CASE STUDY
TOPIC:
REALITY OF MAHATHIRISKONOMISM
(End Notes and References are given in A.P.A Style)
BACKGROUND
OF MAHATHIRISKONOMISM
Mahathiriskonomism
is a thought concept in an effort to save the economy under crisis
and has proven successful. This model was a manifestation of idea and
an action plan used by Malaysia during the economic crisis, which was
an initiative
of
Tun Dr. Mahathir Mohamad during his reign as Malaysia's Prime
Minister. With experience in handling two great economic crises, in
1982 and 1997, the birth of an economic management under stress by
Tun Dr Mahathir can clearly be called as Mahathiriskonomism.
Therefore, the thought perspective and idea with the actions that
were used in 1997 was perceived as an important effective experiment
in handling the economic crisis which has defied western believes,
applied by the International Money Fund (IMF) and also the World Bank
under the Washington Consensus. The global economic crisis 2008 made
Malaysia an important subject as alternative management in economy
under stress. In this ever challenging world, no country in this
world can escape from menaces and threats. The threats that emerge
can come in various forms. One of the threats and menaces that can
manifest is in terms of economy and national development.
Currently,
in this globalised era, international institutions are also used as
instruments to threaten and menace a country’s sovereignty. The
westerner’s are supposed to use international institutions as
agents, design to shake the stability and present an impact to the
government of a country. Consequently the countries being threaten
are compelled to accept the injection from the International Money
Fund (IMF) which is perceived by some leaders and the public as a
proxy to
United
State and westerners. The IMF had succeeded in confusing the local
financial and political system. In the quest to defend the integrity
and sovereignty of Malaysia, under the leadership of former Prime
Minister, Y.Bhg Tun Dr. Mahathir Mohamad had successfully minimized
the impact of threats and maintained economic management and national
politic towards stability. Hence, this approach which can also be
referred as 'Mahathiriskonomisme' is identified as a successful
approach
that amazed the world, furthermore it is observed and studied not
only by economy and political researchers in Malaysia, but also
international researchers.
INTRODUCTION
Mahathiriskonomism
derives from the combination of the name 'Mahathir' from Dr. Mahathir
Mohamad, former Malaysian Prime Minister, with the word risk and
economy, in addition the prefix 'ism' is attach to suggest a thought
o
ideology
(Md. Shukri, 2007; Md.Shukri Shuib, Mohamad Faisol Keling and Mohd
Na’eim Ajis, 2008). Therefore the term 'Mahathiriskonomism' is
created, which by general definition is the paradigm and thought of
Mahathir concerning the economic risk that Malaysia faced during his
reign as Malaysia's Prime Minister from July 1981 to 31st of October
2003 .
In
this ever challenging world, no country in this world can escape from
menaces and threats. Threats that appear can come in various forms.
One of the threats and menaces that can manifest is in terms of
economy and national development. Currently, in this globalised era,
international institutions are also used as instruments to threaten
and menace a country’s sovereignty.
The
westerner’s are seen to use international institutions as agents,
design to shake the stability and present an impact to the government
in a country.
This
is indeed the current reality that the world is facing. Whether it is
true or not, it depends on the perception and view of each
individual. Remembering the economic crisis in 1997/98, many nations
of the world that was threatened by the crisis were a result of the
attack on their currency.
“Countries
like Mexico, Argentina, South Korea, Thailand, Malaysia and Indonesia
are among the countries that directly experienced the impact of the
attack on the currency. The threat on the value currency caused it to
fluctuate dramatically and became the source of economic chaos of the
country. Every planning from national budget, company, business and
also personal was troubled by the instability of the currency in the
international market”.
(Md.
Shukri, 2007; Md.Shukri Shuib, Mohamad Faisol Keling and Mohd Na’eim
Ajis, 2008).
Malaysia
and Indonesia became a literature review of the new form dilemma of
threat menacing national integrity and sovereignty. To defend
integrity and sovereignty of a country, the 'Mahathiriskonomism'
approach is perceived successful, respected by the world and now
studied by not only political economy researchers in Malaysia, but
even international researchers. Previously, there have been studies
explaining Mahathir's approach, such as Mahathirism, and also
Mahathironomics conducted by Prof Datuk Dr. Adnan Alias, and Md.
