Cover Story: ‘It is a much more difficult task (than in 1981)’

This article first appeared in The Edge Malaysia Weekly, on May 28, 2018 - June 03, 2018.
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HOW come there are so many of you from The Edge here?” Tun Dr Mahathir Mohamad asks as he sits down. There are seven of us, including two videographers and one photographer.

One of us replies: “We thought we needed safety in numbers.”

“Oh I see ... because I eat people,” he is quick to retort.

It has been just over two weeks since Mahathir’s spectacular return as prime minister at the age of 92 and it has been a frenetic time. Everyone, from journalists to government servants and even his own staff, is struggling to keep pace with him.

We are the first from the media to have a sit-down interview with Mahathir after he was sworn in as prime minister on May 10, and because of his tight schedule, we get down to business quickly.

The following is an excerpt from the 50-minute interview we had with him.

 

The Edge: Tun, in an interview with us a year ago, you said there would be a shift in Malay votes, including in the heartland. Not many people believed you at the time. Now, here you are, the country’s prime minister. How do you feel about becoming the prime minister for the second time?

Tun Dr Mahathir Mohamad: It is frightening! When I first became PM (1981), the government was intact (there was no change in government). All I had to do was to fill in the (Cabinet) slots with names.

Now, I have to structure the government to suit our (Pakatan Harapan) manifesto, and also to suit the people’s view of (what) the government (should be). People are not happy with the (previous) government, they think many things were done wrong and we have to dig out these wrong things.

And then, we have the government officers who have been with the previous government. (Some of them) actually participated in the (general election) campaigning. We do not know (whether) these people are loyal to the political party or loyal to the country.

I am working in a very uncertain environment. I have to work with the existing government structure that has been polluted by the previous government. It is a much more difficult task (than in 1981).

I have to sit down and be briefed. And then I have to fill in posts with people I don’t know. It takes a lot of time (to put the new government in place).

 

Do you have a long list of senior government officers and GLC (government-linked company) executives who were involved in party politics? There are rumours about who will be in and who will be out. This raises concerns ...

Some were deeply involved. Some were obviously forced to do certain things. Again, we have to separate them, between those who are very committed to the previous ruling party and those who were forced to do their work in favour of (the ruling party), which is very wrong.

I know some of the old civil servants, but I do not know some of the new ones. Can I accept them and trust them?

Almost every ministry and GLC were involved. There are so many political appointees. Political departments were set up to serve the political party, not the country. There was a lot of money spent. It is horrendous. All these (appointees), we have to get them out.

 

Are SPAD and Pemandu examples?

Pemandu was formerly a government body but they were paid salaries that were not governed by the public servant salary scheme. And now they are no longer part of the government but they have formed a company and they have a contract from the government. Basically, their work has some political implications.

 

You have said the country’s national debt has exceeded RM1 trillion, which has unsettled the financial markets. Are we really at a very alarming stage?

Yes, it is alarming because when Najib was (PM) he kept on borrowing. He didn’t care how much money the government had borrowed. We had to announce it because if Najib had continued to be the PM, the amount would have grown even more. We are fully aware that the government couldn’t take so much debt.

He knew very well that the ECRL, for example, is not something we could afford. It is not going to serve any purpose, it is not going to give us any returns. And yet, he went ahead and decided to build it. And that costs about RM60 billion.

The government’s debt ceiling before was very much lower. But he (Najib) didn’t care. What he did was he formed a body and then they borrowed. And eventually it (the borrowings) comes back to the government to pay.

The ECRL’s contract value is RM60 billion. By the time we pay off the debt, it would be RM92 billion because we have to pay interest. At the same time, he wants to build the HSR (high-speed rail). That is over RM100 billion. It is crazy. He didn’t seem to think about how we were going to pay for all these.

We announced it (the RM1.0 trillion debt) because we want to assure the people that we are going to cut it. We should feel more comfortable. I don’t think they (the people) would have been comfortable to see Najib going ahead with all this massive spending, this very, very big spending.

About the ECRL, there is talk that the contract value was inflated so that money could be siphoned out. I am not sure if you know about this ...

That contract is strange. The contractor must be from China and the lending is from China. And the money (RM55 billion loan from the Export & Import Bank of China) is not supposed to come here but (kept abroad) to pay the contractor in China.

