Chapter11: Embracing Free Enterprise

Encouraging Entrepreneurialism

The catalyst that drives, or more accurately the spark that ignites, capitalism is the entrepreneur. She is the individual who sees the opportunity to sell an item or service at a price higher than the cost of making or obtaining it. She sees the need or demand, and then goes about to meeting that need, and in the process makes a profit for herself. Entrepreneurs are, in the words of the MIT economist Lester Thurow, “…the change agents of capitalism.”

It is at this point that the religious types sense an argument against capitalism. Their argument is simply this: capitalism feeds on the individual’s motivation to make a profit, to get rich. My rebuttal is equally simple. The entrepreneur provides a much-needed service or product where none exists before. If that product or service is not needed, then his enterprise will fold soon enough. As for the personal greed motive, it is worthwhile to note that every successful entrepreneur ignites a chain of events that brings benefit to countless others. Ray Kroc who founded McDonalds restaurants with the simple premise that consumers need a reliable place to get consistently tasty and affordable meals, started a chain of process that helps ranchers and butchers (source of meat), potato growers (the chips), and countless youngsters with their first job. This is separate from the great services it provides consumers.

As for the personal greed argument, it is well to remember McDonalds create more Black millionaires in America than the all the professional sports leagues combined. Similarly when Bill Gates created that software operating system, he also provided opportunities for thousands of other software engineers to write applications for his Windows program. Of course Ray Kroc and Bill Gates became fabulously rich, but they were not alone; they brought along countless others. Equally important and bears repeating, they provided much-needed services, products, and most importantly, jobs. The value of the benefits to society they created with their services and inventions far outweigh the wealth and rewards that they get. That is the beauty and genius of free enterprise.

While the religious types may emphasize the material gains accrued on the individual businessman and trader, I emphasize the goods, services, and jobs she provides to the community.

In feudal societies one’s fate depends exclusively on birth and heritage. From there flows wealth and honor. Providential gifts may at times add new players to the scene. In the movie Giant, the scruffy character played by James Dean catapulted himself into the establishment when he found oil (black gold) on his parched desert property. But those were the days. Today, to use that overworked modern cliché, there is a paradigm shift.

“The old foundations of success are gone,” observes Lester Thurow. “For all of human history,” he writes, “the source of success has been controlling natural resources – land, gold, oil. Suddenly the answer is ‘knowledge.’” It is not that the usual rules have changed in the “New” economy, rather that the traditional ingredients for growth – land, resources, and labor (the factors of production, in economists’ lingo) – are being superseded by knowledge.

The old economic axiom – that real wealth results when more is produced with less, that is through increases in productivity – still holds. Consider a padi farmer. By working an eight-hour day he produces a ton of rice. In an effort to increase his harvest, he works an additional four hours per day and produces an additional half-ton of rice. Even though he may bring home more rice, his real wealth has not increased. The reason is that the additional yield was at the expense of his time away from his other activities, such as his bonding with his young family or even at the expense of his health. These too carry their costs. What he would have earned more from the extra rice production, he would have to pay his doctor’s bills for his backache! Besides, there is a physical limit to how many more hours in a day he can work. If he persists with this technique of wealth enhancement to the extreme, he may end up with losing both his family and his health, and the end result would be a big negative.

I he would change his technique however, from simply putting in more hours to making those hours more productive and efficient, then he would be creating more wealth. For example, he could use high yielding seeds. Then the difference between the increased yield minus the added cost of the more expensive seeds would be the newly created wealth. Or he could rent a tractor and cultivate three times the area to yield three times more rice for the same output of time and effort. And after subtracting for the added costs of the tractor rentals, he would still come out ahead. That is real wealth creation, that is, output in excess of the efforts expended. We should not just work hard in the same manner, rather work hard to find ways to work smarter and be more productive.

It is the individual entrepreneur who brings about change and creates wealth, not governments or institutions. Thus we must ensure an environment where entrepreneurs can thrive, where their activities are rewarded and valued so as not only to encourage them but also more importantly, others to be like them. Entrepreneurs are not born; they can be trained and nurtured.

In the West, entrepreneurs like Ted Turner (the man who founded the all-news network, CNN) and Bill Gates have acquired mythic proportions with their massive corporations and fabulous wealth. This larger-than-life image both helps and hinders other would-be entrepreneurs. The hindrance comes when budding and unsure entrepreneurs believe that such enterprising skills are inherent and cannot be taught. But it is well to remember that for every Ted Turner there are thousands of other successful entrepreneurs who may not have the same wealth and fame but nonetheless are providing valuable services to the community and giving employment to their fellow citizens and at the same time making a living for themselves. Each of them, big and small is a contributor to the economy. Every one who starts his own business is an entrepreneur. The youngsters who hawk T-shirts at tourist stops are entrepreneurs in their own right. So too are the sate (Malaysian shish kebab) sellers and wayside fried banana hawkers. In our preoccupation with the major figures, we underestimate and even denigrate these small players. We forget that those big names were once small operators. McDonald’s Ray Kroc started with only one hamburger stand in Southern California.

Economists, unable to understand or more correctly unwilling to study these small time businessmen, dismiss them collectively as the “informal sector” of the economy, not worthy of their fancy econometric models. But worldwide they provide substantial employment especially to those with minimal skills. As we have seen by the successes of the micro credit lending programs of the Grameen Bank, even illiterate Bangladesh women can trained to become successful entrepreneurs in their own right.

Chapter 11: Embracing Free Enterprise

Moral Arguments For Free Trade

Daniel Griswold of the conservative Cato Institute in Washington, DC, argues that free trade is morally right, quite apart from the benefits that accrue upon the participants. Free trade respects individual dignity and sovereignty. When one engages in honest work, one has the basic right to enjoy the fruits of one’s labor. No authority has the power to forbid someone from exchanging the fruits of that labor with something else produced by another person, whether that person is in the next village or across the globe. Ibn Khaldun first expressed these views in the 14th Century. Protectionism is just another form of stealing; taking from one group of people (consumers) and giving the spoils to another (usually domestic producers and others who are politically powerful).

Free trade also encourages individuals to cultivate moral virtues. To be successful in trade, one must be reliable and provide the goods and services that are needed and at a price that is affordable. Rewards go to those who are trustworthy, reliable, and deliver on their promises. These are the same qualities that are regarded as virtues in any religion. For Muslims, it is instructive that Muhammad (pbuh) was a trustworthy merchant who brought great profits to his employer before he received his prophethood.

Free trade brings people together through their mutual interests. It is not surprising that inhabitants of port cities and trade centers are very cosmopolitan and receptive to new ideas. Malacca was for a long time a trading center along the East-West maritime trade route, and their people were welcoming of the ways of both East and West. They readily accepted Islam because they were open to new ideas. Residents of inland areas and others not exposed to the outside world tend to be xenophobic and insular.

Another important consequent of free trade is that it encourages other basic human rights. With the free exchange of goods and services comes the free exchange of ideas. This encourages tolerance. The wealth created through trade helps nurture civil institutions. People tend to be more tolerant and less selfish when they are prosperous. Today race relations are so much better in Malaysia than Indonesia because Malaysians are so much more affluent. They have a lot more at stake should disturbances of any kind develop. Similarly as China and South Korea become more open and prosperous through trade, democratic and civil institutions there will be strengthened.

Free trade also fosters peace. It does not guarantee peace but as nations become more integrated and interdependent, they have more to lose with the disruptions of trade. Granted, when Japanese imports were flooding America and American workers were displaced as a result, Japan bashing was rampant among union workers and opportunistic politicians. The spectacle of senior members of Congress smashing Japanese cars on the steps of the Capitol in the 1980s was indeed pathetic. What is often forgotten in such crass displays of patriotism is that most Americans do not share those views. Those scenes are prominently replayed on television screens purely for ratings. The fact is for every factory worker laid off, there are many more jobs created in west coast ports to cater for the increased imports. Besides, as the Japanese become more affluent, their disposable income is spent traveling to America and playing golf at expensive resorts. And to cater for the flood of tourists, Japan Airlines had to buy more 747 jets from Boeing. Trade is a “win-win” encounter.

As for the effect of those politicians smashing Japanese cars, Nissans and Toyotas are still very popular in America. Check those hyperventilating politicians; many drive Japanese cars.

Lastly, free trade helps those at the very bottom of the economic pile, those most deserving of help. Americans may sniff at the peanut wages paid to Indonesian Nike factory workers, nonetheless that same income enables the workers to feed and clothe their families. The income may be peanuts by American standards, but it is a heck of a lot more than what the Indonesians would have earned planting rice or pulling rickshaws. Americans, by buying Nike shoes made in Indonesia, do a lot more good for the Indonesians than all the foreign aids that were poured to that country. Lord Bauer was a strong proponent of trade instead of aid as an effective route for developing a country. The success of South Korea, Taiwan, and hosts of other countries is testimony to that wisdom.

The difficulty in understanding free trade, especially international trade, is that we are burdened by the traditional concept characterized for example, by America buying Malaysian rubber and Malaysians in turn buying American planes. These kinds of trading still go on, but modern trading is much more complicated. For example, according to US Department of Commerce figures, 40 percent of American “exports” are not actual trading as described, rather transfers of goods and services to foreign affiliates and subsidiaries of American companies. These are not trade in the traditional sense but more correctly intra-company transfers, even though they occur across borders.

International trade today is also increasingly not in goods but services like management consultancies, insurance, and professional services. An increasingly important component in this service trade is of course tourism. With countries like Jamaica, it is the major source of foreign exchange earnings. Even in Malaysia tourism is now the second leading foreign exchange earner, after manufacturing. For America, a major source of foreign funds is the tuition and living expenses incurred by foreign students studying on American campuses. That can be in excess of US $30,000.00 per student annually. Malaysia is aggressively trying to tap into that market.

