A Malaysian Perspective
 

Market Economy Moral and Cultural Values

A speech by The Honourable Dato Seri Dr. Mahathir bin Mohamad Prime Minister of Malaysia

 
The economy of Malaysia has come a long way since its independence in 1957. From being a producer of primary commodities, namely tin and rubber, it has become a fairly heavily industrialised nation with almost 80 per cent of its total exports valued at about US$70 billion made up of manufactured goods. Its economy has been growing at an average of 6.7 per cent since independence, with 8 per cent plus growth sustained during the last eight years. The per capita income grew from US$300 at the time of independence to about US$4,000 in 1995. Inflation rate has remained low throughout, averaging three per cent, so that the Purchasing Power Parity of the 1995 per capita income is actually well over US$10,000.

Malaysia has always been a free market economy. Socialism and Communism with their centrally planned economic theories never made any headway in Malaysia. True, there were experiments with Government-owned companies and State Economic Corporations, but these existed side by side with private enterprises. Unlike many newly independent countries,
narrow nationalism, which invariably results in the nationalisation of foreign-owned companies, did not rear its intolerant head in Malaysia.

But it must be admitted that the Government did buy a number of large foreign companies, particularly mining and plantation companies. But it did this through the market, buying up a majority of the shares of Guthrie Corporation in the London share market for example. The British Government immediately stepped in, declaring that 'dawn raids' were henceforth to be regarded as illegal. Since we did it before it was declared illegal, it should have been accepted in good spirit. However, Malaysia was accused of backdoor nationalisation.

But at home foreigners have always been welcome to participate in the economy. When in 1982 the Government decided to opt out of business and to privatise many of the Government's functions and the companies it owned, foreigners remained free to purchase shares in the stock market and participate in privatisation from the initial stage. Such is our faith and liberal attitude towards the free market economy.

Along with privatisation came the concept of Malaysia Incorporated, i.e. the partnership of the private and public sectors in the interest of speeding up the development and economic growth of the nation. It is difficult to identify what contributes most to Malaysia's good economic performance. But it is fair to say that privatisation and the Malaysia Incorporated concept contribute a significant share towards this growth.

From the growth figures mentioned, it seems as if all was smooth sailing for the economy of independent Malaysia. This is far from true. A multi-racial, multi-religious, multi-cultural and multi-lingual country, Malaysia was not the best bet among the former colonies of Britain, which gained independence after World War 11, to grow and prosper. Indeed, it started off on the wrong foot. The attempt by the British to unite the Malay states and the Straits Settlements into a Malayan Union where all who happened to be there would be considered citizens, sparked off tension between the indigenous Malays and the Chinese. Race relations was far from harmonious when Tunku Abdul Rahman brought the Malays, Chinese and Indians together under the Alliance banner and gained independence for the country in 1957. To this fragile mixture was added in 1963 the other races and tribes in the states of Sabah and Sarawak in Borneo.

For a time the Tunku's magnetism held this unstable mixture together. Independent Malaysia grew economically on the rubber and tin trade developed during the colonial period.

Then in 1969, following poor performance of the government party, the Alliance, in the election, race riots broke out in Kuala Lumpur. People were killed; shops, houses and cars were burnt. As Malays and Chinese and their political parties glared at each other, the Government declared a state of emergency and suspended Parliament.

The International Press, which had always predicted disaster for the polyglot nation, visibly gloated over how .. correct they had been. Malaysia was written off. The experiments at democracy were described as a failure. Having taken over the Government, the Malays would impose authoritarian rule. The economy would regress and Malaysia would become a basket case.

In the event, democracy was restored in less than two years, Parliament was recalled, and in the interest of reducing the risk of recurring racial conflicts, approved a New Economic Policy (NEP) designed to eradicate poverty and the identification of race with economic functions. In other words, a bold experiment in socio-economic engineering was to be the main thrust of the Government, so as to reduce the disparity in the wealth between the different races, a disparity, which was identified as the basic cause of the race riots of 1969.

Many Malaysians and the outside world were quite cynical of the NEP. Social engineering even within a single racial community as represented by the Socialists and the Communists had not really succeeded. The only result was to equalise the distribution of poverty. How could novices in the art of governing manage a complex socio-economic engineering programme involving such an unstable pluralistic society with large disparities between them, as was found in Malaysia in 1970 when the NEP was launched, succeed?

The Government imposed many constraints on itself. The whole scheme was premised not on taking from the richer Chinese in order to enrich the Malays, but on stimulating the growth of the economic cake and then distributing the enlarged cake to correct the economic imbalances between the races. The whole scheme really appeared far-fetched. Getting the economy to grow in any country, especially a developing country, is difficult enough. But to cause it to grow and to restructure it at the same time is really hopelessly optimistic.

