In Theory: Arabs can learn valuable lessons from the Malaysian experience

Whenever Dr Mahathir Mohammed, former Malaysian Prime Minister and founder of its modern growth and development, gives a talk he is bound to make an addition from his rich and lengthy experience.

The former premier is a quiet and decent gentleman who moved from the practice of medicine to the economy and his overall appearance gives the impression of a scholar rather than a politician. He usually talks with confidence and determination.

The other day, Mahathir gave an interesting talk to the fourth Conference of the GCC Banking Institutes that was organised in Abu Dhabi by the UAE Institute of Banking and Finance.

In his presentation, he dealt in part with the Malaysian development experience that has become a model for developing nations, especially oil producing countries.

Mahathir said, inter alia, that some 30 years ago Malaysia used to depend almost completely upon its rubber exports and unemployment was extremely high.

The overall performance of the economy was generally poor. When Mahathir and his colleagues looked around, they did not find the necessary capital and investments for improving the economic situation.

However, they introduced a future vision focused on attracting foreign capital and developing labour-intensive export industries. This was followed by dispatching Malaysian delegations to wealthy countries such as their rich neighbour Japan.

Gradually, the country's high unemployment rate started to fall, economic conditions flourished, per capita national income doubled and, eventually, the overall structure of the gross domestic product took a totally new shape. Thus, the Malaysian economy became more diversified.

At present, exports of raw materials, including rubber and oil, only account for 18 per cent of the total Malaysian exports that are worth more than $100 billion annually. Industrial exports constitute 82 per cent of the total value of such exports.

Indeed, the country has witnessed a dramatic change within a short span of time — a success story that is rarely repeated in a vast country inhabited by people with diverse ethnic origins.

The country comprises a Malay majority and Chinese and Indian minorities, but they are all combined in their love for work and avoiding ethnic conflicts, making their country enjoy unprecedented achievements.

Seven years ago, when the economies of the so-called Asian tigers suffered a severe monetary crisis that could have destroyed all their tremendous achievements, the International Monetary Fund (IMF) offered its assistance and recipe for overcoming the crisis which undoubtedly helped some of these countries to face such a crisis at a high cost and within a relatively longer period of time.

Achievement

However, Mahathir put aside the IMF recipes and began to implement his own recipe and realised yet another of his magnificent achievements. Under his leadership, Malaysia was able to get over its crisis before the others did and at a lower cost.

Upon completing his lecture, he was asked by some in the audience about the advice he could give Arab countries in view of his rich and long experience.

He said: "As we learned from our own experience, it is vital to diversify the sources of national income and not depend upon the sole source of income, whether such sources are agricultural or mineral raw materials. This is what the GCC and many Arab countries are seeking to do."

Indeed, the Mahathir school could prove to be useful for us in the Arab world considering that its cultural elements are very close to our own cultural ingredients, with certain differences and peculiarities that make the Malaysian experience more complex because of the geographic and ethnic structure of the Malaysian society.

The writer is a UAE-based economic expert