A Doctor in The House: A Memoir of Tun Dr Mahathir Mohamad (69 page)

The early 1990s saw a period of great political and social change worldwide. Communism had fallen by 1991 and the Cold War was finally over. A new era had begun and there was much rejoicing. Some claimed it was the end of history. Some said a new world order was taking shape. It was certainly new, but was it better? Yugoslavia was violently torn apart as Slovenia and Croatia broke away. Then Bosnia-Herzegovina endured a terrible war as the Serbs committed genocide against the Bosnian Muslims. The world did nothing to help as it watched 200,000 Muslims being slaughtered on TV.

What was happening to the Muslims in Bosnia greatly upset me. In full view of NATO troops the Serbs were conducting ethnic cleansing and nothing was done to stop the massacres. One video clip showed an angry British officer yelling at Serbs who had just burnt down a house with the occupants inside. “What kind of people are you?” he shouted in disgust. But his was a lone anguished voice, not an official government policy or part of any concerted world action. The worst case was in Srebrenica, where Dutch troops moved away from the Bosnians they were supposed to be protecting, allowing the Serbs to openly slaughter 12,000 Bosnian men and boys. The women were gang-raped.

When the United Nations finally decided to send troops there, Malaysia sent the biggest contingent. Our troops had to endure very cold weather but they did not have to fight anyone. They were located in a valley with the Serbs camped above them, but the Serbs left them alone and did not attack the Bosnian villages nearby. We were able to protect the locals, some of whom I believe were Croats. While the fighting was still continuing I visited our troops there, mainly to thank them for their brave service. Though their quarters were cramped, I could see that their spirits were high. I did not see the Serbs but I was conscious throughout that they were on the ground above us and could have lobbed shells into the camp at any time.

Then the Europeans made the bizarre decision not to provide arms to the Bosnians on the grounds that, should the Bosnians be able to defend themselves, more people would be killed. Apparently it was better if only Bosnians were killed. This, we thought, was morally wrong. So we decided to provide them with some light weapons. That may have contravened United Nations orders but at this point the Bosnians had no means to defend themselves. We provided Russian-made missiles which could be fired from a cannon that the Bosnian Muslims already had. Other Muslim countries also provided aid, but to this day Bosnians still think that Malaysia was the country that helped them the most.

What the Serbs did was unimaginably cruel but what the Europeans did was equally appalling. European countries that make up NATO like to lecture us about human rights but their inconsistency is shameful. If a dog gets stuck in a drain, they spend time and money to rescue it. A whole town may become concerned over the fate of one dog. Yet they refused to help innocent people who were being killed.

Malaysia’s foreign relations were reoriented during my 22 years as Prime Minister, and the many changes that were implemented have given Malaysia a high profile on the world scene. Today, it is no longer an unknown country “somewhere in China, Africa or the Himalayas”. It is even looked upon as a Third World leader. Many have come to Malaysia to learn how an agricultural country could evolve into an industrialised one and how, despite its multiracial and multireligious population, it was not only able to remain stable but to develop and thrive. They marvelled at our infrastructure, reliable water supply, nationwide electrification and the expressways crisscrossing the country.

Malaysia now has many friends throughout the world. I was gratified recently when a lady who had visited Yemen told me how proud she was to be a Malaysian when she was there. The owner of a restaurant where she was having a meal asked her where she was from. When she said Malaysia, he and his customers had nothing but good things to say about the country. He even refused to let her pay her bill, and said he appreciated what Malaysia had done for the Muslim world, and for its support of Palestine.

Some say to be a big frog in a small pond is no great achievement, but we have proven that even a little frog in a big pool can thumb its nose at the largest, most powerful toad. That it can has not only been gratifying to us, but has also vindicated our foreign and national policies and has brought us self-respect and pride, and given us a sense of accomplishment. Malaysia has shown that a well-intentioned policy of engagement, cooperation and practical involvement with small countries can prove far more beneficial and successful on the international stage than a policy of antagonism, aggression and domination as practised by world powers. There is no need to toady to the powerful.

ENDNOTES

[
1
] Every two years, Commonwealth leaders meet to discuss global and Commonwealth issues, policies and initiatives for the group.
 

[
2
] Wisma Putra is the office that houses Malaysia’s Ministry of Foreign Affairs.
 

[
3
] The Group of Eight (G-8) is a forum for Canada, France, Germany, Italy, Japan, Russia, the UK, the US and the European Union (although the EU does not have the right to host or chair a meeting).
 

[
4
] The Group of 77 is an informal grouping of developing countries that cooperates to promote its collective economic agendas at the UN. As a coalition, the Group also works to give itself a stronger negotiating platform in the UN.
 

[
5
] In 1985, France, West Germany, Japan, the US and the UK signed the Plaza Accord that agreed, among other things, to depreciate the US dollar in relation to the Japanese yen.
 

[
6
] The Organisation of the Islamic Conference (OIC) was established in 1971 to unite the global Muslim community and promote its political, economic, and social interests.
 

[
7
] The Langkawi International Dialogue (LID), first held in 1995, promotes partnerships between
 
Commonwealth leaders, businessmen, social groups, civil servants, and other professionals to enhance 
collective socioeconomic and business development.

[
8
] The Southern African International Dialogue (SAID) encourages smart partnerships and networks that can lead to the development of southern Africa.
 

[
9
] Deng Xiaoping’s reforms helped turn China into a market-oriented economy by encouraging, among others, private enterprise and foreign investments, and changing the focus of local industry to the production of everyday consumer goods.
 

