International Economic Relations Under Mahathir's Period

International Economic Relations under Mahathir’s Period Faridah Binti Jaafar1, Saiyid Radzuwan S. Ghalib1 , Soijah Likin2 and Nazarudin Zainun3 1Political Science Section, School of Distance Education, Universiti Sains Malaysia, 11800, Penang, Malaysia 2Antropology & Sociology Section, School of Distance Education, Universiti Sains Malaysia, 11800, Penang, Malaysia 3History Section,School of Humanities, Universiti Sains Malaysia, 11800, Penang, Malaysia Keywords: Mahathir Mohamad, Economic foreign Policy, “Buy British last”, “Look East Policy” Abstract: Malaysia's foreign policy under the leadership of Mahathir Mohamad from 1981 until 2003 has demonstrated new dimension and unique identity compared with the previous Prime Minister. Mahathir, in his era has played an important role to bring in a great impact on national, regional and international relations in terms of international economic aspects. During the time, the foreign policy of Malaysia was influenced by various internal and external factors. While many policies were formed, this paper will only analyse international economic relations during 1981-2003 by focusing on the “Buy British Last” and "Look East Policy”. These two policies are important to study as Mahathir seems to re-establish economic relations with Japan as it is the first country he visited after he returned to be the 7th Prime Minister of Malaysia. 1 INTRODUCTION economicallyoriented. Mahathir himself admitted that as the Prime Minister, he gave directives to Mahathir Mohamad was an influential figure in Malaysian foreign envoys or diplomats to emphasize shaping Malaysia foreign policy in the years of more on economic issues rather than politics in the 1981-2003. The main objective of this paper is to countries assigned. It was done in order to identify analyse Malaysia’s foreign policies during Mahathir possible prospects of trade and investment to Mohamad’s periods in the aspects of international improve economic relations with the country economic relation. Foreign policies during Mahathir (Mahathir Mohamad 2009). According to Rafidah Mohamadperiods were affected by different Aziz, the concentration of economic relations took situations, conditions, and time and space. They had place during Mahathir’s tenure as the government great impacts on the national, regional and saw the need to spur economic growth which was international relations. In this paper, the debate upon progressing rapidly during the period compared to the economic relations that took place during the other aspects (Rafidah Aziz, 2009). administrations of Mahathir Mohamadpremier will The country’s good ties with other countries, be be scrutinized in detail for example “Look East it at the regional or global stage, were focussed Policy”. The paper will also provide some insights towards expanding the dimension of economic into the factors why Mahathir wasinterested to cooperation. Mahathir also outlined that the first establish economic relations with certain countries issue to tackle in the local economic sector was the and organizations while distancing from others. ethnic-based economic identification (Mahathir Mohamad 1983). According to Mahathir, during his era, there was a pressing need for the government to formulate and implement foreign policies that could 2 ECONOMIC RELATIONS develop the nation’s political and economic interests UNDER MAHATHIR’S PERIOD (Pathmanathan 1990). Mahathir also concentrated on economic diplomacy whichsaw Malaysia forming Malaysia’sforeign policy under Prime Minister ties with all nations, regardless of a country’s Mahathir Mohamadconcentrated more on economic ideology. In economic diplomacy, what is important ties. The testimony is evident from the foreign is that a country establishes ties with any country, as political policies during his tenure, which were 341 Binti Jafar, F., S Ghalib, S., Likin, S. and Zainun, N. International Economic Relations under Mahathir’s Period. DOI: 10.5220/0008884903410347 In Proceedings of the 7th International Conference on Multidisciplinary Research (ICMR 2018) - , pages 341-347 ISBN: 978-989-758-437-4 Copyright c 2020 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved ICMR 2018 - International Conference on Multidisciplinary Research long as it could benefit the country’s economy anti-British stand was strong, and that he held (ChamilWariya 1989). Britain fully responsible for Malaysia’s topsy-turvy In the early days of Mahathir’s period, he state of the economy. manifested his anti-British orientations in both the The “Buy British Last” policy was re-evaluated political and economic relations. The “Buy British in 1983, after Mahathir felt that there was a slight Last” policy was the reflection of his anti-British change in Britain’s