Within the last decade yet another wrinkle has appeared that would dwarf all previous activities of international trade. Today the transfer of funds across borders has less to do with the trading of goods and services, as with traditional trading, but more with trading on money itself. That is, currency speculators trying to take maximal advantage of infinitesimal differences in exchange rates. As the Indian-born Columbia University economist Jagdish Bhagwati noted, while the clear benefits of traditional free trade in goods and services have been clearly demonstrated, no such gains have been demonstrated by the free flow of capital. In his words, “The claims of enormous benefits from free capital mobility are not persuasive. Substantial gains have been asserted, not demonstrated, and most of the payoff can be obtained by direct equity investment. [This] myth…has been created by the…Wall Street-Treasury complex.” Mahathir could not have expressed it better!

Bhagwati’s and Mahathir’s views notwithstanding, nonetheless to those with the money (portfolio and other money managers of the First World) trade is trade, whether it involves widgets, services, or currency. Until the world’s financial architecture can decouple currency trading from other forms of “genuine” trade, this perception will persist.

When Malaysia imposed capital and currency controls in 1998, the investment world took that to mean that the country was no longer open to all trade and foreign investments. The ensuing government’s campaign to prove otherwise came to naught.

Malaysia’s decision to impose capital controls came at the worst possible time, just as the competition for foreign investments became very intense brought on by two confluent events. One, with the breakdown of the former Soviet empire, there are many more newly independent countries all clamoring for the same investment funds. Two, also with the collapse of communism, many countries are now discovering the wonders of free enterprise. They too are clamoring for foreign investments.

For Malaysia, the stiffest competition comes from China and India. They have huge domestic market that is very alluring to investors. China is effectively exploiting that advantage while India remains smug, believing that its large domestic market is attraction enough. Another major competitor is Mexico. Since the adoption of the North American Free Trade Agreement (NAFTA), Mexico has been the recipient of the bulk of foreign investments from America and elsewhere. Even Malaysian manufacturers are setting up plants in Mexico to position themselves more competitively in catering for the American market.

When capital control was imposed, foreign investors deserted Malaysia for countries like China and Mexico. Although those controls are now effectively dismantled, at least for foreigners, the distaste still lingers.

A major misconception not only in the Third World but also in the West is to equate free enterprise with big businesses, in particular large multinational corporations. Much of the criticisms and purported failures attributed to capitalism are more accurately the failures and excesses of big businesses. In America (and also in Japan and Europe), big businesses collude with big government and powerful labor organizations to thwart free enterprise and free trade.

Earlier I referred to the massive agricultural subsidies given to European, American, and Japanese farmers. Similarly, with the giant America steel companies whose inept managers are more adept at lobbying Congress than making their plants more efficient. Their unionized workers too are more skillful at milking featherbedding work rules rather than being productive. The industry is thus forever seeking government help with import quotas and substantial tariffs. President Bush, his commitment to free enterprise notwithstanding, recently buckled to their lobbying and in April 2002 granted the industry substantial tariff protection. There will be other subsidies coming up, with the farm sector next in line. The shipbuilding and cruise industries in America are essentially moribund, unable to compete outside of fat government contracts and subsidies.

Unfortunately many Third World leaders like Mahathir seized upon such behaviors to justify their own retreat from free trade. After all if leaders of capitalism see fit to protect their own industries, why should not Third World countries do the same? I suggest that America progresses despite and not because of these protectionist measures.

Malaysia should rightly challenge America, Japan, and Europe to live to their commitment of free enterprise and free trade. It should not use their protectionist maneuvers as excuses for Malaysia’s own retreat.

Under Mahathir, Malaysians saw their standard of living improved dramatically, despite the 1997 economic crisis. Not coincidentally this occurred at the same time that the country was committed to foreign trade and investments. Under Mahathir, the nation leaped to be among the top twenty trading nations. Malaysia’s experience is by no means unique.

A study by the World Bank showed that in the past two decades the “globalizing” group of nations, that is those nations that had a significant portion of their GDP in foreign trade and investment, grew at the rate of 5 percent annually as compared to about 2 percent for the developed world. That is, they grew over twice as fast. In contrast, the “non-globalized” nations grew at barely 1 percent annually, a rate half of that of the developed world and a fifth of that of the globalized world. This is a remarkably strong correlation that Malaysian leaders simply cannot ignore.

Malaysia should follow the example of Mexico and other countries and seek a free trade agreement with America. Surely Malaysians can compete with the Americans in many sectors. The lives of Mexicans have improved immensely since the adoption of NAFTA. Singapore is also desperately trying to get a similar agreement with America.

Capitalism has served Malaysia well; she should not abandon a proven successful strategy. Malaysia should continue to embrace free enterprise and trade and not take any step that the world may perceive rightly or wrongly as a diminution in her commitment to this cause.

Next: Encouraging Entrepreneurialism

Chapter11: Embracing Free Enterprise

Malaysian Capitalism

In the decade following independence, the Tunku’s administration adopted a laissez-faire attitude towards the economy. He was committed to free enterprise and capitalism, but he wrongly read the Malaysian economy and marketplace. They were neither open nor free. Powerful forces effectively controlled the economy and marketplace. The first were the large and entrenched foreign-owned corporations (usually British) that essentially corralled the major sectors (the “commanding heights”), from plantations and mining to manufacturing and banking. Through their sheer size and well-established network, these companies ensured that their dominance was never threatened. They neither welcomed nor tolerated new entrants and competitors. The second group was made up of ethnic Chinese and Indian “mom and pop” retailers and sundry merchants. Their enterprises were small family affairs. They too protected their economic turf ferociously. They effectively controlled their domain through their clan organizations, often using extralegal means to enforce their code. The “triad” organizations of secret societies are manifestations of this phenomenon.

Between the ethnic retailers and the major colonial corporations, the economy of Malaysia was essentially “locked up.” They imposed stiff and insurmountable barriers to new entrants. In short, despite the government’s commitment to a free market, the economy was far from being free. The game was rigged. Had there been enterprising and competent Malays, they would have been effectively shut out. Even a super entrepreneur like Ted Turner or someone with a Harvard MBA would have a tough time cracking in an honest way such a closed and rigged system.

Much had been written in the past on the supposed lack of business acumen of Malays. The residuum of that thinking still exists today. Had a careful analysis been done, the fault would lay more with the prevailing economic system. It had all the trappings of a free market but the reality was far different. As a result the system actually perpetrated and aggravated existing inequalities while protecting the prevailing monopolies and monopsonies. Apart from the ensuing inter racial hostilities, such inequities also retarded economic growth.

This was not unique to Malaysia. Forty years later the Harvard economist Robert Barro empirically showed that such high levels of inequality, especially in a poor country, reduce economic growth. Perversely, in rich countries like America, such inequities encourage growth. In the 1960s Malaysia was a poor country. Tunku’s misguided strategy and his denial of the aggravating inequities culminated in the country’s worse race riots of 1969.
Tunku’s knowledge of free enterprise was gleaned only from the lecture halls and libraries of Cambridge; he had no real life experience of the free market. His entire career before entering politics was in the civil service.

Fortunately for Malaysia, Tun Razak, Tunku’s successor, intuitively knew what Barro and other economists would later discover. He ignored the conventional wisdom and intervened in the economy aggressively through his New Economic Policy. This massive social engineering initiative upended the entire economic and business scene in Malaysia, effectively leveling the economic playing field. His interventionist policies resulted in Malaysia becoming more of a true free market. Tun Razak’s interventions succeeded because he did not take the economy away from free enterprise system and free market rather he pushed it towards those goals. As a consequent, the nation is far better of today than it was a generation ago.

Thus many of the criticisms leveled at the free enterprise system are in reality criticisms of highly controlled economy that are masquerading or having the veneer of a free market.

There are of course valid criticisms and imperfections of the free market. By appealing to the lowest common denominator (that is, the most profitable), capitalism threatens traditional values and indirectly also our freedom. American mass media, being commercial enterprises, depend on advertising for their revenue; the higher the ratings, the bigger the revenue. Thus programs that offend one’s sensibilities continue to be aired because they garner high ratings. This coarsening of mass culture through the media may encourage some to argue for government intervention. However I prefer a market solution first, as illustrated by the following example.

A few years ago one of the popular comedy shows wanted to break new grounds. The producers wanted to “out” the hostess’s homosexuality by showing her kissing her lesbian lover. An outraged public led by some church leaders initiated a mass boycott of not only the station but also the show’s sponsors. It was very effective; the series was terminated and the star dumped.

Malaysian leaders would prefer that some bureaucrats do the screening and censoring. Much as I hate any censorship, I would prefer one wielded by consumers (citizens) rather than by government. As citizens we can easily threaten the economic interests of corporations, but we would be very wary of challenging the government, especially a tyrannous one. And leaders who favor censorship tend to be tyrants.

While governments are quick to intervene in what they consider to be market failures, alas there is no one to curb the excesses of government. I fear the latter more; look at Iraq and Afghanistan. Simply put, I trust the invisible hand of the free market to the stiff arm of the government.

Then there are the conceited few who feel that they can control markets. Malaysia squandered billions in the futile attempts to “fix” the value of the ringgit, corner the tin market, and most recently, manipulate stock prices. They never learn!

Nor should governments be directly involved in commerce. “Commercial activity on the part of the ruler,” observed Ibn Khaldun, “is harmful to his subjects and ruinous to the tax revenue.” Substitute “ruling party” for “ruler,” and we have the mess that is common in many countries. The colossal losses incurred by Malaysia’s myriad state-sponsored enterprises are enough to eradicate poverty, and plenty left over to improve the schools and universities.

