Softly, Softly Go Reforms

Producer: Michael Vatikiotis , S. Jayasankaran
First broadcast: 27 May 04, Far Eastern Economic Review

Abdullah admits that reform has to be practical as well as desirable, and he wants to make sure that he hires top people as he meets his political obligations.

Review Chief Correspondent Michael Vatikiotis and Kuala Lumpur Correspondent S. Jayasankaran sat down with Abdullah Badawi at his sumptuous residence in the recently created seat-of-government city of Putrajaya near Kuala Lumpur. The interview in full appears below:

Q: Prime Minister, tell us in more detail about your plans to reform the government-linked companies [GLCS].

A: The GLCs today in terms of numbers are about 8% of the companies registered on the stock exchange on the main board. Their contribution to the capitalization of the stock exchange is about 34%. A lot can be done to increase their performance to make these companies do better. That's what I believe, that's what I've been talking about - the importance of a culture of high performance and a high-performance index. This means we have to get bright people for the job and for the CEOs especially. We need people with the necessary experience, who are well trained with qualifications and a track record of proven success. Khazanah [Khazanah Nasional, the federal government's investment arm] will play a very important role, because these companies are in Khazanah. We're hoping at a later stage to transfer the MOF [Ministry of Finance] incorporated shares to Khazanah ... and with that Khazanah can play a more important role.

Q: Traditionally, people have to come to expect to be rewarded for politcial loyalty by obtaining seats on the borards of these comapnies, so you could upset the apple-cart with what you plan to do.

A: I know, but as far as I am concerned ... we cannot compromise on this. It is important that good people must be appointed to head these companies and also to sit on the boards. I have already explained to the cabinet about what our plans are for the GLCs ... If politicians are appointed, the first criterion is that they have to be professionally qualified.

Q: Do you think the Singapore model is the right way to go?

A: I know people have started to make comparisons with Temasek and let them do it. I believe we have tremendous assets and very good companies. Surely there are steps we can take to improve the performance of these companies. It all started when we were talking about the importance of changing the mindset, the importance of excellence, glory and distinction. This means concentrating on improving the human factor, improving the man. He's the one that gets things moving, not these beautiful buildings, neither these beautiful cars. If we can get the right kind of person, a lot of things will improve. A lousy woodcarver will ruin an excellent piece of wood. Where are the companies, what can be the catalyst . . . we're looking at our assets again.

Q: Would Khazanah close down any of its loss-making assests?

A: We'll have to see. If there is no way for a recovery, then it's useless to continue propping up something that is continually making losses. But if we can re-engineer it, then of course we'll try.

Q: What's the first step you'll take?

A: We have to get the right people for the job. We want to give professional management more say in the running of the companies. We don't want to be interfering in the running of these companies.

Q: Has the Anti-Corruption Campaign ground to a halt?

A: No, it's going on. But I can't be talking about it every day as if I'm going to be a one-issue man.

Q: People talk about the need to chaneg the political culture in UMNO [United Malays National Organization] to combat corruption. Shouldn't senior cabinet positions go to the most qualified people?

A: That's easier said than done, and it's just not practical. The person leading the government must also be leader of the party. At the same time, of course, we try our best to get good men in the government. I know I have been criticized from all quarters for not doing much to change the entire cabinet. But I am not bringing in a new regime. There's only a change of leadership. Many of the people who are with me today, have been with me for many years. And you will notice that there are 14 new faces in the cabinet. Many are young and talented. And if you look further down at the deputy ministers, there are so many young professional people as well as people who have been successful in the corporate world. Look, I also have 14 political parties to take care of. Every one of them wants representation-that's what we call power sharing. I imagine that by the year 2020, the government at the time will be led by a new generation completely.

What I'm doing now is dealing with the software, I'm dealing with the people. Look around you. You see we have fantastic buildings here in Putrajaya and all the facilities that have been put in these buildings. But I want the men and women working there to be first class. If the infrastructure is first class, the people working there must also be first class. They are the ones who make things move, not the beautiful buildings. What I am creating now, with this move to change the mindset and encourage excellence, glory and distinction, we can go beyond 2020.

Q: What's your view of Proton, the national car manufacturer? There appear to be differing views between Dr. Mahathir and the government.

A: Dr. Mahathir is only the adviser and he knows that. He is free to express his opinion. Finally a decision will have to be made. If his idea is acceptable, then we can accept it. If some changes have to be made, then we'll make those changes, not exactly the way he wanted. An adviser is an adviser.

Q: What do you see as the driver of Malaysian growth?

A: Our economy will triumph on the special niches we are going to create. Our economy cannot specialize in everything. We have to opt for something that we have the edge in and can develop our competitiveness. Like in the resource industry, in palm oil - there's a lot more that can be done. Now we are emphasizing a lot on biotechnology and the modernization of agriculture. When we talk about agriculture we're dealing with wealth, and when you talk about biotechnology you have technology that can produce higher-yield, more productive agriculture.

We have to become a country that has very strong domestic consumption. We cannot depend entirely on the foreign market to consume entirely all that we are producing. At the same time, in terms of human resources, in terms of manpower, I would like Malaysia to be recognized as a country with a very strong and very capable workforce. We must go for value-added and for high tech. The services sector is another area - we're looking at developing an education hub, health services. Also we hope to see more and more multinational corporations basing their operations here.

Q: Will you provide more incentives?

