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Southeast Asia

Malaysia: Lim finds revolution hard going

Toppling a political dynasty is one thing, stabilizing Malaysia’s corruption-riddled finances is quite another, as finance minister Lim Guan Eng has discovered in his first 18 months in the job.

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Even when regime change is quick, it takes years to put a country back on its feet, especially when the previous government lasted decades and defied checks and balances.

No wonder Malaysia’s finance minister Lim Guan Eng says there are no quick fixes for the country’s multitude of problems, particularly the resolution of the 1MDB corruption scandal and the stabilizing of state finances.

When Asiamoney spoke to Lim in 2018, in one of the first interviews he gave shortly after becoming finance minister, he was ebullient and enthusiastic, intoxicated by the massive task ahead of cleansing and stabilizing Malaysia’s profoundly corrupted official finances.

The change of government in 2018 was Malaysia’s Berlin Wall moment, as this jovial Penang native and former banker then described it, marking a revolutionary moment when the United Malays National Organisation (UMNO), led by Najib Razak in a coalition government, was voted out of power for the first time in the country’s 61 years since independence. 

Suddenly Lim was doing a job he had long hoped for but never really expected he would do, one that he thought would be stolen – again – at the last moment by Malaysia’s toxic politics, as he had come to expect during a lifetime battling it, sometimes from prison.

A year ago, expectations were high. Indeed, with his rainbow team of vital but very green young aides, Lim’s office a year ago could have been cast from a Malaysian take on Madam Secretary, albeit with a bit more spleen than the fictionalized Washington version. 

Much of that rancour was directed by Lim himself: he vowed to call to account the Najib-led cronies that Lim’s Pakatan Harapan (Alliance of Hope) had just toppled, promised to punish the corrupt and repatriate the billions of ringgit they had plundered, notably from the state investment house owned by the very ministry Lim was now running – One Malaysia Development Berhad, the notorious 1MDB.

Back then, Lim presented himself as the hard-charging reformer running on adrenalin, toiling in shirtsleeves with tie askew and revelling in 18-hour workdays necessary because, as he then put it, “there is so much more to do than even we imagined.” 


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Malaysia’s finance minister Lim Guan Eng



Lim described tackling the many “ogres in the dungeon,” whether these were politicized civil servants leaking against him or hidden debt bombs that were off the official books but were soon to explode.

But almost 18 months on from the election, it turns out that being in government is as tough as bringing one down. 

Lim says he still does 80-hour weeks but the 2019 version of Lim seems less the terrier of 2018 and more the technocrat. 

“Maybe I’ve accepted the circumstances I have to work with,” he says. “You just do the best you can.”

With the state finances steadied and Najib on trial for corruption, Lim’s language has moderated. This year, Lim comes across as cooler and better groomed, as if he has just been arm-wrestling international lawyers.

As he likely has. 

Much time has been spent, Lim admits, in endlessly negotiating the return of state funds stolen from national coffers, not least playing out the legal endgame of the 1MDB looting, the scandal that so disgusted Malaysians that it helped bring Lim and his unlikely coalition, led by the former prime minister Mahathir Mohamad, to power. But 1MDB remains an expensive nightmare.

“I’m entirely sick of it [1MDB] because I’m still paying for it,” laments Lim, now 59. “I’m paying tons of money without getting anything back. So far we’ve paid M$14 billion ($3.38 billion). It is just interest. Oh my, you can imagine what I can do with M$14 billion?” Malaysia remains in dispute with the Abu Dhabi sovereign fund International Petroleum Investment Company in a London court over $5.78 billion in 1MDB-related bond agreements dating from the Najib era.

“Malaysians have very high expectations,” Lim says. “And they’re very impatient. And when you are set back $37, $38 billion [Lim’s calculated shortfall in the official books after taking office], you can’t do magic overnight. You’ve got to have at least a couple of years to set things right. So the problem is our constituents don’t have the patience. Reform is always painful. 

“Sometimes you get blamed more than the culprits,” he adds.

'Sizeable chunk'

Lim runs through the main agenda items that overshadow the Malaysian conversation: 1MDB; the state’s legal case against 1MDB’s primary financier, the US investment bank Goldman Sachs; the national finances; and the perennial elephant-in-the-room that dominates discussions he has with investors, which is when – or is it if? – Anwar Ibrahim will succeed the 94-year-old second-term warhorse Mohamad as prime minister.

Lim meets Asiamoney a few days after the US Department of Justice has struck a deal with Low Taek Jho – or Jho Low, the fugitive Malaysian financier at the centre of the 1MDB scandal – for him to give up $700 million in cash and assets, though, critically, not himself. It is the biggest-ever salvage of funds under the US government’s Kleptocracy Asset Recovery Initiative, but it is not clear how much will end up in the state purse in Malaysia, whose assets were plundered.

The DOJ matter, Lim says, “was handled by the attorney general (Tommy Thomas). I didn’t want to get involved.” 

But Lim is involved, not least because he has factored the expectation of billions of ringgit in reparations into his budgetary planning. 