Malaysia presents a unique situation in that most if not all its state-sponsored enterprises are created for the benefit of Bumiputras. Such companies as Petronas, Pernas, and hosts of other ‘Nases are created specifically to jumpstart Malay entrepreneurs and corporate leaders. Malaysia recognizes that growth without equity is a recipe for disaster in a multiracial society, especially when those inequities parallel racial lines: hence the justifications for massive state involvement in the economy. Apart from the federally sponsored companies, there are others started by the state as well as local municipalities. Their objectives remain the same; sadly so are their performances. With few exceptions they all have been commercial failures and a drain on the public purse.

The most spectacular is undoubtedly Bank Bumiputra, now finally and mercifully put out of its misery after multiple expensive bailouts. But there are many now vying to replace the bank’s claim of notoriety. Apart from the financial waste, such rescues and bailouts of floundering state corporations exact another much stiffer price. As Malays managed these companies, the failures inevitably raise old ugly stereotypes of Malay aptitude in and competence for commerce. This is not only unfair but reflects racist stereotyping of the most vicious kind.

What is easily forgotten by such ugly innuendoes is that similar state corporations in China (GITIC) and India (Air India) suffer the same fate, yet no one dares conclude from such debacles the aptitude of the Chinese and Indians for commerce. Such companies fail precisely because they are state sponsored. Amtrak, the American public passenger train corporation, needs generous annual subsidies to keep its trains running. The landscape of corporate America is littered with the carcasses of once mighty empires done in when they lost their lucrative military contracts. With the ending of the Cold War, companies like Lockheed and Martin Marietta that became flabby on easy and lucrative cost-plus Pentagon contracts, are now buried under the competitive pressures of free markets.

In Malaysia, another unintended negative consequence of these Pernas-like companies is that they provide inadequate training for and inculcate the wrong values in would-be Malay executives and entrepreneurs. In ambience and culture these companies resemble government agencies. The mentality of the executives is still civil service-like. Instead of preparing Malay executives to be mean and lean, they succeed in making them flabby and content, solely dependent on easy government contracts. And when these companies fail, those half-baked executives are rarely penalized; instead they are simply transferred to other healthy government-sponsored companies. Thus their unhealthy and non-competitive habits spread.

As a Malay I am deeply offended by the behaviors (both personal and professional) of these Malay corporate figures. First I am appalled that individuals with such meager credentials and experiences were given awesome responsibilities of running multibillion companies. Often these executives’ claim to any formal training is their first degree or professional training as bean counters. Few have formal training in management; and if they do possess an MBA, it is more likely to be from third-rate institutions. Tajuddin Ramli, the former head of Malaysia Airlines (MAS), has no understanding of or experience in the aviation industry. His legacy at the national airline is one of massive debt, over capacity, and lousy employee morale. He built his presumed business acumen running a cellular phone company that had the benefit of a lucrative government monopoly. As Sun Microsystem’s Scott McNealy observes, “You need zero, zero management skill to run a monopoly.”

Tajuddin’s successor at MAS, though widely lauded, has yet to prove his mettle. Again, he lacks formal training in management or experience in aviation. At least the government recognized his limitations and is actively looking for an experienced foreign executive to be his number two as chief operating officer. Frankly, no executive worth his salt would be willing to take a position as a subordinate to someone who does not know his job. I do not understand why the government does not directly employ a proven executive. If she happens to be a foreigner, so what? Once you get a capable executive then have a promising local candidate to be the understudy. Meanwhile send your best young managers to leading business schools.

I highlighted Tajuddin Ramli as a prime example because he cost the nation billions and inflicted irreparable damage to the reputation of Malays. He also epitomized those government-groomed “entrepreneurs.” The Oxford anthropologist Patricia Sloane made a field study of these Malay entrepreneurs, treating them as if they were members of some pygmy tribes. What impressed me from her study was the lack of any value these entrepreneurs bring to their businesses. Their commonality was their ability to secure lucrative government contracts or juicy privatization projects, and their networking with the politically powerful. Their particular talent was on cashing in on their political ties.

If you name any successful American entrepreneur, you can immediately connect some product or service associated with him: Bill Gates, computer software; Andy Grove, computer chips; Steve Jobs, Apple computer; Ray Kroch, McDonald’s restaurants. But if I were to mention some Malay corporate titans, the immediate response by the populace would be to list the lucrative government contracts or privatization projects that they were lucky enough to secure. American entrepreneurs count their inventions and innovations; their Malay counterparts count their connections and networking with the establishment.

As to which class of entrepreneurs would prove to be more enduring, the answer would come soon enough. Just a few years later, those once highflying Malay tycoons are now ignominiously grounded, but sadly not before they blew away billions worth of the nation’s precious and scant resources. There must be a cautionary lesson in all these, one that Malaysia must learn and cannot ignore. Retrace those steps by which these “entrepreneurs” were created and then make sure not to repeat the mistakes. The curse of these UMNO entrepreneurs is that the government has blessed them. Ibn Khaldun’s wisdom is as valid today as it was 700 years ago.

Next: Moral Arguments For Free Trade

Chapter11: Embracing Free Enterprise

Free Enterprise As An Islamic Tradition

There are those who believe that capitalism implies greed, the very antithesis of our core religious value. Nothing can be further from the truth. This misguided notion led many nations to adopt socialism, with its promised egalitarianism.

The Koran explicitly encourages free market. It commands the faithful to venture into the marketplace and earn a livelihood: “When the prayer is finished, then disperse ye through the land and seek the bounty of Allah.” (Surah Al-Jumu’a, 62:10). Earning a lawful livelihood is a duty second only in importance to that of prayer, preached our prophet (pbuh).

In Islam it is better to give than to receive a wage; that is, better be an employer than employee. A businessperson enjoys an exalted position in Islam. Contemplate this hadith: “In the Day of Judgment, the honest, truthful Muslim merchant will rank with the martyrs of the faith; the trustworthy merchant will sit in the shadow of the throne of God on Judgment Day.”

Ibn Khaldun wrote in his Muqadimmah, “Commerce means the attempt to make a profit by increasing capital, through buying goods at a lower price and selling them at a higher price…This may be realized by storing goods and holding them until the market has fluctuated from low to high price…or by transporting goods to another country where they are more in demand.”

Yet today profits are regarded as sinful. In Iran they execute citizens for “profiteering,” as if those in authority know exactly the “right” amount of profit. This from bureaucrats who have never done any trading!

In a free market, trading is voluntary. If the buyer feels that he is being gouged, he can simply deny the seller that profit by not entering into the transaction. Those who feel that there is a “right” price and “appropriate” amount of profit are clearly mistaken if not arrogant.

The market value of anything is what we mortals (seller and buyer) have agreed upon. Only Allah knows the real value of everything. Let me illustrate this. I buy carpets in Afghanistan for $10,000.00 and then sell them in America for $20,000. Assume, to use a favorite term of the economist, that my trip costs $4,000. My profit would then be a straightforward $6,000. Straightforward? Not quite.

First, who is to say that that amount of profit is excessive, modest, or adequate? What is the price tag of the risk I took in going to Afghanistan? The Talibans could have killed me for being a capitalist. Then there is the value of my time away from my family. And if Americans in their dislike for the Talibans refuse to buy my carpets, who will compensate for my loss? Thus the real costs cannot begin to be fully quantified when we consider all the factors.

Second, ponder the benefits of my work. An American family gets to enjoy plush Afghan carpets. More significantly, the Afghan weaver now has a lucrative market for his product. I am in fact providing a living for him. No wonder Islam looks kindly on traders.

A frequent criticism of capitalism is the resultant inequality of wealth and income. In contrast, with communism and socialism, every one is equal. This canard is just that. The communists may be all equal but some are definitely more equal. Besides, as the late development economist Lord Bauer once wrote, “It is by no means obvious why it should be unjust that those who produce more should enjoy higher income.” Bauer, like Hayek, was an early advocate of free trade and a severe critic of central planning. Of special interest is that Lord Bauer spent his formative years as an economist studying the Malaysian rubber industry.

Islam recognizes that in a free economy there will inevitably be differences in the wealth of people. The Koran admonishes against envy, and to respect wealth. In Surah An-Nisa’a (The Women, 4:32), “In no way covet those things in which God has bestowed His gifts more freely on some of you than on others; to men is allotted what they earn, and to women too. Ask Allah for His bounty, for God has full knowledge of all things.” Islam demands justice, not equality.

Central to free enterprise are two related concepts, namely, property rights and contract rights. These too are spelled out in the Koran and hadith. In Surah Al-Baqarah (The Heifer, 2:188), “Do not devour one another’s property by unjust means, nor bribe judges in order that you may wrongfully and knowingly usurp the possessions of others.” Another, “Enter not houses other than your own; until you have asked permission and greeted those in them…If you find no one in the house, enter not until permission is given.” (24:27). A clear affirmation of property rights!

The sanctity of contracts is stated thus, “Keep faith with God when you make a pledge. You shall not break your oaths after you have sworn to them.” (16:91-92). Elsewhere (4:33), “As for those with whom you have entered into agreements, let them too have their due. God bears witness to all things.”

Hernando De Soto, in his book The Mystery of Capital, observes that capitalism fails in the Third World precisely because there is no respect for these rights, especially by those in power. The poor in these countries may have homes and enterprises, but without the sanctity of property and contract rights, they cannot convert their assets into capital. One important component of property rights is the right of the individual to the fruits of his labor. Islam rightly condemns slavery and indentured labor, which are the ultimate manifestations of the loss of this right. As Ibn Khaldun wisely observed over 700 years ago, “One of the greatest injustices and one contributing most to the destruction of civilization is the unjustified imposition of tasks and the use of subjects for forced labor.” Sadly throughout history, the state is the one agency that is responsible for most of the abuses in this regard.