Political stability is a prerequisite for economic growth. In 1970 when the NEP was launched nobody expected that the riots of 1969 would not occur. How then can the Malaysian Government even think of achieving so many things simultaneously; political stability, economic growth and the restructuring of its society through a complex scheme of affirmative action?

But Malaysia has done it. There is political stability and a democracy in which the opposition has not only won many Parliamentary seats but has actually toppled the government party and taken over state Governments. Racial peace and harmony is far better than found in any other multi-racial country. Indeed, it is better than in some European countries where off and on racial minorities have been bashed and their houses burnt sometimes with the occupants still in it.

Economically Malaysia has done quite well too, achieving more than eight per cent growth every year for the past eight years while maintaining inflation at about three per cent. The market economy is flourishing, with privatisation helping to lessen the financial burden of the Government while boosting the infrastructure. Such is the confidence of the Government that it has actually dared to launch a 30-year perspective plan. The Plan calls for average yearly growth of seven per cent so as to become a developed country by 2020. Looking at the record, 6.7% growth in the 20 years up to 1990, it is not unreasonable to expect the target to be achieved.

As an instrument for socio-economic engineering, the New Economic Policy (NEP) deserves a few lines of comments. Initially, it was condemned by many as discriminatory against the Chinese in favour of the Malays. But most Malaysian Chinese not only accepted it but actually co-operated in its implementation. When it was found not to dampen economic growth, the critics turned on a new tack.

They now condemn the NEP for benefiting only a few Malays, particularly those close to the ruling party, UMNO. It is true that some of those who succeeded in business are close to UMNO, a party with 2.4 million paying members and many millions more supporters. Considering that there are only six million adult Malays, it would be amazing if some of those who benefited from the NEP are not UMNO supporters. But the fact is that very many Malays who are in UMNO or close to the leaders are far from being rich. They merely benefit from the general improvement of the economy like everybody else.

The NEP is not about producing millionaires among the Malays only, as the detractors imply. It is for all Malays and other indigenous people at all levels. Through the NEP, hundreds of thousands of the indigenous people gained a headstart through scholarships for higher education at home and abroad, training in all kinds of skills, loans for petty trading, even outboard engines for in-shore fishermen. Most importantly, poverty was reduced from 50 per cent plus to a mere seven per cent for Malaysians irrespective of race. There is now full employment. Everyone's income, including those of the non-indigenous citizens, has more than quadrupled while the cost of living remains low with only three per cent inflation on the average. There are today almost as many rich Malays as there are rich Chinese and ditto for the middle class and the poor. In other words, a more equitable society has emerged, contributing to a degree of racial harmony.

These are the results and the record of the much-maligned NEP, perhaps the only socio-economic engineering project that has truly succeeded.

When Malaysia talks of becoming a developed country it is not thinking of industrialisation and per capita incomes only. Wealth and success have a way of undermining the moral fibre. Countries, which are regarded as developed now, show evidence of decay in societal values, which must eventually lead to their retrogression. In history, great empires and nations have emerged which looked as if they would last forever. But wealth and power corrupted them. The drive that built them in the first place was lost. With varying speeds they all collapsed and became mere shadows of their former selves.

The fall of the Roman Empire was due to overindulgence and loose living on the part of the ruling class. The pleasures of life, hedonism, replaced good human values. The affairs of state were neglected. Power corrupted the Romans in all ways. And the Empire regressed and collapsed.

We detect the same trend in modern developed countries. The virtues of working, the so-called Judeo-Christian ethics, are no more. Everyone wants to do less and less work for more pay and more leisure. Wages go up while productivity lagged behind. Competitiveness is lost.

When challenged in the market place by new industrialising countries, the developed nations resort to arm-twisting. The developing countries were told to work less and pay higher wages. Sanctions are threatened ostensibly because of human rights violation of pollution of the environment. Democracy is made an issue. If there is democracy, then the standards are said to be not right, and striction in trade.

Hedonism is pursued by all. The clothing worn, music and songs, films, dances, the graphic arts and everything about daily life is centred on sex and sensual pleasures. Gratification of the senses seems to be the main purpose of life.

Religions have been downgraded. If at all religion is practised, it has been so corrupted that it is hardly the religion that was originally preached. Thus religious authorities sanctioned homosexual marriages and turn a blind eye to live-in mates, casual sex, nudism and all kinds of immorality.

Perhaps the discarding of ' old values and the acceptance of absolute freedom reflect the advanced thinking of a very mature society. But developing countries like Malaysia, while desirous of being developed, are not convinced that the collapse of our moral values is good for our society. We want to retain our values and our standards of morality while achieving economic development in the material sense.

