of independence.

Having settled the form of political cooperation between the races, the coalition government could focus on developing the country. Initially, the only resource was agricultural land. Those without land were allocated 10 acres each to plant rubber.

But very quickly Malaysia ran out of land. But the workforce was growing and failure to create jobs for them would result in public disturbances, riots and demonstrations. These things would neither help them nor the country.

It was decided to create jobs through industrialization. But at that time Malaysia had no manufacturing expertise, no capital, no management skills and no knowledge of the markets. The only way to industrialise was to invite foreign industrial investors to invest in labour-intensive industries.

The government did not mind not benefiting financially from the investments as long as people get jobs. So taxes were foregone and industrial estates with good infrastructure were set up. The legal framework for investments was crafted in such a way as to convince foreign investors that their capital and properties would be safe especially from expropriation or nationalization by the government.

The government adopted a business-friendly attitude. Ministers must be accessible to the business community. Regular dialogues with them are held, their complaints attended to and their ideas and suggestions seriously considered.

Until China opened up, Malaysia was attracting huge foreign investments. So many jobs were created that Malaysia ran short of labour. Today, almost two million foreign workers are in Malaysia, most of them Bangladeshis.

Despite aiming only for job creation, Malaysia gained a lot more from the foreign investments in manufacturing. Its workers became highly skilled and commanded better pay. Some rose in rank and could take over the management. Some were able to design new products. Others acquired enough skills so that they could work for local companies and produce many of the components and even the final products.

Today, Malaysian-owned and –managed companies are able to go into manufacturing of electronic goods and household appliances. From these, other industries were and are being started by Malaysians whose investments have reduced the effect of foreign direct investments going to other countries than Malaysia. Eighty-two per cent of Malaysia’s exports of more than US$100 Billion are made up of manufactured goods, including motorcars, engineering goods, refineries and other manufacturing plants. 


"This book is available for reference at the Perdana Library, Perdana Leadership Foundation. Membership is FREE. Click here to become a member. Click here to read about Tun Dr. Mahathir Mohamad. 

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