The legitimate role of the state is to ensure that trading is not interfered with and that free trade is indeed free, with minimal or no intrusion by the state in the form of tariffs, quotas, permits, licenses, and other encumbrances. The state must ensure parity of power between buyer and seller. Hence antitrust and other laws to prevent business collusion, price fixing, and other anti-competitive practices. That is, the state must ensure not only a level playing field so the various participants do not have an unfair advantage over their competitors but also the gates to the fields are not unduly restrictive to bar new players from entering. The state will always have an important role, as there is no such thing as the economists’ ideal of a market with “perfect competition.”

Additionally the state must also provide an environment where property and contract rights are enshrined and respected. Lastly, the state has a moral duty to provide for those who are unable to look after themselves: the sick, the aged, and the disabled. Perversely, when the state is consumed with matters that are rightly the purview of business, it is inevitably at the expense of this basic function. The poor and the disabled are much better looked after in capitalist America and Western Europe than in communist China or Russia.

Free enterprise is by no means a perfect system, but despite its defects it has proven to be the most successful and fairest. Capitalism as it exists today is much different from the raw exploitative form during Dicken’s time, and it will again be different a century hence. Critics of free enterprise harp on the shortcomings instead of focusing on the benefits. Besides, these deficiencies pale in comparison to the colossal failures of socialism and communism. And a point worthy of note is that some of the severest critics of free enterprise—like George Soros—are themselves successful capitalists. I am sure communism too had critics amongst its midst, but not many survive.

As capitalism continues to evolve, its imperfections are being remedied or improved. Indeed the 2001 Nobel Prize winners in Economics were awarded to three practitioners who devoted their intellectual pursuits in clarifying real-life imperfect markets, or “markets with asymmetric information.” One of them, Stanford’s Michael Spence, has a special connection to Malaysia as he was an advisor to Mahathir for the Multimedia Super Corridor project. The second, Columbia University’s Joseph Stiglitz, is a strong critic of the IMF over its handling of the Asian economic crisis. In a paper he co-wrote in the early 1980s he found that banks tend to restrict credit in a downturn rather than increase interest rates to compensate for the extra risk (as one would expect) because they know that only companies that are in trouble are likely to seek loans. Thus in a recession banks tend to choke off credit, thus exacerbating the downturn. This was what happened to Indonesia and Thailand with the IMF’s prescription. Mahathir’s policy in handling that crisis by lowering interest rate and loosening credit even at the risk of weakening the currency was well founded as proven by later developments. He restored confidence and allowed the market to function again.

Next: Malaysian Capitalism

Chapter11: Embracing Free Enterprise

Let there be amongst you traffic and trade by mutual goodwill.
—Surah An-Nisaa (The Women) (4:29)

When you are lost, goes an old Malay saying, revert to the source. That seems to be Malaysia’s new economic strategy following the Asian economic crisis of 1997. Buffeted by the turmoil of globalization and open markets, Malaysians yearn for the simpler days of fixed exchange rates and controlled commerce. Some even suggest regressing to the old days of bartering! But as in the jungle, the path back is often overgrown, and one could just as easily get lost in retreating. Malaysia is better off preparing for the new realities of open markets and globalization, instead of retreating to some imagined good old days of yore.

With the collapse of communism free enterprise remains the only viable economic system. It is successful because it has proven to bring the greatest prosperity to the largest number of people. Many have sought a “third way,” a mid course or a bridging between free enterprise and state planning. Alas, there is no such alternative.

Free enterprise or capitalism, in the traditional definition, is an economic system based on the private ownership of the “means of production” and in which profits can be acquired through investment of capital and employment of labor. This is in contrast to socialism and communism where the state owns the “means of production,” and also your labor. In free enterprise there is private ownership of properties, while in socialism and communism, everything belongs to the state. In Islam of course everything belongs to Allah, man is only His trustee (“vice regent”) on earth. Only God can revoke this trust (presumably upon one’s death). Nowhere in the Koran is it stated that Allah has substituted the state for humans for the trusteeship of the earth. In this regard, capitalism rather than socialism or communism is closer to Islam. Besides, the atheism of communism is the very antithesis of Islam.

With capitalism you are rewarded for your efforts and ingenuity; with socialism, the all-powerful state decides how much you deserve or should get. To use a biblical phraseology, with free enterprise you reap what you sow; with communism, to each his due or according to his needs. To revert to my familiar bovine analogy, imagine you have two cows. With socialism, in the spirit of equality, you are required to give one to your neighbor; in communism, you must give both to the state and it may in turn give you some milk in return; with capitalism, you sell one cow and buy a bull. (If you are a real entrepreneur you simply let your cows loose amongst your neighbor’s bull!) Real world experience proves that over time the capitalistic system produces the greatest number of cows.

The failures of communism and socialism are now self-evident. The old defunct Soviet empire is only the most dramatic example. But remnants of that ideology are still alive and kicking to inflict their damage on the economies of many countries, Malaysia included. Present-day stagnant India with its ubiquitous “Permit Raj” is an ever-ready sorry reminder of the dangers of central planning and big government.

Malaysia, despite its commitment to free enterprise and open markets, is still very much enamored with elaborate central planning and fancy Five Year Plans. My own minor involvement in the late 1970’s with Malaysia’s never ending Five Year Plans is instructive. I see little evidence of improvement since then. It was towards the end of the Fourth (or was it the Fifth?) Malaysia Plan. I was instructed to develop plans for the next five years, and countless meetings were held. Only months before we were busy with the midterm review of the current plan. There were still many projects that were either behind schedule or had not been implemented. Prior to that, we were engaged in yet another series of equally intensive reviews of uncompleted projects of the previous plans. We were indeed heavy into planning. In fact I could keep myself busy just attending these multitude of meetings! Many civil servants spend their entire time doing just that. Alas, planning is one thing, executing is another, as I would soon discover.

I had this simple idea that instead of concocting grandiose new schemes that would never see the light of day, I would review all previous plans, starting with the very first one twenty years earlier. To my surprise those plans were all well thought out, practical, and sensible. My predecessors had obviously taken their responsibilities seriously and put much thought into their submissions. The only problem was, few of those sound ideas had been implemented. And the fewer still that had been completed were useless or inoperative because conditions had changed dramatically. For example, by the time the new operating suites were completed they were already severely stressed from heavy usage because of the long delay between planning and completion.

So instead of dreaming of glamorous new projects, I merely updated the old ones. As for the required all-important “mission statement,” I stated simply that my objective was to complete all the projects of previous plans. Direct and truthful! After factoring for expanded capacity and inflation, I arrived at the new estimates with no difficulty. My immediate superior was suitably impressed when I submitted my proposal way ahead of schedule.

The only problem was, when the minister reviewed my submission, he was not amused. First, I did not have any grandiose proposals, and second, so many previous projects had not been implemented. While he understood my point, nonetheless he insisted that I come up with a new and better plan. He was not interested to know why those previous projects were not completed. They were his predecessor’s responsibility, not his!

Fortunately for me, I too had my own personal five-year plan, for soon afterwards I resigned from government service. And mine was fully implemented and on time.

Today (2002) Malaysia is embarking on its Eighth Five Year Plan. I can imagine all those bureaucrats spending countless hours in meetings with their Powerpoint presentations (if they are computer savvy, that is) on their various projects, complete with detailed dates of implementations, costs, and other minutiae. When one sits at one of these meetings one is suitably impressed. That is, until you actually see those projects at the ground level. Then one realizes that all those wonderful plans are just that—simply plans.

My experience with top-down bureaucracy of central planning was equally dismal. I was in charge of the postgraduate educational program at the Johor Baru hospital and had ordered much-needed books and journals for the library. Easy enough, except when it came time to get the funds I was told to submit the request to the Ministry of Health headquarters. I did but was told that books could only be ordered once a year and that somebody from headquarters would be visiting me soon to discuss the purchase order.

That bureaucrat did finally show up and the first thing he asked was whether I had competitive bids! I had difficulty convincing him that buying medical books and journals was not like buying hospital uniforms where one can comparison-shop and accept the lowest bidder. I suggested that the ministry authorizes a sum of money annually for books and journals, and let the hospital do its own purchasing. He was not persuaded but instead tried to impress me with his vast knowledge of the civil service code and the relevant circulars.

A year later the books and journals had yet to appear. It would not surprise me that they had not even been ordered, awaiting no doubt approval from Treasury or perhaps the minister himself. All for a measly few thousand ringgit! Meanwhile those young doctors were without their reference books and journals.

When I pointed this out to a more senior ministry official, his reply was that central planning was a way to cut out corruption. Had they given me the cash, I might have spent it on frivolities or worse, absconded with it. It is pathetic that they would trust me with the lives of the citizens but not a few lousy ringgit. I shudder to think of the bureaucratic maze my purchase order went through.

Extrapolate my experience and one need not wonder why Malaysia is a mess. In response to the economic slowdown, the government in 2001 allocated a multi-billion ringgit fiscal stimulus package. A year later the funds were still stuck at Treasury. Whatever economic impact the planners had imagined in drawing up those wonderful plans, all came to naught. The Prime Minister blamed the Public Works minister; he in turn blamed Treasury; and Treasury of course blamed the contractors. Reminds me of the “blame the dumb cows” story!

I have now come to the conclusion that all these elaborate central planning are nothing more than massive public works projects to keep the glut of civil servants occupied. That those plans occasionally benefited the citizens is merely coincidental!

If that were the only consequence of central planning, it would be relatively benign. The more sinister aspect of central planning is that it would lead to the gradual erosion of the rights and liberty of citizens.

These planners may be well intentioned initially, but all too often when they promise a rosy world, the reality is the reverse. People’s lives would be planned to satisfy the needs and desires of the planners. Left unchecked, these planners become control freaks. This was the prescient observation of the Austrian economist von Hayek in his classic book, The Road to Serfdom. It is significant that the book was first published at the end of World War II when the world was enamored with central planning and Maynard Keynes, a brilliant and eloquent proponent of government intervention, was the towering intellect in economics.