Shukri Shuib had proposed the new term to describe on Mahathir
success on handling economic crisis a‘Mahathiriskonomism’.
Therefore, this paper intends to present another observation on
Mahathir’s analysis of risk and economic challenge that Malaysia
faced during the financial turmoil in 1997/98.
MAHATHIRISKONOMISM
A REGIONAL MODEL
Mahathir
showed his willingness to take risk, which is to defy popularity.
Initially, around the peak of 1997/98’s economic crisis, on the 1st
of September 1998 he decided on a political action that was
unreasonable during a time the country is struggling with serious
economic disorder; he sacked the Finance Minister who was also the
Deputy Prime Minister and at the same time the number two leader
after him within the United Malay National Organization (UMNO) and
National Front (BN). Anwar Ibrahim was sacked and this was another
challenge that Dr. Mahathir had to handle
simultaneously
with the economic crisis that struck the country.
“Subsequently,
after creating a political dimension post Anwar, without the number
two, on the 2nd of September 1998 he decided on a drastic measure
that is restricting resource or instrument of speculation. For this
purposes, he prevented offshore activities by controlling selected
foreign exchange to stabilize short-term capital”.
(Md.
Nasrudin, 2000: 89; Md. Shukri, 2007; Md.Shukri Shuib, Mohamad Faisol
Keling and
Mohd
Na’eim Ajis, 2008)).
Dr.
Mahathir's decision was ingenious through his willingness to face
uncertainty and achieve
his
objective. He created the '3R' formula that meant relax, respect and
response.
With
this approach Dr. Mahathir was clearly relaxed in handling any ordeal
although sometimes it reduced his popular among the people and
voters, because he hold firm to what he believes true and right.
Respect means to respect and hope his leadership and country to have
self-respect, he gives response to every action made accurately and
implement the correct policy and action to enable the people and also
international observer not just seeing the success of his actions but
also to enjoy the success together. All along his administration,
there existed various national policies which include
elements
of politics, economy and social either individually or collectively.
The
policies that have been implemented during his administration such
as:
i)
Leadership by Example. The “leadership by example” policy was
launched by the Prime Minister on the 19th of March 1983. The
foundation to this policy success is the existence of an excellent
leadership that can be of exemplary.
ii)
Clean, Efficient and Trust is a philosophy that believes noble
values help increase quality, productivity and credibility and also
trigger the spirit of working efficiently. This policy was launched
in April 1982.
iii)
Islamic Values Application by application of Islamic values aims to
form a happy country and to produce self-respected Malaysians
respected by other nations
.iv)
Malaysia Population towards 70 Million.The policy to increase the
population to 70 million people had been suggested by the Prime
Minister in the UMNO’s Grand Assembly in September 1982. He
believes that with a total population of 70 million within 115 –
120 year, the country would be able to be more successful. The
suggestion was again proposed during the presentation of
Malaysian
Planning on 29th of March 1984. In the efforts to achieve this
objective, the government has unveiled several strategies, such as
tax policy and labor benefits providing benefits to
families
having 5 children.
v)
Privatization Policy. Privatization policy was first introduced in
the year 1983 after the Malaysia cooperation policy. Through this
privatization policy, the government had transferred power, interest
and investments to certain private sector. By privatizing specific
services, the government believed that it would enable to increase
the sectors effectiveness and efficiency.
vi)
Malaysian Cooperation Policy. Malaysian Cooperation Policy was
proposed by the Prime Minister Dr. Mahathir Mohamad during the
launching of the National Institute of Public Administration (INTAN)
on the 25th of February 1983.
This
policy aims to stimulate the private sector’s active engagement in
national development. The key strategy of this policy is to enhance
ties between public sector and private sector in various fields. The
relationship among public and private sector will be improved which
will help contribute to national development.
vii)
Vision 2020. Dr. Mahathir, when presenting a paper work entitled
“Malaysian: The Way Forward” at the first conference of Malaysian
Trading in Kuala Lumpur on the 28th of February 1991, stated nine
main challenges that Malaysia needed to face to become a new
industrial nation and a developed country in year 2020. In year 2020,
Malaysia will be a united country with citizens who are confident,
high moral value and strong ethics, democratic, liberal and
compromising, caring, fair in terms of economic distribution,
progressive and prosperous and have full control over the
competitive, dynamic, active and viscous economy.
viii)
National Development Policy (DPN). National Development Policy (DPN)
aims to attain a balanced development in establishing united and fair
society. DPN stresses on to the growth with fair distribution
enabling every Malaysian to participate in any principal economic
activity. DPN is a continuity of the New Economy Policy (NEP) with a
goal to eradicate poverty and reform society.
