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AWSJ: M'sia PM Readies His Party's Line
By Leslie Lopez

22/6/2001 9:34 pm Fri

[Mahathir tidak menyentuh dua isu penting - isu Daim dan lapuran kewangan Umno kerana ia akan menikam dirinya. Dia sudah mengatakan Daim tidakpun ditahan atau disiasat. Ahli Umno mungkin mendesak agar penyata terperinci dan aset parti dibentangkan. Jika beliau mengatakan Umno tidak lagi memilikki sebarang perniagaan, dia akan diserang balas. kenapa anak-didik Daim diselamatkan jika Umno langsung tiada kepentingan.

Jika Mahathir mengakui Umno masih mempunyai aset seperti dalam Renong, mereka mungkin akan marah juga kerana Mahathir membiarkannya lingkup dan sarat dengan berbilion-bilion hutang sehingga dana awam dikerjakan. Ini akan mengundang ribut kemarahan kerana tidak telus, tidak cekap, dan tidak bertanggungjawab.
- Editor

The Asian Wall Street Journal
21st June 2001

Malaysian Premier Mahathir Readies His Party's Line

By LESLIE LOPEZ Staff Reporter

KUALA LUMPUR -- Prime Minister Mahathir Mohamad faces a critical political test as his United Malays National Organization convenes its annual meeting this week amid growing concern that Malaysia's dominant party is losing its clout.

Dr. Mahathir - who has been UMNO president and Malaysia's premier for almost 20 years - must find a way to revive the party or confront the prospect of steadily dwindling support from UMNO's rank-and-file members, according to Malaysian political analysts and UMNO politicians.

Dr. Mahathir, who addresses about 1,800 UMNO delegates today, could attempt one of two strategies, analysts suggest. He could confront UMNO's woes - sagging membership, factional infighting and allegations of money politics - by promising to reform the party by cleaning up corruption, advancing younger officials and adopting more consensual decision-making. Or Dr. Mahathir could try to blame some of the party's ills on others - most likely former finance minister and UMNO treasurer Daim Zainuddin - to deflect possible attacks on his leadership.

Whatever Dr. Mahathir decides, his speech is likely to set the tone for the next three days of deliberations among senior UMNO leaders from all over the country.

A strong-willed politician known for his tight control of party decision-making, 75-year-old Dr. Mahathir has been able to dominate Malaysia like no previous leader. He has outlasted three deputy prime ministers and several key onetime allies, such as Tun Daim, who resigned as finance minister earlier this month.

But these are troubling times for UMNO, and analysts say unless Dr. Mahathir offers party members a fresh direction to restore UMNO's waning prestige, pressure for a leadership change could mount. Dr. Mahathir hasn't named a preferred successor and has given no indication that he will step down anytime soon.

"The issue is really about the leadership succession," says a businessman close to senior UMNO politicians, including the premier. "Mahathir clearly has no plans of leaving soon, so he will need to provide something fresh."

UMNO - which has led Malaysia since independence in 1957 and is the backbone of Dr. Mahathir's National Front coalition government - has seen its fortunes ebb in recent years. Many ethnic Malays abandoned the party following Dr. Mahathir's dismissal of popular former Deputy Premier Anwar Ibrahim in 1998 and Datuk Seri Anwar's subsequent conviction and imprisonment on charges of sexual misconduct and corruption.

Dr. Mahathir's former protege alleges that he is the victim of a political conspiracy. It is a claim many Malaysians take seriously and one that has caused many ethnic Malays, who had rarely questioned authority in the past, to turn against UMNO. And analysts say widespread corruption within UMNO, largely a result of the politics of patronage Dr. Mahathir has exploited to stay in power, has also blunted the party's appeal among younger and better-educated Malay voters.

Unless UMNO reforms quickly and reclaims its traditional political turf, divisions among Malays, who account for almost 60% of Malaysia's 23 million people, could become unbridgeable. That, say UMNO officials, could damage the party in Malaysia's next general election, which the government must call by mid-2004.

