Malaysia’ Desperately Needs New Economic Story

It’s hard not to feel jaded as “CSI: Malaysia” gears up from another season depicting the cut-throat and chaotic political plot lines dominating one of Asia’s most promising economies.

No, neither Kuala Lumpur nor Putrajaya is the site of one of these popular crime procedurals. But internecine politics have long had a tendency to put this resource-rich nation of 32 million people in the limelight for all the wrong reasons.

The most spectacular crime story of the last 13 years was the rise, fall and attempted return of Najib Razak. The wild tale of his 2009-2018 premiership still has an even-Hollywood-screenwriters-couldn’t-have-dreamt-this-up quality.

Shakespeare seemed a key inspiration as the son of the 1970s prime minister who created Malaysia Inc. promised to dismantle his father’s creation—only to make things worse. Those surprised that far from “draining the swamp,” U.S. President Donald Trump added bigger and badder creatures will get the point.

The state fund Najib launched in 2009, 1Malaysia Development Berhad, actually made it to Hollywood. A portion of the billions of dollars that went missing helped finance Martin Scorsese’s 2013 blockbuster “The Wolf of Wall Street” starring Leonardo DiCaprio.

Though Najib was convicted of corruption in the 1MDB fiasco, one of history’s largest money-laundering scandals, the man keeps hinting at a sequel. Thankfully, voters in Malaysia don’t seem keen on a “Najib 2” project (Najib’s people still say to stay tuned).

Enter new Prime Minister Anwar Ibrahim, who’s story arc seems plenty fanciful in its own right. His story aired in the original season of “CSI: Malaysia,” back in the late 1990s.

At the time, the Asian financial crisis was upending neighbors Indonesia, South Korea and Thailand. Speculators then pivoted to Malaysia, which they viewed as ripe for a currency devaluation. One of the ringleaders—hedge fund manager George Soros—made life hell for then-Finance Minister Anwar and his boss, Prime Minister Mahathir Mohamad.

Things didn’t end well for Anwar back then. At the time, Anwar was a strong proponent of the pro-market reforms being pushed by the U.S. Treasury Department and International Monetary Fund. Mahathir, by very sharp contrast, imposed capital controls and introduced a fixed exchange rate.

Anwar was abruptly fired before being arrested on vague charges of corruption and sodomy. Mahathir wasn’t content just to shroud Kuala Lumpur in crime tape. He also went in anti-Semitic tirades, blaming a cabal of Jews—Soros included—for undermining Malaysia’s economy.

After years in and out of jail, Anwar finally has grabbed the premiership. The question is whether Anwar can pivot to a better, more productive narrative for a nation with so much economic potential.

Anwar finally getting the top job doesn’t magically create a credible timetable for Malaysia to join the ranks of Asia’s most competitive economies. The risk is that the political wrangling Anwar’s government needs to do to stay in power will leave little legislative oxygen to raise Malaysia’s economic game.

Malaysia is a cautionary tale of what economists call “opportunity cost.” Since the Mahathir-Anwar episode in the late 1990s, each Malaysian leader has spent so much time fending off political rivals they’ve had none to increase competitiveness, innovation, productivity or reduce bureaucracy. When you spend 24/7 struggling to keep your job, there’s no time to do your job.

Economists know what needs to be done: dismantling the 1970s affirmative action policies favoring ethnic Malays over Chinese and Indian Malays. They leave the economy stuck in time, to some extent, as China upends Asia’s playing field and Indonesia, Vietnam and others churn out new tech “unicorn” startups.

As disruption sweeps the region, Malaysia Inc. remains too protective of a status quo that stifles meritocratic dynamics. Sadly, it remains a third-rail issue and can barely be discussed, let alone scrapped.

The frustrating thing is that Malaysia’s vast natural-resource deposits, sizable population and enviable locale in the most dynamic economic region should’ve long ago made it the star of Southeast Asia. Instead, messy political subplots create the kind of counterprogramming that often turns off global investors and multinational CEOs.

Let’s hope that Anwar really can flip an economic script that’s grown old. I, for one, am getting out the popcorn.