Simultaneous
economic crisis with political challenges that Mahathir faced was
also similar to the situation in Indonesia. At the time of economic
crisis, the most populated country in ASEAN was also struggling with
reformation.
“In
Malaysia, Anwar also launched a movement comparable to Indonesia and
used the same slogan. In Malaysia, in the development and prosperity
creation perspective, Dr. Mahathir had put a strong foundation to the
national economy system as one of
the
main priorities in Malaysia”.
(Md.Shukri,
August 2007: 50; (Md. Shukri, 2007; Md.Shukri Shuib, Mohamad Faisol
Keling and Mohd Na’eim Ajis, 2008)).
In
the past, politics and military were the main priority of a country,
but now economy has become a source of threat to the national
security of a country if it is not manage and examine thoroughly
and
strategically.
“In
recalling the downfall of the currency in 1997/98, Dr. Mahathir had
declared war and economy
emergency
by setting up National Economics Action Council. He introduced a
method whereby the post as Finance Minister is hold by the Prime
Minister and elected prominent local and foreign economic experts to
tackle the economic problem”.
(Md.Shukri,
August 2007: 50; (Md. Shukri, 2007; Md.Shukri Shuib, Mohamad Faisol
Keling and Mohd Na’eim Ajis, 2008)).
This
decision was taken to enable the problem relating to the national and
international economic system could be monitored and take appropriate
action so that the country is not unharmed in stability and
prosperity.
FEATURES
MAHATHIRISKONOMISM
Mahathiriskonomism
is generally Mahathir's thoughts on dealing with the economical and
political issues especially in facing national sovereignty threats
during the economic crisis in 1997/98. It is identified that there
exist several fundamental features of Mahathir’s thoughts in
determining a decision, according to Prof Adnan Alias the basis of
Mahathir's thoughts covers elements as follows:-
First:
Back to basic which is to question the fundamentals and find the
simplest explanation to solving a problem.
Second:
Confront the flow, Dr. Mahathir dare to propose an idea that is
obviously different from the trend or conventional.
Third:
Make the right decision, this is usually a characteristic of a
successful entrepreneur, every decision is not only base on the right
or best way but also stresses the decision’s need to be
materialized until fruitful.
Additionally,
Mahathiriskonomism also include the courage to risk as a key element
in achieving Mahathir’s action in his response to face the
financial crisis. Mahathiriskonomism's features also include elements
of idealistic thoughts and actions and sometimes transcend time.
Mahathir's thought are visionary and idealistic with strategies and
specific distinctive developed nation in year 2020. Mahathir's
thoughts can also be characterize as responsive to time or
environment, and far from being futuristic. Mahathir's thought are
able to adapt risks of political economical challenge,
this
is clearly seen through his idea by suggesting measures especially in
anchoring the value of Malaysian Ringgit as RM3.80 to AS$1, imposing
capital control that was labeled as an innovative financial
instrument by Tan Sri Nor Mohamed Yakcop who was a Malaysia’s
Finance Minister, which was the most significant measure in ensuring
stability of Malaysia’s financial system
Measures
that were carried out in the administration of Dr. Mahathir through
the National Economic Action Council enabled Malaysia to face
foreign speculator's attack which have capitals of over AS$500
billion. Moreover, according to Tan Sri Nor Mohamed Yakcop, Malaysia
is capable of providing a model that is the opposite of IMF's package
to countries borrowing money from this monetary fund; that is with
not raising the interest rate.
Malaysia
instead lowered the interest rates to increase the number of
liquidity or the amount of money in the market to stimulate economic
growth, as a result the IMF loosen the conditions by granting the
countries lower interest rates to inject liquidity to their economy
so that Malaysia is not seen superior to those countries assisted by
IMF. A vision with merely idealistic idea can not guarantee in
raching an objective, but with appropriate strategies and specific
techniques, Tun Dr. Mahathir was able to response to the situation.