 

The money borrowed does not come to Malaysia at all?

That was the arrangement. And the payments (to the contractor, China Communications Construction Co Ltd) are supposed to be made on staggered terms, regardless of (the stage of) work done. It is not progress payments (based on work done).

 

That’s why there is talk that the money has been used to retire 1MDB’s debts and to acquire certain companies. Is the government looking into that?

Yes, there is such suspicion.

 

Do you think that he (Najib) didn’t listen to the advice of government servants?

If at all they gave him any advice, they might not have been strong enough. They didn’t insist that he stop borrowing more. In a way, some of the civil servants are complicit; they did not stop something that they knew was wrong.

And of course, investing RM1 million in a company (1MDB) and then borrowing RM42 billion. That’s ridiculous.

 

The HSR has not begun and the contracts have not been given out. But some groundwork for the ECRL has already started. Is the government going to scale down the projects?

The terms of agreement (for the HSR) are such that if we decide to drop the project, it will cost us a lot of money. We have entered into an agreement with Singapore. If we break the agreement, we have to pay a very large sum of money. So we are going to find out how we can reduce the amount of money we have to pay for breaking the agreement.

 

What about the ECRL?

The ECRL has already started. A lot of work has been done, they have dug tunnels. The money that has been paid is more than the work that has been done, or at least that is what I have been made to believe.

 

Are you going to renegotiate the terms for the ECRL?

Yes, we are renegotiating the terms. The terms are very damaging to our economy. The market should be happy that we are strengthening the government’s finances.

If Najib had continued to be the government, the country would certainly have gone bankrupt. We couldn’t pay the debt and interest. He wanted to spend RM60 billion here, RM100 billion there. How could you borrow so much money to do all these things?

You know, previously, we built the North-South Expressway, we built the (KLIA) airport but these were built within our means. We didn’t incur big borrowings.

 

The national debt is already so high. The government has zero-rated GST, reintroduced petrol subsidy and is reviewing toll charges. These will cost the government money. How is it going to handle the situation?

Much of the work being done now is to downsize the financing of the government. By doing away with all these expensive projects, we are already reducing (debt) servicing costs.

If you make a comparison, in the 1990s, our income was about one third of what it is now. Now people talk about billions, during my time we were only talking about hundreds of millions. Government income is about three times more now, so if the income is well managed, there should be no problem. So by reducing the cost of government, we should be able to manage.

But in terms of the debt that we have to pay, we will find other ways. Actually (in terms of) reducing the debt, I can see that at one go we can reduce it by RM200 billion by doing away with all these huge projects. The BN manifesto talked about each state getting RM60, RM70 to RM80 billion. I don’t know how they could make that statement ... and the people swallowed it. There is no way the government could spend that kind of money on the states.

I must admit that when we were campaigning, we proposed things so that the people would want us to be the government. But of course, we have to manage these promises. For example, the toll review is not going to be immediate; it will be in a gradual manner.

 

Is the government going to acquire all the toll concessionaires?

Some we have already acquired. But we have to work with the private sector. I have read some of the proposals; they sound quite reasonable. You see, the main point is we don’t want to punish the people (toll operators). At the same time, we have to ensure the government has some money to build roads.

 

You said that digging up the wrongdoings of the past — from 1MDB, FELDA to Tabung Haji — is your priority. Will the government concentrate on a few and move forward?

The number of things that was done wrongly in the previous government is huge. Every time we look at even one ministry, we find out that something has been done to that ministry, to make the ministry very supportive of the previous government. Things like that we have to attend to. We have to attend to appointing trustworthy officers, for example. We have to evaluate the costs of everything we do.

The amount of work that is needed to be done is very big. We decided to make 1MDB the priority. There is a very clear case (of crime), and there is much hope that we can get back the money because we know that the money is in the US, Singapore and Switzerland. But it takes time to get back the money because there are legal processes to go through.

Then, there is other money that has been taken out, which we think we can recover. Jho Low would know where the money is. And I think Rosmah will know where the money is. We have to identify the people who are hiding the money. And then we will be able to recover much of the money lost.

 

You said you know where Jho Low is. All you need to do is pick up the phone and call the prime minister of that country if you want to get him back ...