The word in government circles in Kuala Lumpur is that Lim was unimpressed by the settlement reached by the DOJ with Jho Low, as brokered by controversial Republican politician and former Trump adviser Chris Christie. It is believed that Lim wanted more, and wanted Low to admit to wrongdoing.



It is time to advance a new Malaysian narrative. We are a normal, boring democracy. And that we want to do the right things - Lim Guan Eng


Lim is careful not to be drawn too much, but admits: “If you asked me, I would want the whole hog, but I think the AG should be allowed to make a decision what is the best solution. You may want everything, but whether that is achievable, whether that’s practical or not… Lawyers will know better, how far, how much. You must do the necessary cost benefit on the time taken.

“You’ve got to deduct some expenses, but we should really get a sizeable chunk of it. We are given to understand that we’ll get a sizeable chunk of it.”

So how much is a “sizeable chunk”? If it has been agreed with Washington – and KL insiders say it has not – Lim is coy. 

“It will be sizeable,” he repeats, adding that it could take more than three years to repatriate that elusive, still-to-be-determined sizeable chunk of reparations.

“We’re hopeful everything will resolve by 2021, but I think it may spill over to 2022,” he says. “We’re hopeful for more reparation payments. But that was taking a bit longer than we expected. We still have to go through the due process.”

As for the Goldman Sachs case, Lim says: “We are hopeful that the next year we’ll be able to receive some big payments, from various parties. It is not very appropriate for me to mention this. Proceedings are being carried out. Last year, we had not initiated any proceedings. So, since we’ve initiated legal proceedings, I prefer to err on the side of caution.”

Reparations and returned funds were part of Lim’s recent budget.

“That’s why this year’s budget was much more detailed,” he says. “And we were able to sign off some bold initiatives, which we were a little bit careful in avoiding last year. We just felt that we had to be circumspect. It would be terribly embarrassing that you had to scuttle some of your programmes because you didn’t provide for these financial contingencies.” 

Goldman Sachs

After a long investigation into the state obligations inherited from the long UMNO years, Lim says it is “unlikely [there] will be any more nasty surprises, if at all. It will be pleasant surprises in terms of getting money back. So that’s why we could undertake some of our budget stimulus programmes.”

On the topic of Goldman Sachs, which Malaysia is suing for allegedly misleading investors over $6.5 billion in bonds raised for 1MDB during Najib’s rule, there’s more of the fiery Lim of old in evidence.

“Goldman Sachs should give us back our gold,” he says bluntly. 

With a bonanza series of privatizations of state firms potentially in the offing, Asiamoney asks if Lim, one of the people who would ultimately decide who wins what mandate, would welcome Goldman back into the Malaysian market if terms were ever reached.

“Let’s cross the bridge when we come to it,” he says. “You (Goldman) pay us back our money, then we’ll have that discussion. I think it is premature at this stage.”

Lim says it is time to change the international investment conversation about Malaysia away from 1MDB.

“It is time to advance a new Malaysian narrative,” he says. “It is sort of a new pronouncement by Malaysia that we’re no longer a global kleptocracy. We are a normal, boring democracy. And that we want to do the right things. Adopt and practice international norms. And also focus on growing the economy to developed status by stressing private sector-led growth, and we think that’s best achieved by trying to establish an entrepreneurial economy, where you have partnership with other stakeholders instead of government knowing best. Those days are over.”

Leadership succession

But first, this government must settle another vexatious issue that overhangs that Malaysian discussion – the leadership succession – which Lim admits tends to dominate talks he has with big investors.

The wily Mahathir repeatedly sends mixed signals that have Malaysians speculating about whether or not power will be handed to Anwar, his one-time political protégé during the 1980s and 1990s but who became his fiercest opponent. 


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Lim says: 'The succession plan is very clear. Mahathir (pictured) will hand over to Anwar'





Anwar spent 11 years in jail at the direction of Mahathir and, later, Najib Razak, on what many felt were trumped-up sodomy and corruption charges.

But as graft and greed overwhelmed the tainted Najib administration, Anwar and Mahathir reconciled through 2017 and 2018 in a bid to oust him, an uneasy agreement for both, but one that ultimately won their Pakatan coalition power in May 2018. 

Anwar was released from prison, fully pardoned, and he agreed to stay out of daily government while Mahathir served an initial term as prime minister; the deal was that Mahathir would then hand over to Anwar, who is now an MP. That initial term was supposed to be one to two years, but many Malaysians are not convinced Mahathir will give the job up to 72-year-old Anwar. 

The question of when or if Anwar will become premier has become a political parlour game in Malaysia.



The succession plan is very clear. He [Mahathir] will hand over to Anwar Ibrahim. And he has said that he’ll hand over [after a] maximum three years - Lim Guan Eng


Lim leads the centre-left Democratic Action Party, the second-biggest member behind Anwar’s Keadilan Party (The People’s Justice Party) by parliamentary seats held (and biggest by votes cast) in Mahathir’s ruling Pakatan Harapan alliance. So Lim is not quite a kingmaker, but his voice is a very influential one.

