Thursday, February 10 @ 18:25:39 MYT
By John Burton in Singapore
Mahathir Mohamad has kept a relatively low profile since stepping down as Malaysia's prime minister in late October 2003. That surprised many who remember his 22-year rule for his combative and outspoken style.
But there are signs that Dr Mahathir has recently been flexing his political muscle behind the scenes in efforts to protect the interests of Malaysia's state-owned companies. That could threaten plans by his successor, Abdullah Badawi, to reform industries often criticised for inefficiency.
Talk of Dr Mahathir's renewed clout has been triggered by a management upheaval at Proton, the national carmaker that he helped to create in the 1980s and where he now serves as a special corporate adviser.
Proton was the centrepiece of an ambitious industrialisation policy promoted by Dr Mahathir to transform Malaysia from a producer of tin and other commodities into an south-east Asian manufacturing powerhouse. However, the carmaker is now struggling to avoid the fate of other Mahathir-sponsored industries, such as steel and cement, that failed because they proved uncompetitive.
Proton's domestic market share has fallen from 75 to 44 per cent in the past decade because of rising popularity of foreign models, leading to management friction. The board sought unsuccessfully last year to replace Mahaleel Ariff, the chief executive, whose contract expires this year, and the sudden resignation this week of Abu Hassan Kendut, Proton board chairman, led to speculation that Dr Mahathir had blocked the sacking.
Dr Mahathir has denied saving Mr Mahaleel, widely seen as his prot�g�, but admits he recommended that the chief executive should keep his job when asked for his opinion by Nor Mohamed Yakcop, Malaysia's second finance minister.
Attention has also focused on the recent recovery in fortunes of Syed Mokhtar al-Bukhary, a Malaysian tycoon favoured by Dr Mahathir while in office. Mr Syed Mokhtar gained management control last week of DRB-Hicom, a state-owned conglomerate with interests in car distribution, banking and defence, after a highly politicised bidding process. The decision by government to select the tycoon surprised many analysts, since aides to the current prime minister had indicated they favoured a rival bidder.
When Mr Abdullah took office in 2003, Mr Syed Mokhtar appeared to be the target of a campaign by the new administration to reduce the influence of Dr Mahathir's business associates.
Mr Syed Mokhtar won important government contracts for the development of ports and power plants during Dr Mahathir's rule. But Mr Abdullah scrapped a $3.8bn (�3bn, �2bn) rail project in which Mr Syed Mokhtar was a partner and aborted a deal to sell a controlling stake in Bakun dam, south-east Asia's biggest hydroelectric project, to one of his companies. Officials said Mr Syed Mokhtar won management control of DRB-Hicom because he offered the highest price for the group, although analysts question how he would finance the acquisition.
Dr Mahathir also suggested recently that Malaysia should abandon its currency peg against the US dollar, which he introduced in 1998 as part of capital controls in reaction to the Asian financial crisis. His intervention was seen as promoting the interests of state-owned companies hurt by a weak Malaysian ringgit. Proton has had to pay more for imported car parts as the currency fell, while earnings at Tenaga, the national power producer, have suffered since much of its debt is in Japanese yen.
-The Financial Times, London
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