Tun Mahathir's Latest Potshots

Outspoken former premier Dr Mahathir Mohamad tells malaysiakini about his successor Abdullah Ahmad Badawi’s leadership and economic management, the sidelining of national car maker Proton, development in Langkawi and the lack of maintenance in Putrajaya.

He also took offence over criticism by his former deputy Anwar Ibrahim, saying the latter “never can tell (the) truth”.

Malaysiakini: Recently US Senator Tom Lantos said the US should not proceed with negotiating the Free Trade Agreement (FTA) with Malaysia, because of a business deal between a Malaysian company and an Iranian oil company.

Mahathir: That is the problem with the US. If you have any deal with them, they will use that as leverage to get more power. For example, they sold us airplanes without the source code. Without the source code, we can’t use the plane.

We spent huge sum of money buying airplanes that cannot be used because when you want to use it, you have to ask the Americans. They want to control us, how we use the plane; and even when we have finish using the plane, you cannot sell (it) unless they approve (the sale first). They are always putting in extra conditions even though there was no condition before.

If you are going enter into the FTA, you are exposing yourself to a lot of pressures. Every now and again, they will say ‘if you do this, then we will apply sanction against you, we will not import your goods’. That is the US - always the big stick, very few carrots.

How do you view Malaysia’s negotiations of the FTA with the US? There have been many protests, for instance, by trade unions.

I have always been against it. I don’t think there is any need for this FTA with the US. In fact there is no need for a FTA with Japan even, because we are doing quite well. Without the FTA, Malaysia is growing at 7, 8 percent (annually). Our trade has reached US$100 billion, no FTA. So why do we want the FTA?

So why do you think the government has to start negotiating with the US?

I think the government shouldn’t. I proposed the EAEC (East Asian Economic Caucus) so that they would have sufficient strength to counter the European Union and Nafta (North American Free Trade Agreement), but they are more interested in kowtowing to Australia and New Zealand. I am sorry to say (this), but I disagree with the government.

The government is saying that, without the FTA, it will be very hard for us to continue the growth that we have.

No, I don’t think so. The US needs us as much as we need the US. You apply sanctions against us, the US companies will suffer (too), not only others.

Other countries are signing the FTA, Singapore has signed and Thailand is negotiating one. If Malaysia decides against signing the FTA, wouldn’t the investors prefer to go to Singapore and Thailand instead?

There is a risk to be taken. When we make decisions in our interest, of course there are plus and minus (points). Singapore can sign a FTA, Singapore is a free port, they don’t tax people anyway, what do they give away? Nothing. We are not a free port, we apply import duty in order to protect our industry. Without the import duty, we can’t protect our industry. The US protects its agriculture, why are we so ashamed of protecting (national carmaker) Proton for example? We will have to learn to live without having to depend on other people.

Yes, there will be trouble for some time, but if you going into FTA, you expose yourself to a kind of threat that they will always be wielding against you. You cannot threaten them because you need their market. That’s why I spent a lot of time trying to develop other markets. I went to many countries, to South America, elsewhere (to) develop other markets - not to reduce the trade with the US but to reduce the percentage of trade. So when our trade grows bigger, the trade with US will be smaller.

Now that our trade concentration is with China, we should think about China as the principal market. US is bankrupt anyway. I would think the best bet is for us to develop intra-Asian trade, trade with China and trade with other countries. We will suffer for some time, but you know, in these kind of things, don’t expect to have something for nothing.

It is said that the US has spent a few billion dollars to subsidise 10,000 farmers.

Yes and they are not ashamed of it, but we are ashamed because we supported Proton. The total tax paid to the government over a period of 10 years was RM18 billion, out of Proton. The volume is big, people who buy Proton have to pay tax, a lot of other people have to pay tax and the government collected a lot of money - RM18 billion for a RM480 million investment (in Proton), don’t you think that is good business?

Well, not according to some who have to pay RM10,000-20,000 extra to buy a Proton car.

All right, you pay to other countries, you buy foreign cars. You buy foreign cars, then the money goes out, (so) let’s stop all our industry because foreign imports are cheaper, okay? No industry in Malaysia, what happens? Think about that, think for the longer term, don’t think only just because you pay this much and therefore the whole thing is bad. I have been in the government, that’s the reason why I want things to grow - the government is not like a company. Companies depend upon profit, (but) we can collect taxes.

Even when I spent money to build all these mega projects, you know where the money came from? Every time somebody get a contract, he made profit and I got the money from him; when he buys something from somebody else, somebody else makes a profit, (and) I collect taxes from him; when he buys from the importer, I still collect for the government - the government never loses money. We make money from taxes.

Do you think you are misunderstood by a lot of people?

People don’t understand government, they think government... (laughs) You know, I have been in this government for 22 years, I know something about it. The reason why money should be spent is that when government money is expanded, (it) comes back to the government all the way. One ringgit that you spend will move from A to B, to C, to D and all the way, somebody makes a profit and government gets a cut.

