FROM the 60th floor of Menara Ilham in Kuala Lumpur, Daim Zainuddin, now a frail 84-year-old, watches the Malaysia he helped transform from a rubber and tin mining country into one of the first countries in Southeast Asia to industrialise.

The retired businessman and former finance minister from 1984 to 1991 sighs during his interview with The Malaysian Insight as he recalls how the country has evolved, and that while so much has changed, many things remain the same.

“Now that I’ve retired and as I go through all my old files, I ask, why we have gone back to repeating past mistakes?” asked the former right-hand man of Malaysian strongman and two-time prime minister Dr Mahathir Mohamad.

Daim, who assisted Dr Mahathir in revamping the economy in the 1980s through privatisation of government companies and creation of Malay entrepreneurs, was responding to questions about Putrajaya’s over-reach into business and the increasing dominance of government-linked companies in the economy.

Currently, the government-linked companies (GLCs) and government-linked investment companies (GLIC) ecosystem constitutes RM445 billion or 25% of Bursa Malaysia’s market capitalisation. Malaysia’s biggest sovereign wealth fund, Khazanah Bhd, alone makes up 14% of Bursa’s market capitalisation.

The spirit of the New Economic Policy, Daim said, should not see the government competing with the private sector as governments are not entrepreneurs and “do not know how to do business”.  

“We’ve been through recession, financial crises, inflation, stagflation, everything. You name it and we have gone through it. All we need is to go back to the old files,” he said.

Daim, who was the first person to be appointed finance minister from the private sector, said he had to close down or revamp many of the state-owned enterprises that were losing money.

Although there was a lot of opposition, Daim said he pushed through because he had Dr Mahathir’s support.

“There’s always resistance to something that is new that affects politicians’ vested interest. That’s a big challenge. But because I had the support of the prime minister and politically I’m not interested in any positions, I just pushed through.”

“Government companies that are losing money cannot help the country.

“You’re not expanding the (economic) cake, you are contracting it. And then it becomes a burden.”

Daim tells the story of how Sapura Holdings grew, the GLC which has been in the news recently for governance issues. Its rise came from his belief in helping create more Malay entrepreneurs. Certain businesses were sold at par to help Malays get a head start, and one of them was Malayan Cables, which was sold to Sapura Holdings.

Sapura’s shareholder is Permodalan Nasional Bhd, a GLIC.

Looking at how the government of late has been getting more involved in GLCs and GLICs, and how the federal budget is being managed, Daim is worried.

A big concern is Malaysia’s borrowings to fund government subsidies and a bloated administration, said the former chairman of the Pakatan Harapan administration’s Council of Eminent Persons.

“Our financial situation is serious. Pensions, salaries for civil servants are high and debt servicing is high. And according to the civil servants themselves, by 2030, our pensions, salaries and interests will be RM200 billion a year.”

To make things worse, Daim said politicians are expanding the civil service to gain more votes.

“The politicians want to exploit the 1.6 million civil servants for votes. Plus a wife and two kids and that is five million voters. It’s a vote bank and they want to keep on expanding till they forget about the nation. This cannot go on. I brought this up back then as it cannot go on, even then. And now they are talking about a four-day work week.”

“Some of them are objecting but the Public Service Department still wants a shorter work week. I always say, it’s not how many hours you work but what is the productivity.”

“Productivity is very low. They must understand. It’s not how much you put in but how much you produce. That’s economics. They don’t understand. So, how do we explain it to them?”

Education and corruption

Another concern for the Lincoln’s Inn lawyer is the quality of education in the country and how it affects competition with other Southeast Asian countries.  

Expanding the economy is a simple thing if there is a proper plan, said Daim, who obtained his PhD from Universiti Malaya at 81 after working 11 years on his thesis on the failures and successes of the NEP.

“You manufacture and then you export. This is what the Germans, South Koreans did. At every stage in South Korea and Japan there is this thinking. But there is no plan here. If you want to do that, you need education but our education system has failed.”

He said the inclusion of religious studies into the education syllabus has not helped.

“In the 1980s, when Anwar Ibrahim was education minister, he introduced the Islamic curriculum – fardu ain and fardu kifayah.”

“The Prime Minister’s Office had another division for Islamic affairs, which later became the Department of Islamic Development Malaysia (Jakim). They also introduced the same lessons. By the 1990s, this cost the federal government RM668 million.”

Jakim has been allocated a budget of RM1.5 billion this year.

Daim said back when he was a student, religious studies were held once a month after school and that did not make the children any less Muslim.

“In fact, it’s worse now as leaders have become corrupt and the rakyat say it’s okay.

“We must look back and review all these things. Something has gone wrong along the way. We have wasted so much money and the result is not positive. Be practical and don’t waste the rakyat’s money. I’m looking at history and we have to change.

“Unless the education system is correct and has the right moral and religious values, there will be more corruption.

“And because of corruption, your children will not have good schools or teachers and they cannot get a better quality of life. All this affects you.” – July 10, 2022.