Tun Dr. Mahathir Mohamad may have been our longest serving Prime Minister, credited for much of Malaysia’s development, but there is a generation of voters, most of whom are going to the polls for the first time this year, who are unfamiliar with his administration. As the 92-year old makes his bid for re-election, August Man takes some concerns to the former premier for him to address.

“I’ll be dead,” Tun Dr Mahathir Mohamad says, without hesitation, when asked about how he would feel if Pakatan Harapan loses at the 14th General Election (GE14). It’s no exaggeration that this is a do-or-die battle for the man who will turn 93 in July.

Being Prime Minister again, he says, is driven by the fact that he can’t bear to see the country that was once hailed as an Asian Tiger under his watch, now being cut to pieces.

“When we said that we will change (Malaysia), that is something that we have done before. We would be returning the country to its previous position,” he pledges during an interview with August Man Malaysia.

There is absolute silence when we entered the 81-square metre office at the Perdana Leadership Foundation, located in the administrative capital Putrajaya. Mahathir’s attention is focused on the paper he is writing on. It is the speech he will deliver later that night.

The day that August Man Malaysia meets Mahathir coincides with the nascent Parti Pribumi Bersatu Malaysia’s (PPBM; United Indigenous Malaysian Party) rally in the state of Johor, which reveals the candidates for the state parliamentary and legislative seats. As Johor packs the most parliamentary seats in Peninsular Malaysia, at 26, it is one of the key states for the opposition coalition Pakatan Harapan (the Alliance of Hope) to grab.

Mahathir immediately drops his pen and looks at us, the moment we ask his permission to begin the interview. While a man of his stature needs to multi-task at most times, he gives us all his attention. The moment the interview concludes, he once again focuses again on his speech. There is so much to do as GE14 draws closer, that he says he works up to 18 hours during the lead-up to the election. We begin the three-part series on Mahathir with excerpts of the interview:

Mahathir on his former political party

August Man: Tun, when you were the Prime Minister, did you ever envision that the opposition would actually at one point in time pose a real challenge to the Barisan Nasional (BN)-led government?

Mahathir: I’ve looked at the performances of other countries that gained independence after the war. What I realised was that most of the parties that had successfully fought for independence found themselves unable to manage an independent country. The Masyumi Party in Indonesia is no longer there. The Indian National Congress (Organisation) is also no longer in power. And then we have the All-India Muslim League in Pakistan, also no longer in power.

So, I used to ask myself when I was the Prime Minister, ‘How long can I last?’ ‘How long can UMNO (United Malays National Organisation) last?’ And I saw a trend which was very unhealthy; instead of focusing on what they can do for the country, everyone who joined UMNO during my time thought of what they could get for themselves[1]. They became self-centred and very greedy. This is a sure sign that this (UMNO) is on a decline.

Mahathir on Pakatan’s promise to review the ongoing mega projects

August Man: One concern that the investment community has is on Pakatan’s pledge to review all the mega projects. May we know what you are going to review specifically: is it the procurement process, or the projects’ viability? And are these reviews concerning only the Chinese-funded projects, or all of the mega projects like the Kuala Lumpur-Singapore High-Speed Rail (HSR)?

Mahathir: I think, in the first place, the mega projects were not studied or had due diligence done properly. We had mega projects during my time – we built the Penang Bridge, the North-South Highway, the new airport (Kuala Lumpur International Airport), et cetera. But did you hear – well, maybe you were too young at that time (laughs) – about us borrowing billions and billions of dollars? No, we used our own funds for those mega projects. And they were big projects. But we were careful with the management of money.

Suddenly, we were told that the government was going to build a railway line in the East Coast. And the next thing we know, to build the railway line, we need to borrow RM55 billion. I mean… we can’t afford that. If you find that the project is necessary, you have to do it within your means, with the money that you have.

You can borrow some, but not huge sums. We have never borrowed RM55 billion. I can’t remember borrowing as much as RM1 billion (worth of foreign currency loans) when I was the Prime Minister. I borrowed from the Japanese because they gave an interest rate of 0.7% repayable over 40 years. That is almost like free money. But the government has borrowed at 3.25%[2], and a huge sum of RM55 billion, where total repayment would end up at about RM90 billion.

On top of that, the cost of this project is very high. So, we need to renegotiate these things.

August Man: You have been very critical against the ECRL (East Coast Rail Link), but what about the other mega projects? Like the HSR, and the MRT (Klang Valley Mass Rapid Transit).

Mahathir: We have to review them. If it is going to become too costly, we need to be careful about borrowing money. Countries that borrow money and cannot pay can become bankrupt. This is what happened to Greece3.

The idea of building the MRT was brought to me first when I was still friendly with the government. The private sector was the one who proposed the project to me. (The private sector company) showed it to me, it wanted to go underground and all that. I thought it was a good idea, so I told them to go see the Prime Minister (Najib). I didn’t expect the whole project to be approved. I thought one MRT line, maybe. Or even a shorter line. So I was shocked when I was told the whole project had been approved, where the project was going to cost RM50 billion, RM60 billion4. When you want to develop a country, you develop it slowly within your means because it is very important not to borrow money excessively.

Mahathir on the goods and services tax (GST)

August Man: A lot of economists have expressed their criticisms of Pakatan’s promise to abolish the GST, and the think tank IDEAS (Institute of Democracy and Economic Affairs) says that if Pakatan were to reintroduce the SST (sales and services tax), there could be a double taxation effect. Can you comment on that?

Mahathir: The implementation of the GST often results in double taxation, because the GST is collected upfront on every transaction – from the importer to the dealer, and the dealer to the retailer. The retailer needs to recover the taxes paid by the dealer and the importer. In effect, the GST often results in double taxations.

