A Doctor in The House: A Memoir of Tun Dr Mahathir Mohamad (43 page)

Elsewhere, the story was roughly the same. At the time I rejoined UMNO, these failures were unknown to me and the public. We were all very excited that the NEP was going to correct the imbalances between the wealth of Malays and non-Malays, so we pushed on with the SEDCs. Good intentions seemed sufficient, and their successful implementation was taken for granted.

I had continued with my medical practice while observing the performance of the NEP and waiting for the General Election. To increase Bumiputera shares in the corporate sector, it was decided that companies, especially new companies, should allocate 30 per cent of their shares to the Bumiputera. At the time a number of new companies were being floated on the stock exchange. Almost immediately after the Initial Public Offer, share prices would appreciate. Those who were lucky enough to be allocated such shares immediately sold them. It was like getting free money. Naturally, there was a rush for these IPO shares. I applied for shares to the Ministry of Trade and Industry, not for quick resale but to hold as an individual and contribute to the Malay stake in the country. I was very disappointed upon receiving a reply that the shares were only for the Bumiputera who had registered with the Ministry. The officer gratuitously informed me that I could apply for the non-Bumiputera shares in the usual manner, that is, by filling the application forms which came with the company prospectus printed in the newspapers. The number of non-Bumiputera applicants was naturally huge. I later learnt that about 10,000 Bumiputera applicants had registered with the Ministry.

Yet, true to past form, few of them kept the shares they were allocated. Most sold them to non-Bumiputera buyers to cash in on the initial price appreciation. They would then repay the banks the money they had borrowed to acquire those shares and pocket the difference. This, of course, did not help increase the percentage of shares in the nation’s wealth held by Malays. Had the profits from their sale been reinvested to expand existing businesses or to buy more shares, that might have been defensible. But mostly, the money was spent immediately on luxuries, which gave them the symbols of status in modern Malay society. The cycle would then resume, and shares acquired would again be sold. The Bumiputera regarded this as a matter of right and not as a way to increase their stake in the nation’s wealth. Everyone watched with eager anticipation for new public offers. The objectives of the NEP seemed to be of little concern to the beneficiaries and even to officials.

The NEP was actually a sound policy which would have reduced the disparities between the Malays and the non-Malays. But too many Malays abused the special treatment accorded them and the NEP achieved only minimal success. In fact, as the Malay recipients of this largesse sold to the Chinese, this particular exercise actually 
increased
 the disparity between the communities. The Government was trying to help make a success of the policy to correct the imbalances, but all that the Malay beneficiaries could see was an opportunity to enjoy a short-lived windfall. They could not have cared less if the NEP failed and were not concerned about the larger picture. It was very frustrating. They managed to find a way to abuse everything devised to help them improve their economic situation. The Government might put wealth and shares in their hands, but doing so was futile without changing the familiar old Malay mindset.

There were, of course, some successes. Today there are Malay contractors who can go abroad to build complex infrastructure projects. At home they have gone into manufacturing, producing components for cars. A number have emerged as successful bankers. The papers carry the names of successful Bumiputera executives who often command high salaries, and some even manage large multinational corporations abroad. But the success rate is low considering the concerted and consistent efforts of the Government. Here again the exception proves the rule. Those who have succeeded have done so not simply because opportunities and resources came their way but also because, when such chances came, they showed themselves capable of creating a new mindset.

To remedy Malay disadvantage and to raise the level of Malay initiative and entrepreneurship, what we need is a carrot-and-stick approach. When I was Prime Minister, I often gave talks at Bina Negara (nation-building) camps. I would spend two straight days on my feet, talking from morning to night, trying to explain what being successful required. Wise words fell like water upon a duck’s back. Rather than hear what they needed to accept, many preferred to say why it was unpalatable. Age-old Malay habits reasserted themselves. During question-and-answer sessions, participants preferred to give their own explanations for Malay failures and to suggest that my arguments and recommendations were faulty. Presented with an idea or when challenged to do things differently, their response was to argue why they should not, and why Malays could not.

For me, the formula is easy. First, do not be too greedy. If you are, you tend to rely on practices that only focus on making money. When one does that, one may not be too particular about ethics and legality.

Many commentators say that the NEP should be updated and indeed in some way, its successor policy, the National Development Policy
[2]
 (NDP), attempts this. But I think perhaps it is 
people
 who should be developed so that they might benefit from the economic opportunities created for them. If we simply revert to the NEP with full force, if handouts are given without a second thought, they will again be abused to no public benefit and will damage Malay competence and dignity.

At the time of my rejoining UMNO in 1972 none of this was yet clear to me or others. After my one failed attempt, I did not try to buy Bumiputera shares again. Instead I sought to play a more active role in the party and the Government. Two months after I was elected to the Supreme Council, I was appointed a member of the newly-formed Higher Education Advisory Council.

After that appointment, I wrote to Tun Razak offering my services in any other capacity. I suggested that I should take over the running of Malayan Railways as I had some ideas about how to turn it around. Instead, in November, I was made the Chairman of the Food Industries of Malaysia (FIMA), a government company involved mainly in the pineapple canning industry. I accepted the challenge and set out to be a very active Non-Executive Chairman. I could not be satisfied merely to preside over a board of directors.

While I had no experience managing a multi-million dollar company, during the Japanese Occupation I had run a few small businesses, including a coffee shop and selling rice and bananas. There was, in addition, the experience of running my clinic. With what I understood about “the bottom line”; that is, the importance of making a return on the investment, and reserving some of the profits for the next round, I set out to achieve all these for FIMA.