But then there is also quite a bit of wastage, there would be money being spent not for this particular purpose but corruption for instance.

Corruption is regrettable but just saying I want to get rid of corruption doesn’t get rid of corruption. During my time, I was very careful, if you can find any evidence that I am corrupt, by all means, expose me.

But some of your ministers were (allegedly corrupt).

Give me the evidence, it is not easy. People keep on saying he is corrupt, he is corrupt...

What about Rafidah Aziz (International Trade and Industry Minister)?

Well, (she was) not during my time.

It was during your time.

During my time, she was very careful, didn’t give APs (approved permits) by the thousands, (but) after my time, my goodness...

Your former deputy Anwar Ibrahim claimed he had given you evidence of corruption (involving high profile figures)...

Nonsense, he didn’t give any evidence. Anwar cakap bohong (is telling lies). For example, he started talking about currency trading and (he said) he doesn’t know anything about it, you can go and see the Hansard, he answered all the questions (in Parliament), I never answered the questions. He never can tell (the) truth, he tells lies.

You have buried the hatchet with (American philanthropist George) Soros, what about Anwar?

No, no, I don’t see any point in burying the hatchet with him. He has sued me because I said something that he doesn’t like. I’ve said let’s go to court and let the court decide.

The cost of building Putrajaya is such a mystery, no one seems to know the real cost of it. If we can hear it from you, how much is the cost of building Putrajaya and are you happy with the way it is being maintained?

Maintain? No, I am not happy (laughs), but the cost is very competitive. What happened is this - the government has no money, (state-owned oil company) Petronas has money, so we told Petronas to (undertake) a private finance initiative.

However, Petronas is a 100-percent government-owned company, so any profit made by Petronas comes back to the government. We told Petronas to build and lease to us. Petronas, of course, is quite sure of making profit but certainly Petronas doesn’t want to charge the government too much because in the end, it goes back to the government.

When you have private finance initiative, it goes to a private company, they will cost it so they make a profit. The government is actually financing that because when they go to the bank and say government is going to lease whatever they build and they are going to make so much profit, ‘can you give me some money?’ They will get at least a few billion ringgit.

Actually it is the government which is spending, it is not the private sector, and the longer that you take to pay, the more you have to pay by way of interest. Private sectors work out all these things.

MRCB (Malaysian Resources Corporation Bhd, a property developer) or whatever GLCs (government-linked companies) - they like somebody behind (the company so they) can make some money. They price it in order to be able to make a certain profit, (it is) called definite profit. If they build a bridge, they will make a profit because government will lease it. If they say you build the bridge and you operate it, then it is not private finance initiative.

Just like the private jet (leased by the government)...

During my time, it was privatised. I admit I helped to reduce the cost of privatisation in order to lower the cost of toll roads for example. If you ask them to pay everything for the toll road, you have to pay through your...

But of course, the private jet is very important because we have only one Boeing business jet for the Agong. I think the Agong must have asked ‘please buy me another plane’, that’s why they bought the plane. But I didn’t hear the Agong (say it) because I wasn’t near (him). Some people may have heard the Agong said ‘please buy me another plane, I need another plane’, that’s why they bought.

A plane that is on the ground loses money. If you are operating an airline, you use the plane practically every day. You buy a plane for private use, you don’t use it for all the time but you still have to pay.

Tun Hussein (Onn, former prime minister) bought the (Boeing) 737 before he retired, but unfortunately for him, he retired before the plane was ready, so I got to use the plane. I used it for two years and I asked them what would happen if I don’t use the plane, how much do we have to pay? US$2 million, whether you use it or not, every year.

I said no, give it back. We sold the plane because I don’t need a big plane, I need a small plane, it is enough for me to go around. I don’t carry around too many people, only security people and my staff, that’s all, six or seven people. I don’t need a big plane.

But this 737 which we gave to the Agong is a fantastic plane, and now must be more fantastic. I hear that the people who order the plane were also involved in the interior design (contract).

Something like the super yacht they bought in Turkey?

I don’t know about the super yacht (smiles) because they accused me (of buying one). I will tell you that Ananda (Krishnan, Malaysian billionaire) wants to build a yacht and in fact he has built a yacht. He keeps on bothering me, asking me about the design, I don’t care, I gave my opinion.

So it was Ananda who bought the yacht for (Prime Minister Abdullah Ahmad) Badawi?

I don’t know. But as far as I know, Ananda built this yacht, a 40m yacht, a gullet, it is very beautiful. It is completed already and I told him ‘why don’t you bring it here, you built and put it at the Mediterranean, I want my Telaga Harbour (in Langkawi) to have this yacht. He said ‘no, this thing will eat into the wood, our water is no good’. I said why don’t you build one that has a steel haul then you can bring it here. That is as far as I went.

Of course, if you want to build a big yacht, you keep it here, I am happy, you can build 10 yachts. I am quite happy if you put it in Telaga Harbour then I can have a nice marina for that. Of course, they have to pay.

Do you think the government has abandoned all hopes on Proton?