The government promises if there is a clear case of double taxation, it would be willing to return the claims. But when people apply for reimbursement, it takes the government two years, three years. In fact, since the introduction of the GST, nobody has been able to recover the money (immediately). When you know you are not able to recover the money immediately, you have to put in the cost of the tax into your sales. So the people are paying a very heavy amount. It’s not 6% (rate of retail price increase). It’s 12%, or 18% even.

Other countries cannot compare with us. Saudi Arabia does not have any taxes5 – so don’t compare with Saudi Arabia. But in other countries, they have abolished many taxes and replaced them with the GST. In our case, we actually withdrew petrol subsidies, and then we introduced the GST. With the devaluation of the ringgit, the cost of imports has spiked. Of course, a lot of people cannot pay because the process of paying GST itself is very burdensome. For small businesses, it is a strain.

August Man: Now, the question among the people in the investing community is how Pakatan is going to fill the RM41 billion-void from the removal of the GST?

Mahathir: (Shakes head) No replacement. We collect more taxes now than, say, the 1980s and the 1990s – three times more. So we should have enough money. But the way you spend your money is important. If you spend your money giving to people with no return, then of course there will be a shortage of funds. (The current administration) gives free money through BR1M (1Malaysia People’s Aid), wages to fishermen, a lot of allowances for village aid, and people performing the hajj. It’s the disbursement of a bigger amount of money, but the (channels of) disbursement and the way the finances are managed is what causes the shortage. It is not because there is no money; there is more money than ever before.

Mahathir on his past

August Man: At PPBM’s inaugural annual general meeting (AGM) last December, you made a public apology. What were you apologising for exactly?

Mahathir: People keep telling me that I was a dictator, and all kinds of things. I don’t believe I was a dictator. But people thought that I’ve done wrong. So OK, if you think that I’ve done wrong, I apologise.

August Man: In hindsight, do you have any regrets during your 22 years as Prime Minister? Was there anything you think that you would change if you could go back in time?

Mahathir: I thought I did my best for the country. I was against corruption, I was against cronyism, I was against nepotism – I didn’t give any chance to my own children. I thought that I had set a good example. But when I stepped down, all those things were thrown out.

If there is anything I regret, it was that I was not strong enough to force a change in the thinking of the people. I had relied more on talking, speech-writing, persuading, even prayers. But those did not achieve the objectives I set myself for.

August Man: Tun, you have mentioned that it was hard for you to work with your former adversaries. I want to go back to your memoirs, you mentioned that Datuk Seri Anwar Ibrahim was, and I quote, “unsuitable to succeed me as Prime Minister”. What are your thoughts now on putting Anwar as Prime Minister?

Mahathir: You don’t condemn people for life. If a person has reformed, you have to accept the person. If he (Anwar) had been badly treated before, then he should be given the right to make his comeback.

August Man: Now, do you think he is capable of becoming Prime Minister?

Mahathir: He has the same ideas that I have, in regards to Najib. (Smiles)

 

[1] A recent video that went viral shows a younger Mahathir predicting that the alleged rampant corruption within the United Malays National Organisation (UMNO) would be the downfall of the ruling coalition Barisan Nasional (BN). The full translated transcript: “Sorry to say this, but by 2020, UMNO may no longer be in power because it was rejected by the Malays themselves who are sickened by UMNO’s money politics. Among UMNO members and leaders themselves, they would be fighting for power that they completely disregard the party and the Malays’ struggles. They fight for their own gains only. Voters would become disenchanted with UMNO, and subsequently reject the party. I believe the year 2020 is the longest that UMNO can survive; and the quality would deteriorate far before that. The Barisan Nasional (BN) coalition would then implode with UMNO’s eroding influence among the Malays, as UMNO is the most influential component. Unfortunately, the prevailing party would not be the opposition that we have now; other Malay-based parties, too, would fail to garner support from the Malays.”

[2] 85% of the RM55 billion construction cost for the East Coast Rail Link (ECRL) is financed by a soft loan from the Exim Bank of China. According to CIMB Investment Bank Bhd, the repayment tenure is 20 years, with interest and principal repayments waived for the first seven years. August Man Malaysia’s calculations show that the total repayment amount would be RM83.36 billion.

 

3 It is almost impossible for Malaysia to be declared bankrupt. Unlike Greece, Malaysia is a sovereign nation with its own central bank. Greece meanwhile is part of the European Union (EU) bloc, which is collectively governed by the European Central Bank (ECB).  Even if Malaysia is short of funds to meet its debt obligations, the government can instruct Bank Negara Malaysia to, in the simplest of terms, print more money to pay the debt. As of end 2017, 65.7%  or less than 2/3 of total external debt of the Malaysian government’s borrowings was issued in foreign exchanges. However, as Dr. Muhammed Khalid from DM Analytics pointed out, “Even a US$1 billion default is still a default.” Malaysia’s impeccable track record of honouring its debt obligations was broken in 2016 when 1Malaysia Development Bhd (1MDB) failed to pay the bondholders of one of the government fund’s power plants. However, 1MDB stressed that the default was due to a dispute with the bond’s guarantor, the International Petroleum Investment Co (IPIC), and not because it was financially distressed.

 

4 Mahathir actually understated the figure. The official costs for each MRT line’s construction are as follows: RM21 billion for the Sungai Buloh-Kajang Line (SBK), and RM32 billion for the Sungai Buloh-Serdang-Putrajaya Line (SSP). The Circle Line (MRT 3), which is still in the bidding process, is estimated to cost between RM40 billion and RM45 billion. These figures however are strictly for the construction costs, and do not take into account any land acquisition and auxiliary costs.

 

5 The Kingdom of Saudi Arabia introduced the value-added tax (VAT), essentially the same as the goods and services tax (GST), in January this year at the rate of 5%.