Next: Free Enterprise As An Islamic Tradition

Chapter 10: Freedom, Justice, and the Law

The Judiciary: Justice in Jeopardy

Not only must there be respect for the rule of law, but the laws themselves must be just. Those administering the law too must be just and be seen to be just.

The Malaysian judiciary began on a very high note with judges held in the highest esteem. Tun Suffian set the tone not only with his exemplary personal example but also the depth of his legal judgment and scholarly analysis. The low point of the Malaysian judiciary occurred when the King, acting on the advice of the prime minister, suspended the chief justice and a few of his associates. Sadly from there the judiciary seemed to breach new lows every so often. A retiring senior appellate judge recently publicly confessed his shame for having been a member of that august body. He bluntly blurted about Malaysian litigants being confident of winning even “hopeless cases” as long as they were filed in “certain courts.” A more damaging indictment would be hard to find.

This sorry state of affairs received widespread international attention with the released of a scathing report jointly issued by, among others, the International Bar Association and the International Commission of Jurists. Justice in Jeopardy: Malaysia 2000, asserts, “…well-founded grounds for concern as to the proper administration of justice…in cases which are of particular interest, for whatever reason, to the government.”

The commission in particular was concerned of the manner judges were selected for high profile cases, especially those with political undertones.

Many of the issues raised by those distinguished jurists are familiar not only to lawyers but also ordinary citizens. For example, the commission is critical of the merging of the legal and judicial services that resulted in the rotating door policy between judges and prosecutors. As these officers are answerable to the same superior, it does not encourage the development of distinct and independent services.

The commission resurrects many of the same issues I raised in my earlier book, among them, the insularity and limited experience of Malaysian jurists. As the commission also noted, nearly three quarters of them are promoted from within; there is little or no infusion of fresh talent from the outside. Few of the judges have experience outside of government. Part of the reason is that the pay is not competitive to attract talented private practitioners. Further, new recruits of esteemed lawyers are treated as if they are junior appointees. They are placed on probation for a year or two, and often start as lowly magistrates. That is certainly no way to attract legal luminaries from the outside. In contrast, American judges count among their peer brilliant legal scholars, successful private practitioners, and accomplished statesmen. Malaysia should do likewise and have an infusion of top talent directly into the upper levels of the judiciary.

The way Malaysia selects its senior judges stands in stark contrast with that of Singapore. As related in his memoir, when Prime Minister Lee Kuan Yew was looking for his new chief justice, he instituted a thorough and exhausting winnowing process. He polled successful private practitioners, respected academics, and senior judges for their recommendations. After short-listing the candidates he interviewed each one of them. It is no surprise then that Singapore’s present Chief Justice, Yong Pung How, commands such great respect not only at home but also abroad. No lawyer would dare make flippant or flamboyant remarks about his performance or person. His resume is formidable: the product of the world’s best law schools (Cambridge and Harvard), extensive business experience (chief executive of a major bank), and successful private practice.

No Malaysian judge comes even close to this man in terms of the breadth of experience or sterling academic qualifications. Malaysia does not lack for talent, but the system does not allow them to emerge. Malaysian leaders do not consider senior judicial or other public appointments merit such careful scrutiny.

A telling indicator of the caliber of Malaysia’s top public officials is demonstrated by the silly squabble between Law Minister Rais Yatim and the then Chief Justice Eusoff Chin that took part in mid 2000.

The controversy erupted over the judge’s choice of an overseas holiday companion, a certain lawyer who had appeared before him on a high profile case. When the news first broke out, the judge vehemently denied any impropriety, claiming that he had merely “accidentally” bumped into the lawyer on his trip. But when investigative reporting by Malaysiakini revealed that they had shared the same flight and were together for an extended period during their vacation, the minister felt compelled to publicly chastise the judge.

That a junior minister (and a rookie one at that) could openly humiliate the Chief Justice (a man considerably higher in the government scheme of things) leads me to a disturbing thought: Would a more powerful minister hesitate in letting a less senior judge know of his (minister’s) displeasure?

Rais Yatim, in his previous incarnation as deputy leader of the opposition Semangat Party (it later merged into UMNO, which was how he ended up in the cabinet) was highly critical of the unchecked powers of the executive. Such overzealous dominance, he noted in his doctoral dissertation, threatens the independence and integrity of the judiciary. Wise observation! Alas, that was then. Once in the cabinet he sings a decidedly different tune, one more pleasing to his master’s ears. I would have more respect for Rais had he, before accepting his cabinet position, tried to convince Mahathir of his views. A belief so readily discarded is no conviction at all.

While these pathetic senior public figures spat in public, the more damning criticism leveled in Justice in Jeopardy was conveniently ignored. Indeed both the law minister and chief justice confessed in not having read it as they had not as yet received an official copy, even though the entire document was readily available on the Web. I publicly suggested that the minister should pay attention to the report instead of the judge’s poor choice of holiday companion. That would not have generated as much publicity for Rais, but it would do him and the nation immense good.

In the end what made the government act were the concerns of foreign investors. They were getting increasingly uneasy with the way justice was dispensed, especially in regards to “mega awards” and lawyers “shopping around” for sympathetic judges. Such practices clearly undermine the integrity of the entire system. The Political and Economic Risk Consultancy (PERC) ranked the Malaysian judiciary behind that of South Korea and the Philippines. Increasingly, investors (foreign and local) factor in their faith in the country’s justice system as a major consideration in deciding where to invest their money.

In February 2002, the giant California Public Employees Retirement System (CalPERS) stunned many by declaring its withdrawal from many emerging markets including Malaysia. Although Malaysian officials tried to dismiss or minimize the significance of the decision, there was no question that it was a tremendous blow to Malaysia. CalPERS’s had suffered tremendous loss in those markets. For the past five years, its average annual returns for Malaysia was a horrifying – 18.3 percent. CalPERS concluded that it is not enough to analyze the performances of companies and markets; it must also look at the supporting political and governmental structures. In essence, it concluded that you could not have a “good” company in a “bad” country. Malaysia scored poorly in such areas as political stability, financial transparency, free press, and most importantly in the context of the present discussion, an independent judiciary.

Apart from being the biggest fund manager, CalPERS is also widely regarded as a trendsetter. Malaysia ignores CalPERS observations at its own peril.

In response to Justice in Jeopardy, the government set up a Human Rights Commission (Suhakam), chaired by a former deputy prime minister, Musa Hitam. Thus far Suhakam has reviewed cases of alleged police brutality as well as actively championing citizens’ rights. To me its pronouncements are bland and mild (for example, Malaysians have a right to peaceful assembly). Nonetheless it is a sad reflection of how low human rights and civil liberties have been degraded in Malaysia that such obvious statements were widely lauded and welcomed.

The year 2001 saw the appointment of a new chief justice, Dzaiddin Abdullah. His first order of business was to immediately admit the rotten state of the judiciary, a rare public admission by a senior official, and he then went about to clean up the mess. Thus far his moves have been widely applauded by both the public and members of the Bar. Even Rais Yatim saw fit to claim credit for the judge’s appointment.

Dzainuddin’s elevation was like a refreshing breeze that many would hope will remove the stench from the judiciary.

Through globalization, Malaysians are now very much aware of events occurring elsewhere. Just as Malaysians demand a world standard of education and medical care, so too they now want the same liberties enjoyed by other civilized citizens. Malaysians are not comforted by the fact that they have more freedom than the Indonesians or Iraqis.

Having seen the best they rightly demand the same. The Malaysian system of justice must therefore accept the prevailing international norms. There is no longer a “local” standard. Police brutality and other infringements on basic human liberties are as unacceptable in Malaysia as it is in America.

The negative consequences of the 9/11 tragedies are, among others, intrusive legislations introduced in America to meet this new national challenge. The Patriot Act of 2001 for example, provides for detention of non-citizens without trial. Such moves by the Americans emboldened Mahathir to wield the ISA and other restrictive laws even more brazenly, all the while smugly asserting that the Americans are finally wising up to Malaysian ways. Nothing could be further from the truth.

In their conceit Malaysian leaders are ignoring some essential differences. For one, the new restrictive law had a very rough grilling in Congress. It was also widely debated by the populace. Further, such rules apply only to non-citizens and have sunset provisions, meaning they will be intensively reviewed and will expire in three years unless specifically renewed. These are significant differences that Malaysian leaders do not apparently appreciate or choose to ignore.

If the system of justice in Malaysia were to meet the prevailing world’s norms, it would surely earn the respect of the citizens and the international community. It would also be good for business. Surely that is a worthy goal.

Malaysia spares no effort in trying to attract foreign investors and businesses. Fixing the badly tarnished justice system would go along way to assure these foreigners. In the next chapter I will go into greater detail on how Malaysia could make herself more attractive to investors, local and foreign, by enthusiastically embracing free enterprise.

Next: Chpater11: Embracing Free Enterprise

[The serialization of my Malaysia in the Era of Globalization resumes next week.]

Malaysians Abroad Should Not Vote
M. Bakri Musa
www.bakrimusa.com

Malaysians abroad are misguided and plain wrong in agitating for exercising their right to vote in Malaysian elections.

I can the see the validity for students, diplomats and others on temporary assignment abroad demanding such rights, but then they already have them. For others, especially those who have acquired permanent resident status elsewhere, their clamor for retaining their right to vote in Malaysian elections is misplaced for at least three major reasons.

The first and most important is that since they do not live in Malaysia, they would not have to bear the burden of the consequences of their voting decision. Second, those Malaysians are essentially seeking representation without taxation; that is presumptuous. Third, since they had sought permanent residency status abroad, their focus should now be to prove to their new host country that they are deserving of such a status. Meaning, they should focus their attention, indeed loyalty, to their new adopted land.