I am sorry (that) a company that was making money is now a company that is losing money. Why? Because of interference in Proton and lack of consideration in giving the APs.


Proton is in a very bad shape and mismanagement is still going on. People are leaving the company because they don’t see any hope. It can be resuscitated but it needs good management. The first thing to do of course it to remove the chairperson (Mohammed Azlan Hashim) who actually behaves like a CEO (chief executive officer), he makes all the decisions, nobody (else) can make decisions, that’s what I was told.

Are you still meeting him?

I don’t meet him because it is no good. He comes here not to hear my advice, he comes here to advise me on what he has done, that is the reversal of an advisor’s role.

What about the progress in Langkawi, is it going as you had wished?

I go to Langkawi quite often. Apart from setting up my bakery there, I have to spend my own money in order to develop some of the things that are needed in Langkawi. I spent my money building a horse track, a stable. They are leasing the horses to tourists, quite good business for them (but) I don’t make money. I have two boats there which I built, they use the boats to ferry tourists. Okay, I don’t ask for money.

How is the bakery business going?

Bakery is okay-lah (grins). I want to learn about business, I have been telling people to go into business, and people have been telling me ‘you don’t understand business’. Okay, I’ve started my own business (but whether I) can make it or not, I don’t know.

How is it going so far? Is it making money?

So far, they are eating the bread (laughs).

Going back to Langkawi, are you saying that the government is not actually following what you wanted Langkawi to be?

During my time of course there was a lot of concentration in Langkawi. From a place that was not known at all, it has become a worldwide name - anywhere you go, they know Langkawi. We have done quite well by Langkawi, there are lots of things that can be done, to make it a real tourist product.

They stopped the flight into Langkawi from London, in fact (national carrier Malaysian Airlines) MAS is now stopping flights to everywhere because AirAsia can do a better job, AirAsia should take over.

On the toll hike, there are a lot of complaints that the toll agreement wasn’t very fair. How do you respond to that because a lot of agreements were signed during your time?

Yes, a lot of agreements were signed during my time (but) we didn’t actually scrutinise these things, I didn’t anyway. This was done by civil servants which is their right. They see only in terms of return of investments and things like that, they don’t see the political side.

They agreed to things which we later found out cannot be implemented because the toll is too high. So what they did was (to decide that) the government will pay the company. When you say ‘don’t increase the toll rate’, then it is the government that has to pay because the agreement has to be honoured.

During my time, what I tried to do was to help the company to lower their capital cost by giving them whole chunk of roads that have been built, free of charge. We gave them free land and a lot of loans at low cost, all this (was done) in order to lower the toll rate. But the toll of course has to increase, the quantum of increase is what is felt by the people.

I suggested to the government if you strengthen the ringgit, you will put money into people’s pocket without having to spend one sen. From 3.8, I said go to 3.5 (exchange rate of ringgit to US dollar), that means almost 10 percent increase and that means you are putting 10 percent more money into the pockets of people if they buy foreign goods.

We talk about toll and oil prices, oil is something that you buy from others, if you have a stronger ringgit, then the oil price becomes cheaper. But if you allow the ringgit to float, you don’t get advantage.

If it has now strengthened, how much have you gained? Nothing. But if you do a check on the prices of the imported goods and strengthen the ringgit by 10 percent, you can go and tell them, ‘look, now the ringgit is stronger, I know you are paying less for your imports, so lower your price’. Then people will get money in their pocket just by doing a very simple thing but they want to go along the lines of international practice, they want to allow the money to float...

You are arguing for a re-peg of the ringgit?

Yes, why not? What’s wrong?

To re-peg it to?

RM3.50 for example.

It is already at RM3.50.

I know, but we don’t get any advantage from the RM3.50, you have a stronger ringgit but you don’t feel it. The price of things in the shop hasn’t gone down, the imported things. You go to buy computer, the price hasn’t gone down by 10 percent.

You have to understand the mechanism of this - why do you peg? It is because you have control. If you want to strengthen the ringgit by 10 percent, you can tell the shop ‘look, you are paying for this before at that price in ringgit, now in strong ringgit, you are paying less, so sell it at the lower price’.

That means (you are) literally putting money into the pocket of people. By strengthening ringgit by 10 percent, you actually put money into people’s pocket without having spent one sen.

Given the current situation, what would be the fair...

We are not getting any lowering of the price, you notice any lowering? No, they haven’t because they say ‘we don’t know, this thing might go up and down... it might be US$3 or $4 or something like that’. If you fix (the rate), nobody can say because this is the only price.

When Malaysia fixed the ringgit, people said we cannot do it but we have proven we can do it because we have a lot of money. We have billions of dollars, EPF (Employee Provident Fund) alone is (worth) RM300 billion and US$82 billion in the Central Bank, what for? You only need to keep five percent... You can reduce that and use the money.

Are you suggesting the government’s economic policy is actually imbalanced or they don’t know what they are doing?

It is up to you to decide, whether they do or not.