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From Our Correspondent: Bonded by Money
A new book traces the links between business and politics in Malaysia
By Arjuna Ranawana

November 14, 2000
Web posted at 5:00 p.m. Hong Kong time, 5:00 a.m. EDT


Only one person has ever been granted a license to run a casino in Malaysia. Thatıs Lim Goh Tong, and it is perhaps no wonder he is thought to be Malaysiaıs richest man, with an estimated personal worth of about $1 billion. His companies, Genting Berhad and Resorts World, are the two biggest Chinese-owned businesses on the Kuala Lumpur bourse. The former has interests in gambling institutions overseas and the latter is the owner and operator of the Genting Casino near Kuala Lumpur.

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In a fascinating book on the political economy of Malaysia, academic Edmund Terrence Gomez traces Limıs background and the origins of Genting Berhad. He reminds readers that Limıs original partner in the 1950s and 1960s was Mohammad Noah Omar, a top Malay politician. Noah was the parliamentary speaker and father-in-law of two prime ministers, Abdul Razak (1971-1976) and Hussein Onn (1976-1981). With almost-forgotten gems like this, Gomez challenges fundamental premises about the way the Chinese minority does business in Malaysia and its position in the overall economy.

Gomez does not accept the widespread belief that the Chinese control much of the economy. He says that while they may own a significant portion of equity, true dominance is exercised by the Malay majority through links with Chinese companies. Since the early 1970s, Malaysia has had an affirmative-action program of which the aim is to raise the economic standard of the indigenous people. Called the New Economic Program, it gives preferential treatment to the Bumiputras   "sons of the soil"   through discounted credit, a mandatory 30% share in privatized enterprises and a host of other measures. Gomez says influential members of the dominant political party, the United Malays National Organization, have been the gainers in this arrangement. In his words, his research ³proves that Chinese capital remains very subservient to the UMNO-led government, and to remain productive, dynamic and to develop their corporate base, [the Chinese] have no choice other than to link up with the Malay political elite."

Another example is billionaire Robert Kuok Hock Nien. The commodities, hotels and media tycoon has close links with politically connected Malays, particularly those from the southernmost state of Johore. Kuokıs father obtained rents and concessions from the royal family of Johore before independence, and his son continued these relationships. Prominent politicians including former premier Hussein and the wife of former deputy prime minister Ismail Abdul Rahman have held equity in Kuok's companies. Hussein's cousin, Taib Andak, has been a director in a Kuok company, Federal Flour Mills, according to the book.

Kuok was drafted to promote Bumiputra capital in institutions such as Bank Bumiputra and the holding company Pernas. He was appointed a director in both these companies. This shows the extent of the confidence the Bumi elite had in the Chinese businessman. Gomez says Kuok and finance minister Daim Zainuddin "forged a partnership to buy into the Malaysian French Bank (now renamed Multi-Purpose Bank)." Daim now has no business interests.

Much of the information about the close links between Chinese business and the Malay political elite may not come a surprise to Malaysians   particularly those in the business community. What is new is that Gomez knits these together to show how the Bumiputra elite has benefited from links to top Chinese businessmen, and how those Chinese tycoons have prospered by their links to the politically powerful.

Another belief challenged by Gomez is that the Chinese diaspora is tightly bound by extensive, interlocking business links that enable it to have an enormous impact on the global economy. He refers to writing by other scholars who use terms such as "Chinese commonwealth," "global tribe" and "bamboo network" to describe these connections. Gomez attempts to show that there are in fact few links between big-time Chinese tycoons. ³Chinese capitalism is not hewn from a single block, but organized in a number of spheres that do not necessarily connect much,² he writes. ³Culture, shared identities and value systems do not typify a universal form of Chinese capital or determine ethnic Chinese business life in Southeast Asia."

Published in the U.K. 10 months ago, Chinese Business in Malaysia: Accumulation, Ascendance, Accommodation* has not been aired in Malaysia. Its 39-year-old author is an academic with an unusual background. His first degree was in English Literature. But, driven by moral outrage against cronyism and shady business practices in his country, he then studied political economy. He has written a number of books that have exposed the true extent of the links between political and business figures in Malaysia. Gomez teaches at the University Malaya on the outskirts of Kuala Lumpur.

* Published by Curzon Press, Surrey, England. ISBN 0-7007-1202-X. 234 pages.

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