My last reason is not major but merely financial. There are considerable added costs to have Malaysians abroad vote in Malaysian elections; I would rather have the government spend that money and resources in Malaysia.

Elections Have Consequences

For an action to be meaningful its consequence must affect the participants, otherwise the exercise is merely academic or worse, a game. It may be a fun game for those abroad to vote in Malaysian elections, but for the locals who have to live with the consequences, it would not be so. In short, Malaysians abroad participating in Malaysian elections are engaged in a fraudulent act besides muddying the waters for the “natives” who have to live with the results.

It is also the height of presumptuousness for those residing abroad to seek political representation but at the same time dispensing with paying their share of the costs, meaning, Malaysian taxes. Americans abroad have a right to vote not only because of the fact that they are citizens, but also because they are taxed on their worldwide income. An American may earn her entire income in Malaysia and in ringgit, nonetheless she still has to pay her share of income tax to Uncle Sam as if she had earned that income stateside. So I can see her demanding her right to vote and that the American embassy provides her the necessary facility so she can readily exercise that right.

Malaysians abroad in contrast do not pay any Malaysian income tax, unless they have Malaysian sources of income, and those Malaysians already retain their right to vote. If the rallying cry of those original New England “Tea Party” colonists back in the 17th Century was “No taxation without representation,” today we have Malaysians abroad who pay no Malaysian tax yet perversely are demanding their right for representation without taxation. Absurd if not arrogant!

The Election Commission’s retort to them should be, paraphrasing the famous words of John Hampden uttered at the height of the English Civil War, what a Malaysian abroad has no right to demand, their home government has a right to refuse.

Malaysians abroad on permanent residency visas should not seek or be given the right to vote in Malaysian elections because they have essentially decided that there is no hope for them in Malaysia. If they were to harbor any sliver of hope for change, then they would have stayed behind and agitated for change from there, where their efforts would have the potential of having the greatest impact.

Besides, having made the emotionally wrenching decision to emigrate, their main focus now should be to adjust to that decision and make the best of it. Thus they should endeavor to plant roots in their new adopted community, be an active and contributing member, and not be bothered with matters (especially political ones) they left behind.

If they should be clamoring for any voting rights, it should be for the right to vote in the affairs of their new community, if for no other practical reason than that those decisions will now directly impact them.

If after adjusting well in their new adopted community, these émigré Malaysians still retain a reservoir of goodwill and gratitude for their homeland and wish to contribute, then there are other more productive avenues to do so than to agitate for the right to vote in Malaysian elections.

Eradicating the “Temporary Abode” Mentality

There is something irritating when I see Malaysians holding green cards or otherwise having permanent resident status being more concerned with Malaysian affairs then they are with those of their adopted homeland. If as a non-native in a new land I feel that way, imagine what the real natives would feel. In America I see frequent backlashes against Mexican-Americans for example, who are more concerned with affairs south of the border than they are with matters American.

A green card (or any permanent resident status) is a privilege; literally millions in the world would give anything to secure one. Having secured one and then to treat it so cavalierly is being disrespectful to the grantor state. Worse, that is the height of ingratitude. In fact in some jurisdictions, any political involvement with affairs back in the “old country” would be grounds for rescinding that permanent resident status.

Permanent resident status is more than a long-term permit to work; it is a statement of your intent to be a permanent resident of that country, as the terminology of the document implies. In many countries permanent residents are granted nearly as full a privilege as citizens. Thus it behooves the holders of such visas to exercise their privileges in such a way as to demonstrate to the host country that they value and thus are deserving of such a status.

If I were a native Singaporean, for example, I would not be too happy to see the republic’s permanent resident visa holders more interested in Malaysian rather than the island’s elections. Indeed there is now a palpable backlash among the republic’s citizens to these new permanent residents who treat the affluent island merely as a place to earn a good income and nothing more.

Malaysians would not be too enthralled either if foreigners granted Malaysian permanent residency status were to preoccupy themselves with matters in their former native land while ignoring local affairs.

A common complaint among Malays is that too many non-Malays treat their Malaysian citizenship merely as a stepping stone for them or their children to emigrate to the West. Thus Malays see the lack of enthusiasm by non-Malays to learning our national language as a manifestation of this “temporary abode” mentality. So when these Malaysians emigrate and then agitate to have the right to vote in Malaysian elections, they are reverting to their old stereotypical “temporary abode” behavior, albeit not in Malaysia this time but in their new home country.

Just to be clear, I am directing my comments not to those Malaysians on temporary assignment abroad as students, civil servants and company employees. For students especially, I would encourage and give them every facility to vote. Doing so would be the best way to get them engaged in the affairs of their homeland. God knows, if they were back in Malaysia their political activities would be severely circumscribed. At least abroad they would be free to partake in full in the political affairs of Malaysia.

If the Malaysian government were to give in and pander to those abroad (parties in power tend to do that!) then I suggest that those voters be made to pay for the full costs of making the necessary accommodations. In my estimation, a fee of US$100.00 per voter would be appropriate, at least in America. That fee would of course be waived for those with proof of payment of their Malaysian income tax in the preceding year.

Impose that fee and then see how many abroad still remain “passionate” about Malaysian affairs to demand the right to vote in its elections. Now if those expatriate Malaysians were as passionate in seeking amendments to the Income Tax Act to making their global income subject to Malaysian taxes as they are in clamoring for their rights to vote in Malaysian elections, then I would salute them, but I would still not support it simply because of the costs it would impose on me.

The Malaysian Election Commission faces a host of monumental problems not least of which would be to clean up the electoral roll and streamline the postal voting process for those already in Malaysia, as with the police and military personnel. The clamor of Malaysians abroad seeking the right to vote is so far down the list that I can hardly see it. Further, I see little merit in representation without taxation.

Chapter 10: Freedom, Justice, and the Law

Personal Liberty in Malaysia –
Chilling Effects of Repressive Laws like ISA

An editor of a Malaysian professional publication invited me to be its regular contributor. I readily agreed, and aware of the local psyche and ambience, purposely submitted a rather bland first piece. He readily published it but chided me for being too cautious as Malaysia “has changed” since I left the country. Encouraged, my next piece was more critical, and sure enough, his earlier encouragement notwithstanding, he sheepishly told me that his board had vetoed my submission! Thus ended my brief career as a columnist for that outfit! I later submitted the same piece to a mainstream paper (owned by the ruling party) and much to my surprise, it was published unchanged. I later sent the editor of the first publication the published copy; he felt rather small. The truth was, the mainstream paper had a new editor and I decided to test his professionalism and independence.

In another episode I submitted sample chapters of my first book (choosing carefully the least critical ones) to an establishment Malaysian publisher. He was enthralled and added that he had published a number of books by members of the ruling elite and that he looked forward to publishing mine as it would be a pleasant departure from the usual staple. But when I submitted my entire manuscript which contains chapters much more critical, he demurred. Receiving publishers’ rejection letters is not a novel phenomenon with me, but what startled me was his apologia. He complimented me ad nauseam, for being “brave” and “forthright,” but he was afraid of the backlash as he did considerable amount of business with the government. I also approached other Malaysian publishers and printers, but the refrain was always the same. They had too much business with the government and its myriad companies to risk publishing my book. It would have been better if they had simply told me that my book was not up to their standard. Or perhaps that was their soft Asian way to “save face” and spare me any embarrassment! My book was finally published in America and again, thanks to the Internet and globalization, my publisher had no difficulty marketing it not only in Malaysia but also worldwide. Had I used a Malaysian publisher, my book would not have had global exposure.

I relate these incidents to illustrate the chilling effects of these intrusive rules and restrictive regulations. People exercise self-censorship and excessive caution for fear of official reprisal. Instead of expanding the envelope they stick to the tried-and-true. But progress depends on citizens daring to explore the edges and beyond.

These restrictive laws also foster the kind of behavior that is crudely referred to as “sucking up.” This is an absolute anathema to progress. Subordinates and citizens would then choose a decision or path of action that they think would please those in power. The results can be disastrous as exemplified by the following recent examples.

It is an open secret that Malays are preferentially admitted to local universities while non-Malays with comparable or even far superior grades are routinely rejected. None deny this racist practice and indeed many in the senior levels of the establishment go to great length and contorted logic to justify what is clearly an unacceptable practice. But because there was no public outcry and more significantly, lack of open denunciation by the leaders, the practice persisted and indeed spread.

In late 2001 it was revealed that such obnoxious practices are also being done at the primary school level. That is, students are academically streamed based on their race even at such a tender age. When it was first revealed, the education minister denied, but later in the face of more evidence, he admitted it occurred but was an isolated incident and thus not worthy of his attention. But when the teachers’ union exposed that it was indeed a rampant practice, the minister went through great hoops to justify it! Taking their cue from the minister, bureaucrats began repeating the same mantra – “in the national interest” – to justify their actions. Only when the prime minister and his deputy condemned the practice did everyone realize how institutionalized racism is in the education ministry specifically, and the government generally. This sordid affair occurred because those underlings thought they were doing what their leaders wanted them to do. “Sucking up to the powerful” wrapped as the “national policy.”

To be fair, the minister did finally convene a committee of outside educators to examine the allegations. Chaired by a retired academic, the committee refuted the charges, claiming that there was no intent to discriminate. A further controversy ensued following the release of that report, as the committee made public only an executive summary, not its methodology and full findings.

That primary school debacle came in the heels of another major scandal, this one at the other polar end of the education spectrum involving the Certificate for Law Practice (CLP) examination. The CLP is required of all law graduates of private colleges; those from public law schools are exempted. To appreciate the unfolding drama, one has to understand the political background. Public law faculties in Malaysia, “in the national interest” are the near exclusive preserve of Bumiputras, while the private ones cater to non-Bumiputras. One does not have to be particularly astute to sense the poisonous race potential of the CLP mess.

