Malaysia as Malaise-ia.

Mahathir's Return
Commentary by William Pesek
8 April, 2008

Perhaps it's a coincidence that Malaysia's Kuala Lumpur Composite Index fell for a fourth day yesterday amid growing calls for Prime Minister Abdullah Ahmad Badawi to resign.

After all, investors should be cheered by the March 8 election, which returned the ruling coalition to power with its worst performance in 50 years. The newly empowered opposition wants to dismantle a 37-year-old system of preferences for ethnic Malays that scares off foreign investors.

Yet Abdullah is facing growing demands to step down from none other than Mahathir Mohamad, the man who chose Abdullah to replace him as premier in 2003.

Malaise-ia

It's bad enough that the U.S., which buys one-sixth of Malaysia's exports, is recession-bound. The state of politics is a bigger concern in an economy in which government plays a bigger role than most in Asia. As Abdullah struggles to stay in power, he'll have less time to make Malaysia more competitive and attractive to foreign investors.

Mahathir's return to the spotlight may be disorienting for international investors who thought the anti-globalization firebrand would recede quietly to the background. Yet he has a point.

Malaysia is a resource-rich nation with huge potential. To compete amid the rise of China and India, it needs to improve the economy's competitiveness. The slower Abdullah moves, the more investors will refer to Malaysia as Malaise-ia.