The Pineapple Cannery of Malaya (PCM), FIMA’s main subsidiary, had two pineapple canneries and a can-making plant. The marketing was done largely through a joint marketing company that had been set up by the Malaysian pineapple canneries but operated from Singapore. The canneries also marketed directly to certain customers abroad. I do not think PCM expected a CEO when I was appointed its Chairman, but that was what they got. I wanted to see things for myself. I had some general ideas about what was wrong with the management and what remedial measures needed to be taken. Mainly, the real cost of management and production had to be studied. My instinct told me that in this regard the current management was not too careful. This was confirmed when I discovered the General Manager’s travelling expenses. He was already drawing RM8,000 per month, a princely sum by the standards of the time; when I became Prime Minister in 1981, my monthly pay was also RM8,000. On top of that, the board had budgeted RM100,000 per year for his travelling expenses. The General Manager would try to use this by the year’s end, whether the travel was necessary or not. I immediately put an end to this practice and decided that the GM was to travel only when it was considered necessary.

I made my first visit to the pineapple cannery in Pekan Nenas (Pineapple Town) in Johor on 25 January 1973, and I was met by a picket of 200 of the 900 workers of the plant. Although I was shocked, I went up to the picketing workers and asked them what they were protesting against. They were contract workers who did not earn monthly wages and their pay was very low, less than 40 sen per hour. They should really have been getting at least RM150 a month, or twice to three times what they were receiving. I had not yet been officially briefed, but I promised that I would look into their complaints. They cheered and broke up the picket 15 minutes after my arrival.

When I visited the storage area accompanied by the managers, the floors were sticky and slippery with syrup dripping from leaking cans. The managers were supposed to practise FIFO—first in, first out—when the cans were ready to be taken to wholesalers. But apparently this was a principle they adhered to rather casually.

Workers were taking cans from the easily accessible top pallets, where all the new products were stored. The cans on the pallets below remained there, untouched for months. After some time, some of the cans which were defective would explode due to fermentation of the contents. The syrup that oozed out dripped and drenched the cans below. These in turn would rust and eventually burst as well. The syrup flowed downwards from pallet to pallet, spoiling each layer as it went. Naturally, most of the stored pineapple was not saleable and needless to say, the condition of the store was terrible.

I asked the manager what he did with the useless products. The manager looked at the storekeeper, who was not able to answer immediately. Finally he said, “We get rid of them”. I asked him how. Again, there was a pause. Finally he said, “We bury them”.

“
Where?” I asked.
 

“
Outside,” he said.
 

We went outside and I was shocked to see huge holes cut in the chain link fence and tyre marks on the ground. “What is that?” I asked. This time there was a longer pause and I felt that perhaps we were on the brink of solving the mystery.

Then someone said, “The lorries come in that way”.

“
But why?” I asked. “There is a proper road leading to the store”.
 

Finally, I got the explanation. Lorries apparently backed in at night through the holes in the fence and pallets of good canned pineapple were loaded onto them by thieves. We had security guards but they were afraid to stop these robbers. They were apparently fearsome thugs with machetes, who threatened to kill anyone who got in their way.

It was like a bad comedy. There was no sense of responsibility and nobody checked or audited the running of the company. To say I was horrified is an understatement.

The practice of the cannery was to allow the employees to take at least one case of canned pineapple with their wages every month. They could sell the cases to the shops in Pekan Nenas and hawkers could often be seen selling the canned pineapples on the roadside. But what was being sold was not necessarily from the employees. A great deal of stock was actually the stolen cans from the stores. No attempt was made to mend the fences or to stop the lorries from loading and taking away the stolen cases of pineapple. I ordered the fences to be mended and asked the security guards to stop any further attempts to steal from the stores. Remarkably, no 
parang
 or machete attacks ensued.

I implemented a number of other measures at the cannery. Even though there were more employees than we needed, I did not sack anyone as that would have created uncertainty and resentment. Instead, I allowed for natural attrition and did not replace ageing workers when they retired. Doing things this way takes time and costs a little money, but in the long run it has no demoralising effects.

On another occasion while walking through the factory I saw a large number of can tops scattered on the ground near one of the passages. I asked the executive accompanying me what they were doing there. “They look good to me. Are they condemned?” I asked. The man’s lips began to tremble, then he actually fainted and fell to the floor. The others quickly lifted him and lowered him down to lie on the cemented passageway. He recovered soon enough. I learnt later that they had been selling can tops to another factory. They were thrown on the ground to be collected as unsuitable can tops by the lorry collecting rubbish.

Meanwhile, relations between management and the workers and union leaders were bad. The workers often sabotaged the company by putting silver paper from cigarette boxes into the cans during the manufacturing process. Once, a Canadian consumer even found a lizard inside a can. The consequences were terrible for the company as whole containers had to be condemned. Getting rid of canned pineapple in North America was difficult as there was no place to dump it. In the end the containers had to be shipped back to Malaysia at additional expense and the consumer in Canada had to be heavily compensated to prevent bad publicity. The losses incurred went well into hundreds of thousands of ringgit. The workers did not realise that they were just shooting themselves in the foot by ruining the basis of their own livelihood. We might have had to close the factory and dismiss them all. Thankfully at least, the Press did not get hold of the story.

At that time there were trade unionists who believed that government operations like the Malayan Railways were there not to make money but to create jobs. The Government was apparently supposed to set up these operations and keep pumping money into them, even if these enterprises constantly lost money. The services that they were created to provide were regarded as secondary. This kind of faulty socialist thinking was very prevalent at that time in England where many British industries had to shut down. That’s why the workers at PCM did not care. They thought they would be employed no matter what. Better yet, if the Government was afraid of them, they would pay more wages. It was a confrontational attitude. But is there really a winner in the end?