According to Ahmad Naim in responding to the technology progress,
Multimedia Super Corridor was created and had since been develop in
tandem with the current technological advancement. Dr. Mahathir is
sharp in creating a situation and being able to provide an objective
of his leadership with a clear action plan. This is what it called as
leadership intelligence using the framing technique that mean that a
leader possesses the leadership language and give directions.
“This
definition emerged and is used commonly after Dr. Mahathir’s
sayings such as “We
can”,
“Malay tend to forget”, “The struggle is not over”. Other
popular mottos in his effort to handle the economic crisis of 1997/98
are “currency speculator”, “foreign speculator” and had also
embedded patriotism though the slogans like “Our country is our
responsibility” and “for you Malaysia”
(Md.
Shukri, 2007; Md.Shukri Shuib, Mohamad Faisol Keling and Mohd Na’eim
Ajis, 2008).
THE
PERSPECTIVE OF MAHATHIR’S ECONOMY GAME PLAN
Globalization
comes with an open market. The globalization concept widely used
around the world had also given the birth to the free market concept.
This makes globalization work in tandem with financial and economic
goals. While studying globalization, usually it can also be viewed as
a world threat. Dr. Mahathir perceives globalization and free market
progression as some superpower’s weapon to disseminate their
hegemony. The United States and other develop
countries
have succeeded in making globalization as an agent to propagate their
market and economical power beyond the boundaries of their country.
“Dr
Mahathir explanation of globalization can be viewed as a caution for
Malaysia and other countries in the region to understand and be
aware of the threats behind the concept of globalization and free
market that the West have proliferate”.
(Chandran
Jeshurun,1993:72; Md. Shukri, 2007; Md.Shukri Shuib, Mohamad Faisol
Keling and Mohd Na’eim Ajis, 2008.)
“Free
market means that those who are bigger, stronger and have more
capital are those who will conquer. The citizens will not receive
special treatment. Foreign companies are free to enter any country to
compete with the local business and bank. The small local companies
will be destroyed by the big companies (western companies) and we (in
the local country) will be merely low wage labors working for them.
They promise that it will all depend on merit and not through an
unjust
competition
since they are the biggest and most experienced. And finally they
will conquer every aspects of the local economy.”
(Berita
Harian, 20th of June 2003)
Dr.
Mahathir also demonstrated that economical instruments can become
weapons to menace a nation’s stability. This is validated by Stuart
Harris an emeritus professor at Australian National University. He
mentioned that through globalization, the financial system is the
starting point that causes an economy crisis. In this context, it is
evident that through the economy and financial system, it can be
utilize as weapon to destroy a nation by disturbing its stability via
a
menace
to one of the economic elements which can trigger a social disorder
if the economy system becomes uncontrollable. In terms of
nationalism, the concepts of regional and globalization can be
perceived as an agenda that can inflict threat towards the
sovereignty of a country. Globalization is especially assumed as the
source of destruction. It can occur very fast if the country is
unprepared to receive the free competition not only in the market but
also in the free politics, economy and social which is highly
connected with comprehensive security. This is because, in this era
of globalization, the competition does not only happen outside the
boundaries but also involves domestic competition inside the country.
“An
imbalance competition between the rich and poor, the strong and weak
will be an unjust competition. Additionally, in this global era with
the notion of globalization, a rich world and foreign company who
possess large capital will dominate the market and consequently
monopolize the industry. In this world of globalization, monopoly
will eventually prevail. The result is that the receiving country
indirectly, without regulation control and protection from the
government will kill the national company. This is due to the
inability of the national company of a country to counter all
completion with different quality and price”
.
(Rosazman
Hussin, 1999:143-159).
In
the context of nationalism, it is normal for a country to defend the
position of national company. But in this globalize era, very few
people, including the leaders, view the protection of national
company as important. This is the drawback of globalization seen
through the viewpoint of nationalism. IMF had confessed its global
mistake. But the negative effect should be fixed even though it had
destroyed markets and capitals. Malaysia and other countries like
Indonesia cannot
avoid
this global threat.
“In
comparison, Malaysia had succeeded in defending the overall
sovereignty, which is rejecting the injection of money from IMF
sponsored by the West. Dr. Mahathir introduced the move to loan
domestically, to stimulate the economy and encourage development”.