Perhaps Malaysia is too naive. Practically all-human societies deteriorate after achieving wealth, power and success. The cycle which empires go through is well known to everyone. Indeed, we are witnessing the deterioration of great empires and nations taking place today right before our eyes. But still we will try.

The peoples of European origins have devised systems of Government and management of the economy which have made them rich and powerful. At one time their empires smothered the globe, leaving no race or country free or outside their sphere of influence.

The achievements of the Europeans naturally captured the imagination of the peoples of other civilisations. The Japanese were the first to emulate the European. They not only restructured their system of Government but they even tried to set up European-styled empires. And European ways of organising business enterprises and doing business were copied wholesale.

Following the break-up of the empires after World War II, the newly independent countries naturally adopted the European model of economic management. The East Asians are perhaps the most adepts. They adopted the free market 'system of Europe while imbibing and improving on the technology. However, they retained their work ethics.

In a very short space of time, the East Asia nations had developed to the extent that they were able to compete with Europe. The retention of their work ethics apparently gives them the edge over the Europeans.

When the Europeans were on their way up they too had good work ethics. Work was regarded as honourable. Loyalty to the establishment was regarded as a good trait. Although the skills no doubt played an important part in the economic success of the West, hard work, loyalty and discipline contributed much to their achievements.

We in Malaysia cannot help but notice all these. Malaysia has embraced the free market economic system fully. No other country in the world has implemented privatisation as Malaysia has. The Government considers that it is its duty to ensure businesses succeed and are profitable. The whole Government machinery has been reoriented in order to support business activities.

And so today Malaysia has become one of the fastest growing countries in the world. We are elated and have become somewhat egoistic according to our detractors. It is pointed out that of late we have been building monuments. The world's tallest building, the world's biggest airport, a new administrative capital, new roads, new railways etc. etc.

But have we already started on the road to decay even as we announce our ambitious plan to become a fully developed country?

It would be satisfying to be able to say that we are totally free of the early evidence of decay. But it must be admitted that there are some signs.

Drug taking has continued despite severe anti-drug laws. Young people are given to loafing and the mindless pursuit of fun and pleasure. Loyalty to the establishment has diminished. Commercial crimes have increased. Corruption is still very much in evidence though not to the extent that is made out by foreign critics.

To achieve developed nation status, as defined by Vision 2020, it will be necessary not only to sustain good work ethics and morality but to actually roll back some elements of the national culture, which are not conducive to good progress. To do this not only must the legal system be adequate to deal with any breakdown in the ethical code but also an active campaign has to be mounted in order to define and propagate good values. These things will not be approved by Western liberals. But Malaysian society still believes that freedom should not be absolute, that Government has a duty to promote good values and to protect the people from the breakdown of moral and ethical standards.

These the Government is actively doing. Religions are promoted. Work ethics and cultural values are defined and deliberately cultivated. Slogans and campaigns are carried out, as are talks and seminars on subjects, which are no longer valued by the West.

We may succeed or we may fail. We may actually be doing the wrong thing. Wealth and success will probably undermine our morals anyhow. In the end we may decay like the others. But we are not going to just sit back and do nothing. We are going to try, and we are going to try very hard.

We think the market economy is a winning formula. We are convinced by it. But what is the good of prosperity, which is transient? What is the good of prosperity if in the end we are going to return to the status quo ante; to be back to square one, to be poor and miserable again?

Some societies, realising the deleterious effects of material wealth and power, have chosen to remain poor and, so they think, morally strong. But to us there is no virtue in poverty and weakness even if our moral fibre remains strong. We have experienced the indignity of poverty. Morally strong people going around with begging bowls and 'kowtowing' to the powerful and the rich hold no attraction for us.

So we will continue to try and achieve the impossible. We must, in order to retain our honour and dignity, our sense of values and our pride even when we become developed and exposed to the corruption of wealth.

Malaysia has succeeded so far, even if we say so ourselves. We think we can succeed in achieving our dream. God willing, by 2020 we will be a developed country in the true sense of the word - developed materially, spiritually and enduringly.

As Malaysia continues its transformation into a market-driven industrial economy, we see the important need to retain the very basic foundation of our success thus far, and that is our moral and cultural values. While we strive for progress, we must not lose sight of some of the basic positive aspects of our society - the Malaysian society. We need to assess the positive values of the developed nations, adopt and modify them perhaps and retain those of our own values and culture which we think are good and constructive.

Vision 2020 is not just about attaining a certain rate of growth over a specified period of time through the market economy. It is not about becoming a developed nation at breakneck speed. It is not about development at all cost, but development as we define it, progressive and more durable.

My hope is that in the year 2020, a leader from the next generation of the new Malaysian society would stand here and, with pride and humility, report on the status of the vision and that status is as what we have envisioned.