It started out rather routinely: the tests’ questions were leaked. The results of the investigations were also routinely Malaysian: some minor clerks were arrested. But from there things unraveled very quickly. It turned out that such leaks had been going on for years! But the greatest bombshell was that the released scores were not the same as what the candidates had earned from their examiners.

The scores had been tampered, and that this too had been standard practice for years. This brought forth an outpouring of outrage from many, including Law Minister Rais Yatim. The upshot was that the director was suspended. No further details were forthcoming; the man chose to keep quiet.

In the flurry of letters to Malaysiakini (the mainstream media saw fit not to cover the issue extensively), it was revealed that the director was a former associate dean of MARA law school (a public and exclusively Malay institution) and he was chosen at a time when those MARA law students had to sit for the CLP. And they were not doing too well; thus the insidious practice probably began then. Today those MARA students do not need to sit for the CLP, but old habits die hard. When the truth finally emerges I am sure that the misguided soul thought that what he was doing, tampering with the CLP, was also “in the national interest.” To imagine that hundreds of Malay would-be lawyers at MARA were under his tutelage boggles the imagination!

Malaysia’s many restrictive laws have another more corrosive effect on society. They discourage healthy public debates on important issues. Indeed certain topics are deemed “sensitive” and beyond the pale of discussion. The leaders have decided, in their wisdom, no further new inquiry or insights are needed on such important issues. They are deemed settled. No more discussion!

This mindset reminds me of the mentality of Muslim scholars and leaders of the 10th Century when they decided that everything were deemed settled in Islam and that no new inquiries were needed. Today, Malaysians too have their own secular or political “closure of the gate of Ijtihad (rational discourse).” The effect on the nation of this stricture will be equally destructive.

The issues deemed sensitive include among others, the Malay language, special privileges, and the status of the sultans. With time the list will surely expand. Anyone breaching such prohibitions is subject to the dreaded ISA or the equally feared Sedition Act. Many scholars, politicians, and writers have met this fate. Even more startling, such gross violations of the basic rights of the citizens evoke minimal or no outrage from the general public.

Malaysian leaders view public discourses as dangerous. The ghost of the 1969 savage race riot still haunts them. They still view Malaysians a generation later as being dumb and easily swayed by emotional and chauvinistic exhortations of opportunistic politicians. Unfortunately today many Malaysians, especially Malays, still demonstrate this juvenile tendency. The 1998 ugly demonstrations over the firing of former Deputy Prime Minister Anwar Ibrahim merely confirmed the worse suspicion of leaders like Mahathir that Malaysians cannot act rationally or discuss their differences in a civil manner.

This leads to a “Catch 22” situation. Unless Malaysians are trained or encouraged to have healthy public discussions, they will never learn to tolerate dissenting opinions and have civil disagreements. Learning to disagree agreeably is an art, and Malaysians must be trained and prepared for this difficult skill.

Foreign visitors to America are always impressed with and surprised at how civil American political leaders are toward each other. In the Senate, a flaming left wing liberal like Edward Kennedy could cosponsor legislative bills with an archconservative right wing Orrin Hatch. The two may view the world very differently; nonetheless they can still work together for the good of the nation. Indeed the two actually admire and hold each other in high personal regard. While they may profoundly disagree with each other politically, their private and public exchanges have always been civil and decorous. No resorting to name calling.

The Republican and very conservative President Reagan used to invite Tip O’Neill, the very liberal Democrat Speaker of the House of Representatives, to the White House especially after some particularly contentious congressional debates for an evening of drinks and cigar smoking. Such amiable personal gestures go a long way. More significantly, such very public displays of civility are not lost on the general populace. This of course has not always been the case in America. There was time when there had been actual open brawls and gun duels in Congress.

Malaysia during Tunku’s time was remarkable for the personal amiability and personal rapport among its various leaders. The Tunku made it a habit after the opening of parliament for example, of having a social get together at his residence for all members of parliament so they could get to know each other socially and outside the usual context of party politics. The aristocratic and worldly Tunku had very warm personal relationships with the socialist Tan Chee Koon as well as the leaders of PAS. It is to be noted that while Tunku was in his personal behaviors less than a pious Muslim (he admitted as much in his personal writings), nonetheless none of PAS leaders ever called him a kafir. Today PAS leaders callously labeled Mahathir as “Mahafiraun” (evil Pharaoh) and other epithets. PAS followers of course take their cue from their leaders. Mahathir too is equal to the task in return, calling PAS leaders and followers simpletons and backward.

As the result of this coarsening of public discourse, Malaysians have difficulty tolerating differences of opinions among themselves. This is particularly true among Malays. Malays cannot seem to disagree with each other either in political or religious views without imputing ugly motives. This state of affairs will continue as long as Malaysians are denied the opportunities to express their disagreements in the appropriate channels without fear. This trend, uncorrected, will only lead to further polarization and division.

Perversely, the nation’s leaders implicitly encourage this. They would prefer that the citizens be docile and passive followers and leave the decision making to the leaders. The assumption is that they and only they have the exclusive wisdom as to what is good for the country. This is definitely not a recipe for progress.

It is a tribute to the bravery and ingenuity of Malaysians that despite such intrusive and highly restrictive rules, they still manage to express themselves and circumvent those barriers. The government and the ruling party may control the mainstream media, so committed citizens created their own news outlets. When the government denied Harakah, the daily publication of PAS, from expanding because it was attracting an increasing number of readers, its publishers turned to the Internet.

Similarly, Steven Gans together with other committed and independent-minded journalists, fed up with the self-censorship of their editors at the traditional papers, started the Internet daily, Malaysiakini.com to provide an alternative to the government-controlled media. It is a reflection of the hunger Malaysians have for reliable and trustworthy news that within a year, Malaysiakini was getting more daily hits than the established papers. Malaysiakini’s success is also an indicator of the citizens’ distrust of the mainstream media. Indeed newspapers controlled by the ruling parties saw their circulation substantially reduced. In addition to providing an independent source of news, Malaysiakini is also performing a vital public service by providing an avenue for such refreshing new writers as Amir Muhammad and Hishamuddin Rais. Amir was a regular contributor to the establishment newspapers, until his editors mangled his essays beyond recognition.

Another brave soul deserving much praise is the political writer Syed Hussein Alattas, or Pak Habib, as his myriad readers and fans know him. When established publishers would not touch his books, he started his own publishing company. He has, in his words, “written more books than the average Malaysian professor has ever read!” His power and influence is such that former Deputy Prime Minister Musa Hitam blamed (credited?) him for his (Musa’s) fall from power. When Pak Habib writes, observes Asiaweek’s Roger Mitton, Malaysian politicians tremble.

I cannot help imagining how many more writers and talents out there that are being suppressed by Malaysia’s many oppressive rules. The flowering of arts and literature in the West is precisely because of the freedom their citizens enjoy. Malaysia will never see a similar renaissance if its citizens are kept on a very tight leash.

Next: The Judiciary: Justice in Jeopardy

Chapter 10: Freedom, Justice, and the Law

Personal Liberty in Malaysia – The Abomination That is the ISA

To me the ISA is an abomination. If indeed the Act is for the protection of society, as its supporters suggest, then it has failed miserably. ISA did not prevent the May 1969 tragedy, the 1984 Memali massacre, or more recently, the equally deadly Kampong Medan melee.

Surprisingly, the government chose not to use this powerful statute to arrest members of the Al Maunah group involved in the deadly arms heist in 2000 of the army camp in Grik, Perak. Instead the state charged them with waging war against the King. Surely such a crime is the ultimate threat to peace. If there is one situation where the ISA would have been appropriate, this is it. But the government opted for an open trial where its evidence was subjected to cross-examination and public display. There was no indication that the nation’s security and safety were compromised by the subsequent open trial.

If the Al Maunah members could be apprehended and successfully prosecuted using statutes other than the ISA, I see no compelling reason why those presently detained under the Act could not be treated in a similar manner. If, as has been intimated, the ISA detainees were bent on overthrowing the legally elected government of Malaysia through violent street demonstrations, charge them with inciting a riot. Get the evidences out in the open so the public could scrutinize them. Reveal the evil intent of these perpetrators.

ISA is not meant to be a substitute for incompetent prosecutors or inept police investigations. Truth is, the ISA is presently being used not to protect the public but as a crude weapon to coerce the government’s increasingly effective critics. Distressingly, the law is also being used to silence political adversaries as well as scholars who dare to voice their dissent.

Taking away a citizen’s freedom without due process is a serious matter. It is disgraceful to read that in the rounds of arrests in 2001, the honorable home minister (and also deputy prime minister) Abdullah Badawi had delegated such enormous powers to his lowly bureaucrats. I would have thought that as the minister in charge, he would have given such decisions the gravity and solemnity they rightly deserve. To hear him say that he was in effect “out of the loop” is simply unacceptable. Surely he must have had some evidence of the dangers posed by these individuals for him to order their detention. Thus once they were detained, he should be intensely interested in the details of their supposedly treacherous plot. Were there dangerous weapons stashed away, and was this part of a larger conspiracy, possibly with foreign involvement? Had the interrogations revealed a more serious threat, the minister would want that information quickly so appropriate preemptive measures could be taken. By waiting passively for a report from his subordinates, the minister wasted precious time. Besides, to treat such decisions casually goes beyond simple incompetence. It is a flagrant dereliction of ministerial duty, bordering on criminality.

Abdullah Badawi’s remark reflects, at best, a flippancy that is grossly inappropriate; at worse, a callous and sinister mindset. These are our fellow citizens whose freedoms are being violated. He acts as if such important decisions are not worthy of his personal attention and deliberation.

