July 10, 2006

Prime Time for Badawi    (see also Protonomics)

BIOGRAPHIES of Nelson Mandela, Richard Nixon, and Che Guevara sit alongside tomes from ex-Chrysler boss Lee Iacocca and celebrity chef Nigella Lawson on the bookshelves in Abdullah Badawi’s study in Putrajaya. Nearly three years after succeeding Mahathir Mohamed as Prime Minister of Malaysia, he sat down with FORTUNE correspondent Eric Ellis to talk about his new 15-year plan, the state of the economy, and the fate of Proton.

FORTUNE: You’ve just released the Ninth Malaysia Plan (9MP)? Is it all your work, your plan?

BADAWI: Yes, I can claim ownership of that. The plan is not for my ambition, not for my political advancement….it is the Prime Minister planning for the nation

FORTUNE: Its an ambitious program you have outlined……

BADAWI: Yes, it is ambitious, it is not just a plan for five years, it is a plan for 15 years.

FORTUNE: The focus of previous Mahathir plans has been on so-called mega-projects, huge public works. Yours has a more human tone to it..

BADAWI: Human capital. My approach to human capital is very Islamic but it is not in any way wrong or something people find distasteful. Human capital begins at the time the mother feels she has someone growing in her tummy, her baby is coming, to inculcate love in the little child, to do well to your siblings and don’t quarrel, and leave a little bit when you eat, be obedient, the little things, we must build a very strong moral foundation, on universal values.

FORTUNE: Are you backing away from economic development?

BADAWI: I will not say there will never be a mega-project, but the emphasis is (on human capital). We are moving up the value chain, eliminating social disparities. I have a development plan, to close the gap between rich and poor, the sectoral gap between agriculture and industry, our regional gap, all these gaps have to be closed.

FORTUNE: Malaysia had 22 years of Mahathirism, is the 9MP the arrival of Badawism?

BADAWI: I don’t know, I leave it to you.

FORTUNE: Where are the openings for foreign investment in the 9MP?

BADAWI: Information technology is a good area…..we encourage investment in agriculture, in bio-technology. In telecommunications, in services, we are still open for business, there are opportunities everywhere.

FORTUNE: Is globalization dying? Is protectionism on the rise in Asia?

BADAWI: Globalization is something (developing countries) are frightened of…..because they can’t take advantage of it, they have no capacity. Globalisation should not be seen as a threat but as an opportunity. For a developing country as small as we are, we are among the top 20 of world traders. We have to build capacity but this capacity-building cannot take place without adequate human capital development, education, training.

FORTUNE: To Proton, the National Car Project, which has been around for 20-odd years. It is struggling. How do you view developments there?

BADAWI:  Proton has the potential to succeed but how do you make it succeed? You have to work hard, you have to be competitive. I told them that Proton has to compete. We can help to the extent that we can, but don’t be too dependent on help without improving yourself, you have got to improve. When we did away with the levy, Proton said fine, we can compete so I am placing some hope on the present management. Quality, design, everything has to be improved.

FORTUNE: Without the crutches (state support)?

BADAWI: Finally, it has to be without the crutches. But if to an extent we can help we must help, we can’t sacrifice it. It’s a very major industry, we are committed to this industry. Proton is our national pride. Yes, I mean that, national pride. I want allow it to sink but they’d better work hard. Find a partner if you want, its management’s decision to make. I cannot go into its micro-management, I don’t know how to run a car factory.

FORTUNE: In contrast to state-backed Proton, there is the example of the airline Air Asia, rising from the grassroots, without significant state help..

BADAWI: Yes, it has a very good entrepreneur. Smart small, move fast…you grow with the organisation, you learn to do certain things, you can make the adjustment if you do things wrong, you learn….

FORTUNE: You have been PM for two-and-a-half years. Do you like being PM?

BADAWI: I’m enjoying my job, its an opportunity to do something. I have managed to keep the country stable, I have managed to keep people together and not creating racial conflicts, this is very important, this is the basis of what we will do in the future, political stability, united, to build together. I have been able to come up with the Ninth Malaysia Plan, a vision that has been accepted by Parliament. Now I have a plan, the nation cannot say ‘where is Badawi?  What is he talking about? He has no sense of direction, where is he heading? We give him big election victory, come on let’s walk the walk’…that’s what they used to say…..you remember that?

FORTUNE: Sure, I might have even written that.

BADAWI: We can always do better..

FORTUNE: Its natural people will compare you to Mahathir. His style was hectoring, your style is avuncular…

BADAWI: Its me! Its me! I have my own way, I did not cultivate a style just because I became Prime Minister, its me all the time, all the way…..put it this way, being tough, being persuasive, being abrasive, its only a matter of style. To me what is important is substance. The substance must be sound, and just. To me justice is very important. Its most important, a leader must have this justice

FORTUNE: Iraq and Iran. Malaysia is the chairman of the OIC…what’s your view on the course of events in Iraq?

BADAWI: It’s a sad thing,. Iraq is not going well. They cannot come together to agree. The administration that has been set up (in Baghdad) is viewed as purely the representatives of Washington. (Iraqis) don’t like the Americans. That is all. All this ‘liberating,’ this changing of regimes, and hoping that people come and embrace everyone, girls kissing soldiers…. that doesn’t happen. This is not like World War II when America went to Europe, its not France, this is Iraq.

FORTUNE: Is there a role for Malaysia, as OIC chair, as a moderate Islamic power, in brokering this, in helping sort it out?

BADAWI: We have been talking to a lot of people, trying to get them to sort out their differences. We have been meeting, a lot of meetings on Iraq. I have not yet announced what I want to do but a lot of discussion is going on. Sometimes we use a third party..

FORTUNE: Iran. Are we heading for another war?

BADAWI: No, I don’t think so. It will be worse than what is happening in Iraq. It is going to be disastrous. I don’t think the Europeans like it.

FORTUNE: You recently met (Iranian President) Ahmadinejad..

BADAWI: A tough character. He feels that why should people deny me the right to develop nuclear energy for peaceful purposes. There is between the two parties deep mistrust. I have been engaging the Iranian leaders, out of concern, from the spiritual leader to the Prime Minister, the former President, I’ve spoken to Blair, to Bush, to Chirac, to Putin, but they don’t trust the Iranians.

FORTUNE: Do you?

BADAWI: I can put my trust in them. I can see both sides. They have to go on talking….Bush (told me he) wants a diplomatic solution with Iran.

FORTUNE: To domestic politics. Are you secure? Dr Mahathir has been sniping from the sidelines.

BADAWI: Yes, I am secure, I know it, I know it….the cabinet is secure.

FORTUNE: Why is he doing this?

BADAWI: You’ll have to ask him.

FORTUNE: You talk to him?

BADAWI: I have talked to him, I have spoken with him but on this issue its not easy to talk.

FORTUNE: Are you still friends with him? Respect him?

BADAWI: Yes, yes, I respect him.

FORTUNE: How long do you intend being in the chair?

BADAWI: I want to achieve Vision 2020. (Mahathir) started it, it become a national vision, he has seen to the first half, I will see about the second half. Malaysia Boleh (Malaysia Can).