Mahathir says he underestimated challenge of governing Malaysia

Malaysia's Prime Minister Mahathir Mohamad attends a press conference in Tokyo on 30 May 2019. (PHOTO: Getty Images)

BLOOMBERG — Malaysia’s Prime Minister Mahathir Mohamad said he underestimated the challenges of governing the country before his shock election victory last year.

“I underestimated because we were on the outside and we didn’t get any information on what was happening on the inside,” Mahathir said in an interview with Bloomberg Television’s Haslinda Amin in Bangkok at the 5th Bloomberg Asean Business Summit. “We are having a very tough time dealing with damages in the finances as well as the crimes that were committed.”

Here are some key comments from the interview:

1MDB

Goldman Sachs offered “a little compensation” versus the “huge killing” it made, Mahathir said, noting he was unsure where the money lost from the 1MDB scandal has gone.

The scandal surrounding 1MDB sprawls from the U.S. to Switzerland, reaching the highest levels of Malaysian politics while ensnaring Goldman Sachs Group Inc. in its first criminal case. Mahathir has raised the amount he wants to recoup from 1MDB to $7 billion after previously saying he sought $4.5 billion that U.S. prosecutors estimated went missing from the state fund. So far, the Southeast Asian country has brought back less than $500 million.

Mahathir said in May he was awaiting a response from Goldman Sachs before deciding whether to take legal action against the bank over “too high” fees on 1MDB bond sales. Malaysia had already announced criminal charges against Goldman in December, accusing the lender of misleading investors when it knew that funds raised from the $6.5 billion bond offer it arranged would be misappropriated. The bank said it will defend against the allegations.

China

Mahathir disagreed he was sending a message to the U.S. by taking China’s side on certain issues. It’s “free speech,” he said. “I don’t like the old idea of cooking something up in the West and then asking us to accept them. China is a bit more sensitive to our feelings.”

On the resumed multi-billion dollar rail project, he said: “We were able to renegotiate the terms of the contract. It is quite obvious that the contract was overpriced.,” he said. The government considered dropping the project altogether “but did not want to pay huge compensation on it.”

The project will now cost 44 billion ringgit ($10.7 billion) instead of the original 65.5 billion ringgit, according to a statement from the prime minister’s office in April.

Succession

Last May, Mahathir led Malaysia to its first change in government since its independence from Britain in 1957. The country is set for another political shift as he is expected to hand over power to Anwar Ibrahim, who said Mahathir had made it “very clear” that Anwar would get the top seat by May next year.

Mahathir said he will hand over to Anwar in “a year or so.” He doesn’t want to leave Malaysia in shambles, he said, pointing to the state of the country when his predecessor Najib Razak was ousted.

“I made a promise, I keep my promise,” Mahathir said. When asked why he was reluctant to set a date for the handover, Mahathir said it was because “there may be something I need to do before I step down,” noting he wanted to fix Malaysia’s debt.

When asked whether he had changed, Mahathir replied: “I don’t know, I’m still myself. Well I want to work for the country. I don’t have much of a future so the last thing I want to do is to go away leaving the country in shambles, like the previous one.”

Economy

Mahathir has trimmed state spending to narrow the budget deficit to 3.4% of gross domestic product this year, from a five-year high of 3.7% last year. Fiscal recovery remains fragile as the government spends billions rescuing troubled institutions from the Hajj fund to an agency overseeing farmers. His administration replaced a sweeping goods-and-services tax with a more targeted consumption tax last year, and is now counting on state oil company dividends to support revenue.

The government would be careful in choosing buyers for beleaguered national carrier Malaysian Airlines Bhd, he said Friday, noting: “If there is a good offer, we will consider.”

© 2019 Bloomberg L.P.