A Doctor in The House: A Memoir of Tun Dr Mahathir Mohamad (52 page)

[
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] Majapahit had its capital in East Java and was the last of the Malay Archipelago’s great Hindu empires.
 

Tun Hussein Onn was generally not a very healthy man; he was also a very heavy smoker. I remember a meeting we had at Dewan Tunku Abdul Rahman in Jalan Ampang in Kuala Lumpur, where many people were smoking. As the hall was air-conditioned all the smoke was trapped inside. It reached the point where I could hardly breathe and had to peer through the haze of smoke to see someone’s face. I turned to Tun Hussein to ask him to tell everyone to stop smoking—only to see him lighting a cigarette.

In January 1981, Tun Hussein informed the Supreme Council that he was going to London to undergo a coronary bypass operation. I was away attending the third Organisation of Islamic Conference meeting in Taif, Saudi Arabia, at the time, so I did not see him off before he left.

He remained in London for two months after the bypass, and during that time I took his place as Acting Prime Minister. Tun Hussein did not recover fully from the operation and when he came back to Malaysia, he was still very ill. I gave instructions to everyone, including Ministers, to let him go straight to his car after getting off the plane. I did not want people to shake his hand or otherwise bother him, as this could prove to be a strain or expose him to infection.

It was while I was Acting Prime Minister that I launched the Heavy Industries Corporation of Malaysia Berhad (HICOM)
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 as the Government vehicle that would oversee and implement our industrialisation efforts. I also started introducing ideas about Islamisation and the need for Malays to get serious about the future of the country. I was still mindful of what Tun Hussein would say, but that period turned out to be good training for me because things were about to change.
 

Shortly after he returned to work, Tun Hussein held a meeting at his residence in Seri Taman. At the end, he pulled me aside and told me that he was not able to carry on. All the others had already left and there were only the two of us standing at the door. His face showed his depression. He said he was not well, that anything could happen, and so he wanted me to take over as Prime Minister. It was a startling but very short conversation which could not have lasted more than a few minutes.

I knew he was ill, but I thought he would continue as Prime Minister at least for a while longer. I repeated my earlier offer to take on some of his work so that he could have time to recover and carry on. But he refused, saying that he had already decided he should step down. I did not tell anyone about our conversation, not even Hasmah. My greatest fear has always been that revealing confidential news may jinx the potential result. Tun Hussein, for example, could have easily changed his mind. But it became clear that he was firm in his decision when he announced his stepping down at his UMNO division meeting in Johor Baru in May 1981. There, he also said that I would be taking over as Prime Minister. The news came as a shock to the people gathered there that day. He repeated his decision at the UMNO General Assembly on 26 June 1981, and when he stepped down as Prime Minister on 16 July, I was sworn in the following day.

I do not think the public realised how he had never fully recovered from the bypass. Back then they had little information about heart operations since none were done in the country. But they knew that it involved having your chest opened up and being placed on a heart-lung machine. It was frightening, to say the least.

When Tun Hussein took over from Tun Razak many people, especially journalists, had asked me whether things would be different. My reply had been that there would only be a difference in style, not objectives. This held true when I became Prime Minister as well. I believe that Tun Hussein did not agree with many of my policies, particularly my belligerence towards the British. This was not his style at all. He was not confrontational and disliked being blunt.

I can understand why he was not happy with me. But if as Prime Minister I had asked for his advice, my fear was that he would say something that I would not be able to follow and this would have been a sign of great disrespect. I did, however, go to see Tun Hussein at the former PETRONAS office at Dayabumi because I felt I needed to explain to him why I did what I did about several issues. He was adviser to PETRONAS at that time. He did not say much during our meeting and I left with the feeling that he did not fully approve of some of the things I was doing. For my part I sincerely believed that what I was doing was for the good of the country. And so I went ahead with the changes I had planned for Malaysia’s accelerated industrialisation, and a foreign policy which was less pro-West and pro-Commonwealth.