stand, as they extended attempts policy on the economic relation, as a response to to neutralize the two-way frosty relation between British corporate figures who were not only ignorant Malaysia and Britain resulting from the “Buy British with the government’s policies, but often interfered Last” policy (Mahathir Mohamad 1984). The re- with matters related to Malaysian employees. The evaluation was an impact from the global economic British business community was insensitive towards situation in 1983 that saw the British pound suffered Malaysia’s domestic economic policies like New a devaluation compared to the Malaysian Ringgit. Economic Policy (NEP), which required the Once the pound was devalued, the products and participation of the bumiputera, or local people and services from Britain became more affordable, hence it was an issue that Malaysia could not tolerate. it would be unrealistic for Malaysia to continue with Malaysia was disenchanted with The Western the policy (ChamilWariya 1989). According to media’s prejudice towards the country’s domestic Mahathir: “Even when we are saying “Buy British economic policy. The Western media often labelled Last”, we still laid out the welcome mat for British Malaysia as a country that practiced ethnic investors (ChamilWariya 1989).” discrimination in its economic policies as they The policy is considered as a two-pronged claimed that the Chinese and Indian ethnics were strategy in Malaysia’s foreign economic policy as suppressed and denied equal rights in the economy the target was not just aimed at the Margaret and education sectors (ChamilWariya 1989). Thatcher government, but also towards the Malaysian bureaucrats that thought too highly of 2.1 Buy British Last anything British. The British realized that morally, they should not have belittled Malaysia as an The situation led Malaysia to take a different autonomous and independent nation. Meanwhile, approach by launching the “Buy British Last” the bureaucrats were indirectly reminded that not all policy, and the takeover effort of the Guthrie agency products and services from Britain were the best, to by PermodalanNasionalBerhad (Jomo 1983). The the point that they neglected their rights as a citizen “Buy British Last” policy that was launched in 1981 of a sovereign and independent nation to make was actually a domestic economic policy, however, choices if other countries could offer products and it had created a rift with the British which led to services that were better than Britain. strained economic ties with the British (Mahathir In terms of the economy, the “Buy British Last” Mohamad 1982). This issue is reflected in the policy had helped Mahathir face British in dealing conclusion segment in the second chapter which with the increased tuition fees for Malaysian claims that foreign policies are often linked with undergraduates in Britain, and the stock exchange domestic consequences, and vice versa. Through procedure of Guthrie’s successful takeover by PNB. this policy, products and services originating from Mahathir, in his own way, had imparted some moral Britain were to become the last choice in the pecking lessons for British firms to be more sensitive order at government agencies. towards Malaysia’s economic policies like NEP. The above situation appears to be cliché as it was There were a few factors that had contributed to often aired by the Malaysian media to justify the the decision by Mahathir to implement the “Buy “Buy British Last” policy. However, the events that British Last” policy. The first factor is Mahathir’s followed were what Mahathir had been hoping for, anti-British stance; while the second factor is an as it was an opportunity for him to manifest his anti- external factor, that is, the British traders’ British stance, and a chance to teach the nation’s insensitivity towards Malaysia’s domestic economic former colonial master to better respect Malaysia’s policies like NEP. Another external factor is the status as an autonomous and independent country. It approach taken by Japan and Korea in forming has been explained previously that leaders would collaborations and providing assistance to Malaysia never abandon their previously-held ideologies and to advance its economic growth. principles, and they would just lie in wait for the right time and momentum to strike. The same goes with Mahathir, as it was common knowledge that his 342 International Economic Relations under Mahathir’s Period 2.2 The Look East Policy discipline that had done wonders to the Korean economy. When the policy was announced in 1982, The stellar rise of East Asian nations’ economy had only Japan and Korea were chosen as the two model encouraged Mahathir to reform Malaysia’s foreign countries for economic

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