It seemed outrageously wrong to me that, when Malaya became independent in 1957, practically all the big tin mines and rubber estates in the country were owned by British companies and listed on the London Stock Exchange (LSE). Perhaps some nominal tax was paid here but it was clear that much of the profit flowed to the UK. At that time, about 80 per cent of our wealth and export earnings came from tin and rubber. Had the earnings stayed in the country, our people would obviously have been more prosperous.

Established during colonial times, the major companies trading in our country continued to belong to foreigners after Independence. Land had been sold or leased to them at very low rates, hence their great profitability. But there were no corporate taxes under the Colonial Government, which meant most of the profits they made and whatever taxes they paid went straight into the British metropolitan economy. Yet they would never have made their money without their favoured access to cheap (five ringgit per acre) Malayan land. Malayan tin and rubber had kept a financially-strained Britain and its empire economically prosperous for much of the inter-war years of the twentieth century. The departing British colonialists had thought that an independent Malaysia would never be governed properly and would suffer chronic financial problems. At Independence, a British head of the Prisons Department voiced his misgivings about the jails being as well-managed as they were under British gaolers.

The Government of independent Malaysia felt that something needed to be done to maximise the returns from our own main assets for our country. I decided to be more aggressive about re-acquiring what should have belonged to us but I could not nationalise foreign holdings, as many other countries had done when they gained their independence. That would have had an adverse effect on the foreign investment that we needed. The only choice, then, was to buy back those major wealth-generating assets. We wanted an orderly transfer of ownership from willing sellers to willing buyers. We wanted those companies back—partly for the profits they would generate for us once we owned them and partly for reasons of national pride.

When we first sought to buy back Malaysian companies, we met with open hostility. But the way we went about making our bid revealed a sophistication no one suspected Malaysia had.

Permodalan Nasional Berhad or PNB, our National Equity Corporation, was keen to add big plantation companies to its portfolio. We had already bought London Tin Corporation in 1972, the biggest tinmining company in the world, and we now also set our sights on the big plantation companies. The Guthrie Group,
[1]
 now part of Sime Darby Berhad,
[2]
 was one of them. After the acquisition of London Tin, there was some resistance to Malaysian purchases of the shares of the big plantation companies. To succeed, we had to devise strategies to avoid being thwarted by British authorities.
 

We ruled out negotiating to buy shares from the biggest shareholders as we did not believe they would sell if it meant Malaysians would gain control of a major British plantation company. It had to be a hostile takeover—several parties would have to buy shares in coordination, striking as soon as the London Stock Exchange opened in the morning. That was what we did in what came to be known as the Dawn Raid.

The plan was masterminded by Tun Ismail Ali, a former Governor of Bank Negara and Chairman of PNB, who also happened to be my brother-in-law. A taciturn man who did not suffer fools gladly, he was the ideal person to carry out this very complex operation in London, far from familiar ground. Under his direction the foray into the market was well coordinated. As soon as trading opened on 7 September 1981, the Malaysian team swooped in and mopped up the shares, acting in concert but initially appearing to act separately. Under British stock market rules, once we had acquired 30 per cent of the company’s shares we had to make an open offer to buy the rest of the shares at the same price. By noon, Malaysians had acquired controlling shares in Guthrie plantations and at that point, we made a general offer to purchase the remaining shares.

The 30 per cent equity threshold requiring that an offer be made for the rest of the shares was designed to deter individuals from getting control of public limited companies. But the Dawn Raid was to prevent interested parties from denying us this control. Our Dawn Raid has subsequently been quoted repeatedly in the standard accounts of how stock markets are managed. But after the raid, the LSE changed its rules. To make such surprise acquisitions nearly impossible, a trader acquiring as little as five per cent of the shares had to make a public announcement of his holdings. That made it almost impossible for us, or anyone else for that matter, to gain control of a public limited British company through share acquisition. The LSE and its favoured inside players did not want to be so easily caught ever again, but Malaysia had already made its mark. We had forced them to take account of us as serious players in their tricky game.

I was elated by the success of our Dawn Raid and the acquisition of Guthrie, but the British Press was furious. They and the British business community condemned our legitimate acquisition as back-door nationalisation. Their rage distorted their reasoning: on the one hand, they insisted that we could not nationalise as this was not done in a free capitalist economy. Yet they also effectively said that we could not buy shares either, if this resulted in us gaining control of an expatriate company. We were apparently not allowed to do anything to acquire the assets that they had held for so long and so lucratively. It seemed that they could not accept that we should manage and be master of our own assets. The era of colonial rule may have ended, but colonial-era thinking was alive and well in London’s stock market and financial Press.

We did not simply seize assets that we believed were ours, as other nations had done. We wanted to do what was right, because we had been told that if we unilaterally nationalised such overseas-owned assets, foreigners would no longer invest in Malaysia. But how long could we let foreigners control the biggest industries in our country? Arguments that we were not competent or qualified to run these enterprises simply did not apply anymore.

There were no technical or technological barriers, as oil palm estates were not so sophisticated that they were beyond our abilities to manage. Growing oil palm and extracting the oil was not the most complex of processes and we could accomplish both without foreign expertise. In fact, by the time we bought Guthrie, we had mastered the business completely. We were ready to welcome foreign investors who had new know-how we could learn from and use, but the owners of the plantations at the time of the Dawn Raid no longer brought anything new to the industry or to Malaysia. They had nothing to teach us any more. Besides, they had already got back their money many times over on their investments. How much longer would they continue doing so? To go on enjoying those profits without further raising the industry’s technological level would have been indefensible, nor could it be justified on business entrepreneurial grounds. Foreign control of our key agro industries had reached the end of its historical road. That, and not the staging of our Dawn Raid, was the real basis of the grief and wailing we heard from the British Press and the industry’s former owners and investors.