He has stolen our money. He (then) laundered the money in America. He used the American currency and American banks. He has committed a crime in America, so he is now subject to American laws. But when the Americans get back the money and properties, they will send the money back to the country from where the money was taken. But the process is going to be very tedious; there will be hurdles to go through. So we are not going to get the money immediately.

So, even with 1MDB, we are not going to get the money immediately. Maybe we will get some of the money if we can find out where they are hiding the money, as happened here. But, of course, the money is not only hidden in Malaysia. I believe much of the money has been taken out of this country, hidden somewhere else. But then, of course, we can cooperate with that country in order to get back the money.

 

But you need to get him first right … Jho Low?

Jho Low yes, we need to get him, of course. I think if we get him, we would be able to get him to tell us where the money is.

 

Is there any estimate as to how much has been lost to fraud?

The loss due to fraud is not the same as the amount of money we borrowed. I think it runs into several billions. Certainly, in America, they identified it’s US$3.5 billion.

So, at this moment, we don’t know, because the money keeps moving. You know when 1MDB was created … when they had an investment in PetroSaudi, even before any work was done, the money was used to pay for some loans. I don’t know why and that money has travelled to the Caribbean, then Seychelles, then Singapore and also to Jho Low’s and Najib’s accounts.

You have to track all these things, so that you can say ‘this is our money’ but if you don’t track and you just claim this is our money, what is the proof (that it is our money)?

 

There are concerns about the future of CEOs of GLCs, for their involvement with the previous party in power. There are also some companies on the stock market that have seen their share prices collapse, because the owners of these companies have been deemed to be associated with the previous prime minister. What would you like to say to them? Should they be concerned that they are going to lose their government contracts and that the new government will be against them?

Well, contracts are legal documents, so we will have to abide by them and what we have committed to. On the other hand, if there is money lost through the contract because of some wrongdoing, again, the law will be applied in order to take action against the people who have stolen the money. But that doesn’t mean that because this man is arrested, the contract is invalid. If it is a right and proper contract, then we have to respect it.

 

Each time there was a change in the prime minister in the past, there were companies that were deemed to be on favourable terms with the new prime minister. Of course now, it is even more extreme as you have a change in government. So, the corporate sector and businessmen sometimes get caught up in this situation. What is your advice to them going forward on their relationship with politicians, government officials and their businesses?

I think they should give their trust to this government. The process of cleaning up will, of course, involve people who have done wrong things. This we have to clean up. We can’t say, ‘Well there is a contract, it is a legal contract’, and go ahead without punishing or taking action against the people who perhaps made use of the contract to make money for themselves.

For example, if the government gives a contract worth RM100 million, then there are people who actually pushed up the value of the contract to RM130 million by an agreement or something … provided you gave some money, so that you could get this contract … There are many ways for people to cheat. Of course, the government will have to pay. Instead of RM100 million, it now has to pay RM130 million.

(They will say) this is the lowest tender … RM130 million and then, RM30 million extra will be shared by so and so.

 

So, going forward, it will be open tenders and no direct negotiations?

Open tenders are very good. That is the best way and the names of the companies should not appear on the sheet that gives the different contract values. But what happens is, we give preference to bumiputera companies too — we give them a 5% advantage — as not many of them get contracts outside the government. Without government contracts, many bumiputera companies will close down, maybe because they are inefficient or do not have the experience. But, at the same time, we have seen some bumiputera contractors that have done very, very well. The tendency is to always favour the people who can deliver the goods.

 

What was your reaction when you saw (Tan Sri) Tony Fernandes supporting Barisan Nasional and the former prime minister, and then apologising for his actions?

Well, I know that the (former) government applied pressure. For example, if a company or an individual appears to be friendly towards us (Pakatan Harapan members), the income tax department will ask them to pay extra tax and say this is legal … some of them had to pay as much as RM90 million.

 

They buckled …

Yes, so they change red to blue, in order to please the (previous) government.

 

So you sympathise with him (Fernandes), you understand why he did it?

I sympathise with a lot of people who were pressured by the government in many ways. Your (the sympathisers’) contracts were cut off, you were no longer on the government’s list of contractors … a lot of punishment was meted out to contractors that did not favour the government. They came to a stage where they did not want to be seen near me — if you are seen near me, you are punished. One person made a statement (that was) favourable to us and the next day, his contracts were taken away.