I would have been comforted had Abdullah said that he was indeed following the situation closely and that jailing someone without trial was a decision he took with a heavy heart, but due to the sensitive nature of the investigations, he was unable to divulge the details. I would still oppose his decision but at least I would know that he had discharged his ministerial duty diligently and that he had not used that immense power arbitrarily and capriciously. Or worse, delegated that awesome authority to his underlings.

As can be seen with the episode on the senseless beating of Anwar Ibrahim while in police custody, it takes only one overzealous officer to humiliate the entire nation. I expect our government ministers to be chief executives of their agency and be on top of matters under their authority. Abdullah Badawi, if he was truly unaware of the circumstances of the arrests, behaved more like a symbolic sultan rather than as an engaged executive. If this pattern of behavior portends his future performance as prime minister, Malaysians ought to be worried.

Like the frightened and weakened nobility at the time of the French Revolution, today’s Malaysian political nobles are using the ISA as a carte blanche to browbeat the masses. Malaysians today are in the worst possible position: Having a bad law (ISA) administered by an inept minister.

The government had another round of arrests under the ISA of suspected extremist Muslims following the 9-11 attacks. Unlike previous roundups, this time the government was spared any criticism from the West. Indeed Law Minister Rais Yatim, on a visit to Washington, DC, in May 2002, crowed that the US Attorney General was highly supportive of Malaysia’s ISA! It took the American embassy in Kuala Lumpur days before it denied such an endorsement. And it was done by a very junior embassy official. Such a low-key response!

Malaysian officials who were previously so dismissive of American official and public opinions are now suddenly eagerly lapping up any praise from America! I do not know who are being more hypocritical—the Americans or the Malaysians? Obviously to the Americans, flagrant abuses of basic human rights and due process are fine as long as the targets are presumed enemies of the West.

Criticisms of the ISA aside, there are legitimate security issues facing the country that must be addressed. Can this be done adequately without the ISA? Absolutely! The successful prosecution of the Al-Maunah group sans the ISA is one ready example. Granted the police and prosecution had to work hard to prove their case, and well they should.

Another argument favored by the Act’s apologists is that such laws are needed in a multiracial society to prevent those who would incite racial hatred. This is a valid concern, but it can be addressed using far less draconian measures. America has its “hate crime” laws where if a crime is motivated by racial hatred, it carries a substantially more severe penalty. Further, the victims of such crimes could sue their aggressors for civil damages and or violations of their civil rights, the latter carrying a much stiffer remedy. Similarly there could be “no bail” provision for such crimes. There are several viable options short of the drastic ISA.

Another defense of the ISA (and also the prohibition against public protests and rallies) is that Malaysians are fed up with unruly demonstrations and the resulting disruptions to traffic and businesses. Again here there could be provisions whereby those who plan such protests must carry adequate insurance in case of accidents or property damages. Such “event insurances” are common and mandatory in America. Having such insurance as a prerequisite would ensure that the organizers take extraordinary precautions to prevent their demonstrations from getting out of control. If they lose control of their followers they would have to foot a significantly higher premium the next time around.

A more problematic contention is this. The ISA has been a major issue in almost all general elections, with the opposition parties advocating its repeal and the ruling party (Barisan Nasional – BN) defending it. Yet BN keeps wining. But it would be a mistake to read much into this beyond saying that the issue does not resonate with the electorate.

In truth Malaysians do not support the ISA; they merely tolerate it. Electorates do not consider the ISA reason enough to boot the ruling party out.

One of the tragic consequences of the ISA is that its victims are not allowed to contact their families or attorneys. Their families are kept in the dark of where their loved ones are being detained and for how long. Nor are their charges and evidences specified. As has been amply demonstrated by Abdullah Badawi, the current minister in charge, such awesome powers are routinely delegated to minor officials.

Apart from its impact on the victims, the Act carries a far greater and deeper chilling effect on all Malaysians. Much like the barbwire fence would be a constant ugly reminder keeping the animals away from the edges for fear from being entangled, Malaysians are forced to behave extra cautiously. Citizens internalize self-censorship and keep to the narrow and safe. Any new initiative is stifled for fear of offending the authorities. New ideas are evaluated not on whether they will work, but how the authorities would perceive them. How many times have one heard officials say, “It’s not government policy!” And with that robotic response, everything is settled. Case closed! Everyone is scared of running afoul of those in power.

Next: Chilling Effects of Repressive Laws like ISA

Chapter 10: Freedom, Justice, and the Law

Personal Liberty in Malaysia

Freedom is not absolute. In the West where personal freedom is held in the highest esteem, there are still definable limits. Freedom of speech, in the words of an American jurist, does not include the freedom to yell “Fire!” in a crowded theatre, unless of course there is a fire. America has enshrined in its constitution the Bill of Rights with the specific purpose of protecting the civil liberties of its citizens. Among its provisions are the freedoms of speech, religion, and peaceful assembly, together with the rights of due process. These statutes notwithstanding, they did not protect Japanese Americans from being forcefully relocated and incarcerated during World War II, and more recently, the detention of thousands of Arab-Americans following the 9/11 attacks. Today the injustices perpetrated on those Japanese-Americans are widely acknowledged, but significantly, the Supreme Court decision affirming the legality of that mass detention has yet to be overturned.

There will always be limits to freedom; the pertinent question is where those lines are drawn and the role they play in the ordinary lives of the citizens. An analogy will help clarify my point.

Visiting San Diego Zoo I was impressed to see how free the African antelopes were on their little man-made island surrounded by a narrow strip of shallow moat. The animals could easily jump over that barrier and escape. The attendant explained that the moat is a natural barrier (limit) and that the animals felt safe behind it. Indeed they seemed content, munching close to the very edge without ever attempting to jump over. Had they been enclosed behind a high wire fence, the ground near the fence would be barren with the animals pacing to look for an escape route. The moat serves as a limiting boundary but unlike the fence, it does not interfere with the daily lives of the animals. Indeed the animals behave as if there is no boundary even though their movements were limited.

Limits on human freedom can be viewed likewise. In America there are definite limits but they are more like the moat; the citizens are hardly aware of them. They are not intrusive. Executive powers to establish military tribunals for example, are definite boundaries and gross infringements on the citizens’ freedom. Similarly Canada has its War Powers Act that gives its prime minister as sweeping a power as Malaysia’s ISA. Indeed the War Powers Act was used in 1970 by no less than the libertarian Prime Minister Pierre Trudeau. Because these statutes are rarely invoked except in national emergencies, citizens do not feel constrained by them.

There are other less intrusive but no less potent restraints. I may own private property in California but I cannot even pave my driveway without first getting a permit from the county. A colleague had long dreamed of building his retirement home in the countryside. Unfortunately the county discovered a rare specie of salamander inhabiting his land, thus he could not build where he wanted to! A neighbor had a ranch raising pony horses, but an accident involving another neighbor’s child resulted in a messy lawsuit that ultimately ended with his getting rid of his beloved animals. I may be a trained and licensed surgeon, but I cannot practice my profession unless I carry adequate medical malpractice insurance. If I cannot afford or find one, then I cannot practice. Thus my freedom to practice my profession is infringed by and dependent on some insurance underwriters.

A more dramatic example would be the constraints American liability laws have on businesses. Many huge and otherwise successful firms have been forced into bankruptcy because of massive liability claims on their products. Manville Corporation was done in by the avalanche of asbestos lawsuits, and Dow Corning over its silicon implants. There is in America at present a massive redistribution of wealth through the tort system, with the bulk of that bounty ending up in the pockets of plaintiffs’ lawyers. A major concern of the present Bush administration is to rein in these legal robberies. The battle is severely handicapped because these super rich lawyers are also the wealthiest and most powerful political contributors and lobbyists.

These tort restrictions are real and they affect the daily lives of all citizens but somehow they do not appear as ominous or threatening as the rigid rules of a totalitarian state. They are like the moat in the zoo. Unlike America, Malaysia does not have a moat, instead ugly and menacing metaphorical barbwire fences. They announce their limits crudely and in no uncertain terms. Challenge them at your own risk! As such they are much more intimidating and affect individual behaviors much more profoundly.

Malaysia has many such highly intrusive rules, ranging from the Printing Press Act to the Universities Act. But the mother of all restrictive laws is its infamous Internal Security Act (ISA).

The ISA, with its provision for preventive detention without trial, is meant to protect the stability and security of Malaysia from subversive elements. It is a legacy of colonial rule, and in its original incarnation was meant to fight the communist insurgency in the 1950s. Since then it has been “strengthened” (made more intrusive) despite the fact that the country no longer faces any communist or subversive threat. Originally the orders of the minister were subject to court review; now that protection is gone. Detainees can appeal to the King, but the same minister also advises the monarch. Some checks and balances! In effect the minister’s power to incarcerate a citizen is absolute.

Malaysians tolerate the ISA partly because they have seen how quickly society’s stability can be easily disrupted, with disastrous consequences. One merely has to look at Indonesia and Sri Lanka to be reminded of this grim reality. Better that we jail a few, ISA apologists argue, if that prevents Malaysia from degenerating into another Bosnia.

The genius of the American system is its diffusion of powers and the delicate checks and balances. Despite that, egregious abuses do occur. The Watergate scandal of the 1970’s involving senior Nixon administration officials was perhaps the most pervasive and disturbing. More recently, the coziness of the FBI and the White House resulted in confidential files of many Americans being surreptitiously viewed by President Clinton’s political operatives.

As long as humans wield power, there will be abuses: hence the importance of checks and balances. The process must also be transparent, with adequate and effective review mechanisms. The more awesome the power, the more we must have meaningful oversight. That the decision of a mere minister is not subject to judicial review is the most menacing aspect of the ISA.

Next: The Abomination That is the ISA