(Md.
Shukri, Ogos 2007:51).
Institutions
such as Employees Provident Fund (EPF), PETRONAS and other related
government institutions became the centers of credit to recover
national economy. The views from world finance and economy experts
also supported Malaysia’ move under the leadership of the then
Prime Minister, Dr. Mahathir. Prof. Joseph Stiglitz and Prof. Steve
Hanke explained their critical opinion on the expansion of global
market and IMF threats to the sovereignty of a country in this era of
globalization. Indonesia and Malaysia was chosen as an interesting
model study case. Here it has clearly demonstrated the importance of
the government’s role in handling the global threat toward the
nation’s politic, economy and social stability. These three
elements known as the global three functions namely politic economy
and social are important elements in defending the
security
and sovereignty of a nation.
THE ECONOMY AS A
TOOL AND A THREAT
The
Asian crisis of 1997-98 had clearly transformed Indonesia and
Malaysia. Economically, socially and politically the economy crisis
and turmoil presented a significant effect. This change is not only
acknowledged by Malaysian and Indonesian leaders but also by the
Australians who is a neighbor of these Southeast Asian nations. Paul
Keating, the former Australian Prime Minister (1991-1996) in his book
entitled “Engagement”, said:
”Then,
from the middle of 1997, the Asian economic crisis presented
Indonesia with the sharpest economic decline in its history, one of
the steepest anywhere in the world in modern times. The economy
shrank by 20 per cent”.
(Keating,
2000: 148-147)
Unemployment
more than doubled. Inflation soared by 80 per cent. It was a crisis
unlike any Indonesia had faced in the past, because it was taking
place in a country that had been transformed. In 1966, when Suharto
came to power, agriculture made up half the economy; now it was just
20 per cent. A large middle class of perhaps 1.5 million people had
grown up. Most importantly, community expectations had changed.
“As
a result of thirty years of development, the people of Indonesia
expected their own lives, and the prospects for their children, to
steadily improve.”
(Keating,
2000: 148-149)
MAHATIRISKONOMISM
SAVED MALAYSIA
For
Dr. Mahathir, in his game plan to ensure Malaysia continuously will
be able to succeed, the economic elements are the major foundation,
with the economic progression, prosperity will be achieved, thus
directly will ease the nation and encourage the development of
business arena. Additionally, with a peaceful environment, the
political stability will be established
It
is no wonder that various policies on development and progression
were stress by Dr. Mahathir’s administration. Malaysia is not
immune to threats that Indonesia had experienced, the economy turmoil
of 1997-98 had presented several problems to the country.
“As
describe by Md. Shukri Shuib (2007) in his article on
Mahathiriskonomism, the outcome of Mahatiriskonomism revealed the
bravery of Dr. Mahathir in taking risks concerning economic matters
to generate absolute sovereignty. In brief Mahatiriskonomism had
saved total sovereignty even though the forces of threats were
troubling Malaysia’s global three functions”.
(Md.
Shukri, 2007; Md.Shukri Shuib, Mohamad Faisol Keling and Mohd Na’eim
Ajis, 2008).
“According
to Weller and Hersh (2002), the main problem of Asian countries is
the drastic capital flow. For 20 year the capital market had been
flowing without control. This is evident through the increment of
foreign capital from developed countries to developing countries.
This increment can be compared to the increment of 1980 that only
experience capital flow of US$1.9 billion to US$120.3 billion in
1997”.
(Md.
Shukri, 2007; Md.Shukri Shuib, Mohamad Faisol Keling and Mohd Na’eim
Ajis, 2008).
This
clearly displays the financial trouble in the domestic market of
Asian countries including
ASEAN
and Malaysia, which is the inability to hoard the drastic foreign
capital out flow like what the foreign investors executed during the
Asian financial crisis 1998. And amazingly, as soon as the Asian
countries experience bankruptcy, the acquisitions of foreign
companies from foreign investors have attracted new investors. In
1998 alone, there was still foreign investors interest to invest up
to US$56 billion in the domestic market of Asian countries. Malaysia
identifies IMF not as an alternative for assistance in resolving the
crisis. Japan as a friend was the alternative for Malaysia to assist
the economic crisis. It is no wonder why Dr. Mahathir believes that
East Asia has the potential in strengthening the regions market.
