Setting the stage for a new Malaysia

TUN Dr Mahathir Mohamad may be setting the tone for Malaysia's revised geo-economic policy.

Narendra Modi, India's prime minister called upon Mahathir not too long after the latter assumed office. This is a significant meeting in so far as Modi has been keen on "Acting East" and forging stronger ties with Asean.

With Mahathir at the helm, Modi may well have an active and influential partner in the region.

India is likely to be an economic powerhouse in the coming decade or two. Any long-term economic architecture will have to take this reality into account.

India may not figure strongly in Mahathir's calculus now. India represents a future era that he may not have to contend with. More pressing is the present; and that requires a reset.

Will Mahathir run the risk of disrupting Malaysia's economic relations with China, which is a powerhouse right now? Not quite, although he will want to tilt the balance.

Mahathir has not questioned China's intention to build friendly, harmonious and prosperous relations with the region or with Malaysia.

If anything he has added a dose of reality to some of the questionable investment agreements that Malaysia had entered into with China; and that is why he wants these deals to be reviewed.

Mahathir has clearly said that "we will be friendly to China but we don't want to be indebted to China".

Not that he does not realise China's global position, which he was clearly aware of when he stated that China is "a big and powerful country and our policy is to remain friendly with China".

The prime minister is obviously keen to do business with anyone who means business, provided there are no hidden caveats and Malaysia is not compromised.

If there were any question of wanting to cut off China, Mahathir would not have met with Jack Ma.

This brings us to Mahathir's meeting with a second foreign leader – Shinzo Abe. Why did Mahathir choose to go to Japan on his first official overseas trip soon after he came to power?

First, Mahathir probably sees value in reviving his Look East policy, perhaps in a different form and for slightly different reasons. There is an element of nostalgia, for sure.

Second, the Najib administration did not treat the principle of equidistance with the sensitivity it deserved. There was a tumbling over to China coupled with a reticence to engage enthusiastically with Japan, at least with nothing of the enthusiasm that Tokyo enjoyed during Mahathir's days.

Third, Mahathir has always believed in equidistance from global super powers, preferring to work with the larger economies as equals. Mahathir would, by logical extension, be willing to cooperate with China's One Belt One Road initiative, without Beijing using Malaysia as its playground.

In that respect, reaffirming Malaysia's long friendship with Japan is a reassertion of Mahathir's pragmatic approach to geoeconomic policy.

The principle of equidistance is not possible unless something like the Non-Aligned Movement (NAM) is in existence. In lieu of NAM, Mahathir would see this being fructified through a more integrated Asean linking up with other countries such as the US, China, Japan, Korea, India and Central Asia. This would be a revival of his East Asian Economic Caucus (EAEC) concept, an idea that may have its share of non-adherents.

Without doubt, a well-knit Asean, through the EAEC, would be able to give countries such as Malaysia more access to markets, but without having to pay an onerous price for doing so.

In this scheme of things, neither the US nor China would try to dominate Malaysia. Nor would Malaysia face the dilemma between choosing to align with a falling power or one that is rising.

Mahathir's discussion with Jack Ma signifies his pragmatism. It is indicative that more than being caught up in big power politics, he wants to push ahead with attracting strings-free investment, be it from China, India or any other part of the world.

He understands that trade and investment is Malaysia's lifeblood. Improving Malaysia's networking with the rest of the world's markets must take top priority to foster better trade and investment. Therein lies the importance of his EAEC idea.

Besides, EAEC gives Malaysia the opportunity to escape the either-or situation. It allows countries like India to trade and invest in Southeast Asia and other countries while being able to show their home constituencies that they can make gains without paying for it with tough commitments. Of course, EAEC will have its share of detractors.

Mahathir's meetings will set in motion a couple of initiatives: It will return to the default position of maintaining equidistance between super powers. Japan will not feel it is being edged-out of Malaysia's investment landscape. Malaysia will stand for a free and unaligned Asean, with Mahathir leading a campaign for a new trade architecture that might be more palatable to countries in Asean, which will minimise the conflicting demands of China, the US and India. All of this measures up to quite a bit.

Much as Mahathir has a tough job setting domestic affairs right, he has the no less easy task of realigning the country's geoeconomic policy.

Dr Shankaran Nambiar is a senior research fellow at the Malaysian Institute of Economic Research. He is author of "The Malaysian Economy: Rethinking Policies and Purposes" and "Malaysia in Troubled Times." Comments: letters@thesundaily.com