Malaysia was beginning to experience a swift and sharp change from an agricultural to an industrial economy. I had been to Japan, Korea and European countries and seen the industries that they had there. The workings and the running of modern industry were no mystery to me and I knew that if we truly wanted to, Malaysia too could industrialise. All that was needed was the willingness to learn and work hard. There would be mistakes and failures—that was a given. But corrections could be made and eventually the cost of these mistakes would be recovered from the growth and development that industrialisation would bring.

Malaysia had long had import-substitute industries but these had not brought about meaningful industrialisation. With that, I decided it was time to develop our own heavy industries, a necessary step towards becoming a developed country. There would also be numerous spin-off effects, which would make supporting industries viable. Heavy industries would have to be serviced and supplied with raw materials, component parts, engineering and technological support, and the manpower to operate heavy equipment and machinery. These were all services we could learn to provide given proper training, which in turn meant more employment opportunities. In agriculture, the number of people you can employ is limited, but that is not the case in industry. For one, it makes for much more economic use of land. One acre of agricultural land can feed one family, but that same acre, given over to industry, can provide 500 jobs and generate wealth many times over.

We also needed technological know-how to build our industries. For this, I looked back to how I had become a doctor. As a young boy I had thought of it as a fantastic, unattainable profession, something I would never be capable of. But I did become a doctor, by working hard and taking all the necessary steps. Applying this to the technology we needed, it became clear that it was a question of identifying clearly what you wanted to do, and then being willing to work hard to attain it. I am a firm believer in success being the end result of these actions. There is a link between means and ends, between effort and outcome, between knowledge and success.

I chose to focus on heavy industries because I believed developed countries had become less efficient in this area and their costs—particularly labour costs—were too high. We would also be dealing with readily available raw materials. I identified the heavy industries that we should pursue: a steel mill to be built in Terengganu, a tin plate mill, a car factory and a cement plant in Langkawi. I thought of establishing the tin plate plant because of my experience managing the Malaysian Canning Company. Malaysia was using a lot of tin plate for its growing food industries. The steel mill that was proposed would consist of a direct reduction plant and an electric arc smelter to produce billets and blooms to be used for producing construction steel. That was to be the first stage. Section mills and other downstream products would be added later.

I did not think we would face too many problems establishing these industries if we gave them enough careful thought. As part of the purchase agreement the suppliers of the plants would train our people to operate them. But I overestimated the Malaysian capacity to learn how to operate a major industry. Apart from managing and operating plants, a lot of experience is needed in order to deal with any bugs and problems with the machinery.

At the time it was built, the cement factory was the best in the country. It was located by the sea on the island of Langkawi, off the northwestern coast of the Peninsula, close to the limestone hills which were to be quarried for the plant. The other raw materials and products could be transported economically by ship. Unfortunately, the factory was sold off during the financial crisis in the late 1990s as the market was poor and it had stopped making money. It was not a matter of mismanagement, but if you don’t have deep pockets to weather the bad periods, you will always lose. Now it is owned by the French company Lafarge and is doing very well. People later asked why we built a dusty cement factory on a tourist island. The truth was Langkawi was not yet a tourist destination when we made the decision. When it became one, great care was taken to minimise the dust. The people of Langkawi also enjoyed employment in the cement factory at a time when there were almost no hotels to provide jobs.

When the demand for cement was low during the recession, I asked the Public Works Department to use cement for building roads. Fourteen kilometres of road leading to the Datai Hotel in Langkawi were built with cement. Many rural roads were also built with cement during that time, even though it was more costly than tar roads and more difficult to repair.

The tin plate plant was also eventually sold off. It was a joint-venture with the Japanese, who had a minority share but still participated in the management of the plant. I do not know who was responsible but someone arranged the sale, which more or less amounted to a transfer of Government shares to the private sector. Contrary to general belief, I did not always know everything that went on in Government. But I accepted blame if things went wrong as that is the proper way when you hold a high position. Because of the sale, the Japanese partner was no longer able to help manage the plant, even though they were still holding on to their shares.