A: Well, we already have a lot of incentives. I believe that incentives need not necessarily be monetary. There must be an environment that is conducive to doing business at a low cost. The cost of doing business must be progressively pushed lower. We can do this by improving the quality of public services.

Q: How do you explain the decline of Malaysia's Islamist polictical party, Parti Islam Se Malaysia?

A: We took a stand and decided not to do the same things that Pas wanted. We talk about Islam that is progressive, and Muslims must be able to perform better and acquire knowledge. Pas challenged me by saying, "Here is this fellow with education in Islamic studies, who is the grandson of an ulama, so we want him to explain his stand on Islamic issues." I didn't buy that. I just said that as far as I'm concerned, this is the role of Islam in Malaysia.

Q: Dr. Mahathir once said that he considered Malaysia an Islamic state. Do you agree with this?

A: I don't want to get into things that promote controversy. What has been said has been said. I never said anything against it after that. I did not undo it. But what we must do is make sure, yes this is Negara Islam [an Islamic State], but this is the kind of Islam we want to practise in Malaysia. I am emphasizing more on what needs to be done. When Dr. Mahathir says this is an Islamic country, then people go yes, but what next, what are you going to do? Will we follow what Pas wants to do?

Q: So you don't want to go down that road?

A: Why should I go down the road that Pas has chosen because they are going down? I don't see Pas coming back as a political force.

Q: Sometime in January you said that all contracts will be open tenders, but so far there has been no public announcement of an open tender.

A: It depends on the kind of project you want to do. There are some projects that have already been committed to and we cannot tear up the contract. Neither can we tear up the letters of offer. Some projects have been postponed-many projects have been postponed. And some of these projects happen to be projects for which a letter of intent has been issued, which is something that has given me a problem.

Q: What's your stand on mega projects?

A: I will not have another Putrajaya-there cannot be another Putrajaya.

Q: Once, when asked what Malaysia's credo should be, Dr. Mahathir said he thought it should be "Think Big." Would you say now that's the Malaysian credo?

A: As far as I'm concerned I like the word "Malaysia Boleh" [Malaysia Can].

Q: You talk about progressive Islam, yet the wider world is still worried about radical Islam in SouthEast Asia.

A: What you talk about has been there for a very long time. Some Muslims now who think of another kind of agenda, a bigger agenda for Islam-these people hijack Islam. If we have solved this problem, then the radicals now would have no people to exploit. Areas of backwardness and poverty are fodder for radicalism. Deprivation and alienation, discrimination, all this promotes unrest. Anybody who comes in and offers something that will draw attention to their demands, they will support.

Q: The Thai government alleges that Malaysia is offering a safe haven for rebels in Southern Thailand

A: We don't want to harbour the enemies of our neighbour. Why should we?

Q: Do you think the idea of setting up a caliphate in SouthEast Asia is a credible threat?

A: No, I don't think it is a credible threat. People talk about a surging tide of Islam, a resurgence of Islam-and then of course there is no such thing as a neo-Christian movement?

Q: Following the relevation that a Malaysian company exported parts that could be used to make nuclear weapons, is the U.S. asking for export controls for dual-use products?

A: They have been asking. They came to me and discussed this. We have to think very carefully. Such a move will have an impact on the private sector and we don't know if it will be negative or positive. The U.S. would be very happy for us to have export controls, but that is up to us to decide.

Q: The U.S. also wants to offer help in patrolling the Malacca Strait.

A: I think we can look after our own area.

Q: Are you worried about a slowdown in the Chinese economy and its impact on Malaysia?

A: The economy is a big economy. If any upheaval were to happen there, we would be in trouble. I hope China will have a soft-landing and allow it to make whatever adjustment is necessary. China is aware of its size, and the impact its economy is having on the area.

Q: Do you expect more military cooperation and dialogue with China?

A: I don't think we can exclude that from the possible things that China may want to do. China is already involved in the Asean Regional Forum, also part of the Asean process, and is involved in Apec [Asia-Pacific Economic Cooperation forum]. China is also very concerned and is playing a role also on the issue of the North Korea. So they are playing a security role. China is also a permanent member of the United Nations Security Council and there are certain responsibilities, which she cannot shirk. So how the leadership will want to handle and steer China depends a lot on how they perceive things happening in this region. As far as we are concerned, our relationship with China remains strong and I believe that it is also expanding and we see China still as a land of opportunity for us.

Q: Relations have got better with Singapore. Is it true that Malaysian companies will be allowed to buy into more companies in Singapore?

A: There is going to be reciprocity in the way we treat each other as far as these deals are concerned.

Q: Do you see any bilateral problems with Singapore down the road?

A: I am hoping we can resolve these bilateral issues. We're already doing a lot of things very quietly. Let's hope that the relationship will continue to improve.

Q: Do you talk regularly with Prime Minister Goh Chok Tong?

A: Well, I have not spoken to him for quite a long time already. But we must make sure our businessmen talk to their businessmen, and at the foreign ministry level we hold talks. One thing I can say is that the comfort level has gone up.

Q: Are you enjoying the job?

A: I do, yes. I enjoy the job.

Q: Do you feel that you're in the shadow of your predecessor?

A: No. Dr. Mahathir has been very considerate. He has allowed me to do whatever I wanted to do. I do not call him - there was one occasion, that's all. Very, very rarely. Why should I disturb him?