Political problems are exacting a toll on Malaysia's economy, which independent economists predict will grow 3% to 4% this year, down from 8.5% in 2000. In recent years, for example, state-backed bailouts of politically well-connected companies have helped dull investor interest in Malaysia's flaccid stock market, making it difficult for many debt-laden businesses to restructure.

Meanwhile, Malaysia's declining foreign-exchange reserves have increased speculation that Kuala Lumpur may devalue the ringgit, which is currently pegged at 3.8 to the dollar.

Some economists say Dr. Mahathir could attempt to calm restive UMNO members and jittery investors. They suggest, for example, that Dr. Mahathir could muffle his often-strident attacks against foreigners and pledge to stop state bailouts of favored companies.

But many UMNO politicians don't expect Dr. Mahathir to change course. "You might see some minor modifications," says a former minister and senior UMNO official. Dr. Mahathir "is a very proud man. To change would be admitting that his way was wrong."

Some UMNO officials say Dr. Mahathir may try a different approach: Blame Tun Daim for Malaysia's problems. Some UMNO members privately criticize Tun Daim as the architect of unpopular state-sponsored rescues for companies such as Renong Bhd., UMNO's former business arm, and for the government's costly recent purchase of a stake in Malaysian Airline System from a Daim business protege.

Such bailouts irked many ordinary Malaysians, as well as UMNO members, who are struggling financially because a weak economy has derailed the party's patronage machine.

Tun Daim - who isn't attending this year's party meeting and doesn't command much support within UMNO - would make a convenient scapegoat, some political analysts suggest. But it would be a risky gambit for Dr. Mahathir: Any unbridled attack on Tun Daim, his longtime friend and confidant, could create embarrassing new political dilemmas.

For one thing, Dr. Mahathir would have to explain how he was misled by Tun Daim, who had been his closest economic adviser for 20 years.

Another potentially touchy question is the state of UMNO's finances. Prior to 1984, UMNO owned a number of businesses as a means of raising funds for the party. But its business operations were limited, small and not particularly profitable.

In 1984, Dr. Mahathir named Tun Daim, a former lawyer, as UMNO's treasurer, with a mandate to overhaul the party's business interests. Tun Daim, who also became finance minister in 1984, reorganized and greatly expanded UMNO's corporate empire. He installed his associates to manage party-owned companies - many of them listed on the Kuala Lumpur Stock Exchange - and awarded them privatization projects, such as the building of toll roads and other infrastructure projects.

But UMNO's business structure was threatened in 1988, when the party was forced to disband and its assets were confiscated by a government agency after a Malaysian court ruled that UMNO itself was illegal because of membership irregularities.

UMNO was quickly reconstituted. Shortly thereafter - through a series of complex transactions that were never publicly explained by the party or the government - UMNO's supposedly confiscated companies were back in the hands of the same people who managed them as party nominees.

Senior UMNO leaders, such as Tun Daim and Dr. Mahathir, have since repeatedly declared that UMNO no longer owns any of its former businesses, either directly or through nominees.

But that's an assertion that few UMNO members or local businessmen take seriously, because of the lack of a convincing explanation of how UMNO's old assets migrated from the party to Tun Daim's associates. They assume that, somehow, UMNO still controls such concerns.

With Tun Daim out as UMNO treasurer, party members might now insist on a full accounting of the party's assets from Dr. Mahathir, who has assumed the treasurer's post.

That could put Dr. Mahathir in a bind. If he sticks to his earlier public claims that UMNO no longer owns any businesses, it could prompt a backlash from party members. They could demand to know why the government bailed out Tun Daim's associates at historically UMNO-linked companies if the party no longer had any interest in them.

But if Dr. Mahathir acknowledges that UMNO does, in fact, still control companies such as Renong through secret nominees - and has been rescuing such concerns with state funds - it's likely to provoke a fresh political firestorm.