We discovered that one of the shareholders was using the company for his other deals, which led to huge losses. This was when the Government decided to step in and buy the company back. We made sure the Japanese partner would have a bigger say in the management, and with their expertise, we managed to turn the company around. Today it is doing very well and even has a branch in Vietnam.

The industry venture that gave me the most trouble was the steel mill, run by a company called Perwaja. We first tried working with the Japanese to use a system of direct reduction, that is, burning off the oxygen to produce pellets from ore and scrap which were free from rust. The pellets would be mixed with more scrap and melted in electric arc furnaces to make billets and blooms. These in turn could be made into construction steel. Careful management rather than high technology was needed here. The Japanese Direct Reduction Plant failed, but they compensated us fully while leaving the plant they had built intact.

I knew something about steel making but not enough to be able to rebuild a failed plant. I had to consider other systems of direct reduction which were in use at that time. Finally I agreed to a Mexican system by Hylsa which modified the plant. To cut a long story short, Hylsa put things right and the plant was able to function. But if costs were to remain low, skill in management and operations was needed. Unfortunately, the manager appointed by HICOM lacked this skill—and much more.

I was flabbergasted to discover that he tried to run the mill from Kuala Lumpur and, needless to say, we lost a good deal of money. I decided to get a new Managing Director, a man called Tan Sri Eric Chia whom I had first met in the late 1960s. He had been introduced to me by a fellow Member of Parliament and friend of mine, Lim Pee Hung, whose father had owned the first motorcar dealership in Alor Star. Chia was a Straits-born Chinese who spoke Malay well. He was also a successful businessman and I had earlier appointed him to be a member of the Board of FIMA. At a time when few Chinese were more than small shopkeepers, Chia was running UMW, an engineering company, and was producing component parts for the heavy machinery he was importing.

He was a pioneer of local manufacturing and I was impressed with his ability to produce heavy parts for road rollers and track vehicles. I saw in him someone who was innovative and willing to try something new.

When Chia took over Perwaja, the plant was in bad shape and was dirty and untidy. He turned it into a spotless workplace, much like the factories I had seen in Japan. Any breakdown of the electric furnace or other machinery was handled quickly, enabling the plant to keep running. He also set up storage facilities and a sales centre in Kuala Lumpur.

Perwaja’s previous management had used lorries to dump scrap iron on wasteland next to the factory. The scrap often included sharp pieces which, even after being buried in the soft earth, would cut the lorries’ tyres to shreds when they drove in to dump more scrap iron. Replacing the tyres cost the company a lot of money. Chia decided to cover the dumpsite with cement and from then on, made sure the scrap was piled neatly away. It was amazing how much money this saved.

Chia also infused a new spirit among the workers, arranging for them to undergo physical training and motivation courses. He supplied them with uniforms, improved their pay scale and ranked them according to their performance. He also provided small, thoughtful touches like supplying the workers, who were mostly Malays, with dates to help them break their fast during the month of Ramadan. They became more motivated and dedicated at their jobs, and seemed to genuinely enjoy working under him.

As the head of Perwaja, Chia became a part of the business delegations I led to several countries, including Chile on my first trip to South America in 1991, where he negotiated successfully to buy iron ore. Chia then decided to expand and buy a section mill, i.e. a plant that would produce I-beams and H-beams that were used for the construction of steel frames. He told me that the plant was produced by Danieli of Italy for Iraq, but there was a ban on such exports to that country. I agreed to the purchase after he convinced me that we would be able to get it cheaply. The plant was built in Gurun in Kedah. The truth was that locating the plant there was not a good idea logistically because it meant moving steel ingots and blooms all the way from Terengganu. The finished products would also then have to be transported from Gurun to other parts of Malaysia for use or for export. But I must admit that his decision to locate the plant in my home state swayed me, because I wanted to see more development take place there.