Through ASEAN+3 (Japan, China and South Korea), and the collaboration
of Southeast Asian and East Asia, Japan has the capability to take
the role as regional super power. According to Dr. Mahathir, Japan
through the success of Malaysia in managing the economy, had
guarantee bon that Malaysia circulated in the international market.
This was personally mentioned by Dr. Mahathir confirming that in
times when Malaysia was in need to recover the economy crisis, Japan
had offered its help.
Malaysia
according to Prof. Stiglitz is ..
“… only
Malaysia was brave enough to risk the wrath of the IMF; and though
Prime Minister Mahathir’s policies- trying to keep interest rates
low, trying to put brakes on the rapid flow of speculative money out
of the country- were attacked from all quarters, Malaysia’s
downturn was shorter and shallower than that of any other countries”
(Stiglitz,
E. Joseph, Globalization and its Discontents. Australia 2002:
93).
Stiglitz
also added,
“Malaysia
was severely criticized during the crisis by the international
financial community. Though Prime Minister Mahathir’s…many of his
economic policies were a success”
(Stiglitz,
E. Joseph, Globalization and its Discontents. Australia2002: 122).
IMF
also recognize Malaysia’s success in solving the economy and
financial crisis of 1997-98, which they had announced clearly during
the annual Group of Eight in Evian, France on the
endof
June 2003. The Chairman of IMF, Horst
Kohler
stated:
“Malaysia
has recapitalized its banks, its system is more transparent and the
country has been able to deal with the non-performing loans”
additionally, “Generally, Malaysia has improved the business
climate”
(Kaur,
2003).
Even
the former IMF chairman, Michael Camdessus, in Paris a week before
said “They are
(Malaysia) within the rules of the IMF which has no objection”
(New
Straits Times, 2003).
Mahathiriskonomism
approach is a success, this is because several years after the crisis
Malaysia has recovered and improved the economy climate. In June
2003, Bank Negara Malaysia announced that the growth of NGP was 4%,
revealing that Malaysia’s economy is improving. This also
supported
the statement announced by the Minister of International Trade and
Industry, Dato Seri Rafidah Aziz, that until April 2003 Malaysia had
recorded a surplus in the international trade valuing of RM5.77
billion (US$1.52 billion).
Furthermore
it enlightened that without the help of IMF, known to obstruct the
financial freedom of loan receiving countries, Malaysia accomplished
success with its diversified resources. Hence, what Malaysia
implemented in the economic crisis 1997/98 is now clearly accepted
globally as an option to save the world economy from deteriorating.
The developed world has also indirectly accepted Malaysian thinking
and actions derived from Mahathiriskonomism applied as an economic
policy during crisis. The success of the Mahathiriskonomism’s model
can visibly be seen through
excellent
record achievement showing sustainable economic managerial
performance.
“ It
is evident, where in 1985 when the country faced critical economic
state with a rate of just negative 1 percent in growth, Malaysia
could overcome it and boost the growth to 1.2 percent and continue
to increase and hit 8.7 percent” .
(Md
Shukri Shuib, Mohamad Faisol Keling and Mohd Na'eim Ajis, 2008).
“Mahathiriskonomism's
legacy of success has clearly been stated by Datuk Tajuddin Abdul
Rahman, Barisan Nasional Parliament member of Pasir Salak, affirming
Tun Dr. Mahathir’s vast experience in economy which has proven
successful in treating the economic stress in 1997 and has brought to
Malaysian’s success and therefore proposed that Dr. Mahathir be
appointed as chief of National Economic Council”.
(Utusan
Malaysia, 21 November 2008: 8). A repetition of the economic crisis
occurred which later hit Malaysia as a result of the regional
Asia-Pacific crisis in 1997-98, again
Malaysia
with the distinctive model successfully encouraged positive growth
where the decrement hit negative 7.5 percent in 1998, Malaysia with
its 'Mahathiriskonomism' model that combines elements of Tun Dr
Mahathir’s ideas and thoughts in taking economic risks have
successfully brought Malaysia to a growth as much as 5.8 percent. The
growth in 1999 was an increase of 13.3 percent from the previous
year. Now, with a growth estimate still at 5 percent this year and
3.5 percent next year, Malaysia is still seen solid and is able to
face crisis. The Malaysian Deputy Prime Minister and Finance
Minister’s statement, Datuk Seri Mohd Najib Tun Abdul Razak that
the continuous lesson achieved due to a decade of economic crisis has
caused Malaysia to place a concrete economic base which according to
him 'continuous implementation of financial reformation since 1998
has made the country's financial sector long lasting' and is
actually a management style that handles economic stress in the
context and model implementation of Mahathiriskonomism.