 

Tun, you say the government is now in the process of cleaning up. How extensive is it going to be? Is there a concern that it may cripple the operations of the government?

I explained to you, the operations of the government will not be crippled. We will be very careful about our spending. We want to keep within our income and our income is very big now. Luckily for us, the price of oil has gone up. Before, when I was prime minister (the first time), the price of oil was only around US$30 per barrel, and yet we didn’t incur huge debts. It’s all about careful spending.

When we built the North-South Highway, we didn’t have the money, so we decided to privatise it. But if you privatise it, it will result in the toll rate being very high and people may not use it and the company may go bankrupt. So, what we did was to give soft loans to the companies. We also transferred some of the roads that have been partly built and bought the land for them … with that, we reduced the cost of building. Then, they charge a toll rate that is acceptable to the public. But even then, the public screamed. Malaysia’s toll rate is the lowest in the world, I think. I went to Japan (where) a bridge that is shorter than the Penang Bridge, one way is RM250, so two ways is RM500 but here, we are charging RM7. It’s absurd. We are very cheap in many ways. But we have to build this infrastructure. Otherwise, the country cannot grow.

Why did we build the North-South Highway? Because we knew that once you built the highway, the country and the economy would grow. If you look now, along the highway, from Johor Baru to Bukit Kayu Hitam, all the areas have been developed. There are many new townships, settlements and industrial estates that have stimulated the economy.

So, although we had to subsidise the company (that built the North-South Highway), the government gains back money — more money than what it spent — as the country develops.

I give you another example. We were not a tax (duty) free country … Singapore was. So, Malaysians used to go there, buy everything there, then when they came back, usually they would not pay tax because they knew they could hide whatever they bought. So, we earned very little from import duties.

We then decided to have articles which are tax free, like electronics and luxury watches. The result was tax-free shops sprouted up, and they made a lot of profit and we taxed their profit and collected far more than the import duties.

To develop Langkawi, all we did was declare it a duty-free island. Look at how it has grown — 10,000 visitors before; now it’s 3.5 million.

 

Tun, coming back to 1MDB. We need to bring the money back as soon as possible as the country needs it. Will you give amnesty to Jho Low and whoever else took the money, if they agree to confess and help us bring all the money back?

Well, we have to look into that because they have committed terrible crimes. So for this, I will have to consult the legal department as to whether it is worthwhile or not, but we do know that they know where the money is.

But one thing I must remind you, when we bring back the money (taken) from 1MDB, it has to be used to repay the debt … that money was borrowed money, it’s not for us, but of course, it lessens our burden.

 

But would it be politically acceptable to give them amnesty after what they have done?

I don’t know … quite a lot of people are involved. Perhaps we will wait.

 

Tun, when do you expect to announce the rest of the Cabinet?

I hope within these two weeks. We have some ministries which are urgent, like the foreign ministry.

 

We were joking just now Tun, when we saw Gobind Singh Deo, that we could not imagine that they are now working with you. You are their boss. This new coalition — a coalition of people who used to be foes — how has it been and how do you bring them together? I am sure there are very different views …

There are four parties … This is where the problem arises. To form the Cabinet, I have to take into consideration the four parties, how many (Cabinet positions) do they get and what ministries. Then, of course, in Malaysia, we have to think whether he is Chinese, Indian or Malay, then we have to think whether he is from this state or that state. If everything is given to Johor, people from Kedah may feel (upset). It’s not an easy thing.

That’s why I said just now, when I first took over in 1981, I just put (the ministers) in the respective slots. Most of them were from Umno. But now, I have to take into consideration the four parties.

 

The most shocking decision to most people was when you appointed (Lim) Guan Eng as finance minister, not only because he is Chinese but because he is from another party and Umno (Malay) has held that post for many years. Why did you make that decision?

Well, we had Malays … of course, Malays will want Malays, but we had appointed a Malay as a minister of finance and he had lost huge sums of money … and he was also the prime minister.

So, it’s not whether he is Malay, Chinese or Indian. It is according to the quality, the knowledge that he has. We know, for example, that when DAP took over Penang, they managed the finances there much better than the previous (BN) government. They could not depend on the federal government as they were an opposition party. Yet look at them, they managed the finances better.