“Malaysia’s
effort under Dr Mahathir's leadership in 1998 that had restructured
the financial institution by combining the involvement of 71
institutions with a capital between RM13.2 to RM6.6 billions to only
allowing banking operation to just nine institutions, now enables
each financial institution to have capital average of RM38.3
billions”.
(Malaysian
Business, November 16, 2008: 27).
“Profit
of financial institutions have been positive where before tax profit
in 2007 were on average RM17.7 billions compared to only RM7.4
billions in 1997”
(Malaysian
Business, November 16, 2008: 27).
This
altogether shows that Mahathiriskonomism has strengthened the
structure and domestic financial system which is continuously
feasible until today. In generating the financial industry's
competitiveness, the style or pattern in the agenda has gained
profit, where formerly in 1997 it was merely dependent on profit
based on lending especially corporate loans that moved in 2007 to a
more based upon profit from diverse source that balanced the profit
by loans. This gives a multi sources move to financial institutions
which directly will profit people who saves their money in the
country’s domestic financial institution. Apart from that, having
learned that currency can also be made as a weapon and a cause of a
country’s economy downturn, the effort to strengthen the ringgits
role in the local market was implemented and successful. The strength
of local financial system is the fruit of Mahathiriskonomism's
management style which has also made Malaysia possess bank assets and
financial institution including insurance with 90 percent which is
based on ringgit’s denomination that is in local currency form
namely Ringgit Malaysia and has enabled protection from the risk of
devaluation of dollar (Berita Harian, 21 November
2008).
Malaysia’s
move modeled after the futuristic thought of Mahathiriskonomism's
paradox clearly embeds the application in the national economic
management and has visibly save the country’s financial system and
market from a crisis that has taken place in the developed countries
and the U.S financial market today. Tun Dr. Mahathir leadership
clearly states that in any market, economy and the development of a
country, the function of a financial institution such as banks and
public
funds
must be protected and feasible. In the Malaysian context, compared to
the U.S, the failing of poverty level in Malaysia which has only a
population of 27 millions, is not as great as what that largest
capitalist country is facing. The record obviously shows that
Malaysia even with only a developing country status, can afford to
create a success in reducing poverty rate which is somewhat
astounding. From a poverty rate of 49.3 percent in 1970 Malaysia has
successfully reduced the rate to 16.5 percent in 1990, and the rate
is continuously decline to only 3.6 percent in year 2007, compare to
its decrement of 5.7 percent in year 2004.
CONCLUSION
It
is clear that through globalization the threat towards a nation’s
sovereignty exists and can happen. The role of United States as the
source of national threat through economy that can spread to the
nation’s politics, social and security is evident. United States
role to use their regime and other global institutes are rational and
concrete. Economy is regarded as a basis of national prosperity and
should always be reminded it can also be the basis of national
sovereignty destruction.
With
the national perspective of Dr. Mahathir thoughts, the national
economy and development to achieve absolute sovereignty will be
difficult to perturb by global threats. The Mahathiriskonomism
approach had save Malaysia even though initially Dr. Mahathir’s
decision was strongly disapproved. But eventually Malaysia succeeded
in recovering the economy and overall national sovereignty. Dr.
Mahathir was the main actor in handling the nation’s economy
turmoil.
Thus
his effort and approach had proven successful and respected
worldwide. Malaysia should be proud and bless to own such a brilliant
thinker. The sustainability of Malaysia’s sovereignty from global
threats should constantly be protected. The development of Japan
utilizing the Meiji Recovery program in 1868-1912 has been
continuously studied and analyzed to this date. Thus Malaysia should
be proud with Mahathir Recovery as the foundation to be a developed
country in 2020. Mahathir’s approach that dares to take risks in
the economic environment has made Mahathiriskonomism a successful and
worldly recognized approach to solve risk during politic, economy and
social trouble threatening the stability of a country.
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