So, we need to have quality people, not just party people, or Malay or Chinese or Indian. I want to put someone who understands finance and has shown a record. That is why I brought Guan Eng in … I know some people are not happy.

 

Tun, can we ask about what happened on the night of GE14? Is it true you called up the IGP (inspector-general of police) and the chiefs of the military wings, asking them to respect the decision of the polls?

I didn’t call (them).

 

Did Datuk Seri Najib contact you?

Najib only contacted me after the declaration that I was the winner. He called me up to congratulate me … very nice of him. But before that, we had a terrible time (waiting) because the people overseeing the counting managed to reduce our victories by quite a number. For example, in Jasin (Melaka), the first count showed that we won by 4,000 votes. They did a recount and a recount and eventually, we lost by 2,000 votes — a 6,000-vote swing. Of course, we are appealing.

In the case of Sabah, for example, we thought we won by 35 seats but subsequently, after a recount, it went down to 29 seats. There must be something wrong. Normally, you do a recount when the margin is about 5% but there were cases when the margins were very clear, but yet they did a recount and subsequently the number of votes for us decreased.

When we won, they (the Election Commission) did not announce it immediately. So initially, you saw that BN was winning, was ahead of us, because when BN won, they announced (the results) but when we won (a seat) they didn’t make it official. But later on, they ran out of victories for BN, so they had to publish our results.

 

Tun, you are 19 months away from taking the country to 2020. Nobody would have expected this as you are 92, and because you stepped down in 2003. Do you believe in destiny?

I don’t know about destiny, but I was practically forced to come back. When I stepped down, I thought I would be able to rest and have a relaxing time, but even a week after I stepped down, people started coming to see me asking me to do something … please advise the government … that was (Tun) Abdullah (Ahmad Badawi’s time as prime minister). Well, as you know, Abdullah later had to give up because he didn’t do so well.

The first election he achieved the highest victory. Many people expected him to do well and there were a lot of things said about me. But between 2004 and 2008, it was shown that he didn’t perform, there were a lot of accusations levelled at him and his family. So, he stepped down.

When Najib was appointed, very shortly after, again people came, (saying) ‘please do something’. So, actually, I don’t know whether it’s destiny or not but I was forced to come back.

I tried advising him, but it didn’t work. I saw the damage being done to the country. I was frightened by the amount of money he was borrowing. Anybody, I think the whole nation, should have feared this, but some people seemed to have thought it was okay — ‘We borrow money and get better pay’.

I, myself, I have got no debts. I have never borrowed from the bank and I don’t have any shares in the stock market as well. When I ran the government, one thing that concerned me was, do we have the money? Can we do this? And, if you manage it well, you can do it. We built the North-South Highway, we built the double-tracking (railway lines), we built new ports, airports … all these things were built with very little borrowed money.

So, I don’t know if it’s destiny or not but I have a duty.

 

Are we seeing the old Mahathir now, like the first time you were prime minister?

Some of it … but I have been accused of being a dictator and all that. That is normal, to demonise your opponent in politics. I also called the opposition nasty things, but I think they know that those accusations don’t hold water, because I was running the government as democratically as possible.

Yes, I used the ISA (Internal Security Act) but that was on the advice of my security advisers, the police and, in the case of (Datuk Seri) Anwar (Ibrahim), I told them, they must not use the ISA — if there is a case, go to court.

 

So, just as it had been difficult to take action against Anwar in 1998, now, in the case of Najib, given your relationship with his father and his family, it must be difficult …

In the case of Anwar, I was told by the police, but in the case of Najib, I know. I know from public (sources), the media and all said all these (damaging) things, and he didn’t sue them, which means he was (actually) doing these things … so, in the case of Najib, I know it is different.

 

But given your relationship with his father, was it a difficult thing to do?

Well, actually, I must admit, I appointed Najib because I owed a debt to his father. Without Tun (Abdul) Razak (Hussein), I would not have been the prime minister. Tun Razak actually told (Tun) Hussein (Onn), when in trouble, call me (Mahathir). So Hussein, when he had to choose from three vice-presidents (of Umno), he chose me, and that’s all.

That’s how I became the prime minister, so I owe a debt to Tun Razak. I thought Najib would be like his father … but I was wrong.

 

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