“We have taken a very firm and definite position,” Lim says insistently, “that we’ll stick to our agreement arrived at before the last general elections that when we win, the prime minister will be Dr Mahathir. The succession plan is very clear. He [Mahathir] will hand over to Anwar Ibrahim. And he has said that he’ll hand over [after a] maximum three years. Three years from 2018 means 2021. The succession will proceed as planned. And the person would be Anwar, and Mahathir has said it’ll be Anwar, not Azmin [Azmin Ali, the economy minister who has emerged as a rival to Anwar and is a Mahathir favourite] or any other leader.

“So, I think that’s clear,” Lim says. “Both personalities [Anwar and Mahathir], both leaders are happy with the entire process, whether it is the transition or the timing, so I do not understand why others who are not in the picture, why are they so dissatisfied? We [Lim’s DAP party] had declared that we support that position that we arrived at last year. We’ve got to keep our word. If not, we’re just treating it as not worth the paper it is written on.”

Asiamoney asks Lim if he is absolutely convinced that Mahathir will also keep his end of the agreement?

Lim is emphatic: “Yes, yes, yes, yes, yes. He has been very consistent. And he has never said otherwise. So definitely he’ll keep his pledge.” 

In an interview with news agency Reuters in the middle of December 2019, Mahathir said he would hand over to Anwar but not until after the November 2020 summit of leaders of the Asia-Pacific Economic Co-operation (Apec) to be held in Kuala Lumpur.

Will Lim stay on as finance minister in an Anwar-led government?

Anwar was in that chair for seven years through much of the 1990s, a golden period for Malaysia when it led southeast Asia in economic growth and became a magnet for foreign investment. But Mahathir and Anwar fell out during the crippling Asian financial crisis of the late 1990s, most famously at the 1998 general assembly of the UMNO party, then led by Mahathir, when a book titled ‘50 reasons why Anwar cannot become prime minister’ circulated the conference, sealing Anwar’s fate.

Before Lim took over the ministry in May 2018, four of Malaysia’s last five finance ministers had also been prime minister; the exception was Mahathir’s close associate Daim Zainuddin, who was finance minister from 1999 to 2001. And it is also unlikely to happen for an ethnic Chinese such as Lim in majority-Malay Malaysia.


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Lim became finance minster after Najib Razak (pictured) was voted out of power in 2018

A decade of industrial mismanagement and cronyism under Najib from 2008 has convinced Malaysians that it is prudent to keep the two roles separate. So will Anwar, if he becomes prime minister, revert to type and take charge of the finance ministry for a second stint some 22 years after his first term?

Lim certainly has a say in the composition of the Pakatan cabinet, but cabinet posts are wound up in Malaysia’s complex ethnic politics. Lim is the first ethnic Chinese finance minister since Tan Siew Sin in 1974 and the first non-prime minister to hold the post in almost two decades.

Lim baulks at discussing his own longevity in the post but sources close to him say Anwar wants him to continue, and that it is understood that Lim will keep the post in an Anwar government.

Lim says he knows Anwar well, has been close to him for a long time, and that “we went through hell and high water together.” That’s a reference to the jail terms both men have served at the hands of their political rivals and oppressors, notably their current boss Mahathir. 

As the son and political heir of three-term opposition leader Lim Kit Siang, Lim was imprisoned twice during Mahathir’s first 23 years as prime minister, for 18 months between 1987 and 1989, and for a year in 1994.

“Not only did he put me in jail twice, he also put my dad in jail twice,” Lim reminded Asiamoney last year.

Lim says he and Anwar “talk very often, we converse often”, as Lim does, he says, with “Tun,” using the honorific short form for Mahathir. 

“We also meet very regularly, at least once a week, sometimes three, four times a week,” Lim says. “When you talk about meeting, it is not just attending meetings. It is actually having conversation one to one. So, I think this is where you build trust, and we work together to resolve problems. Some of them are intractable, take time. But this is where I think real solutions can be found.”

Shadow economy

Asiamoney asks Lim how he thinks Malaysians and the markets have responded to him as finance minister.

“Well, you make decisions, definitely there’ll be some who wouldn’t like you, especially those who are used to the previous system, how they operate,” he says. “So, for those who cannot game the system, definitely I’m a problem. Those who are addicted to sugar, they have to get off their sugar high, so definitely I won’t be popular.”

That’s a reference to a big task of Lim’s second year at the ministry, to dismantle Malaysia’s black, or shadow, economy.

“It is all these illegal activities, illegal gambling, everything illegal, bookies and all that,” he says. “It is basically corruption. All these amount to M$300 billion, about $73 billion. It is huge. 

“If you can cut down even about 25%, you can get anything from within M$5 billion to M$15 billion in extra revenues, anywhere from $1.5 billion to $3.5 billion,” he says. 

“We thought that we could cut that [shadow economy] down, but the progress has been a bit slower. Because the vested interests are much more powerful than we expected – as well as they have their own network within the civil service.”

Lim had run the influential Penang state for a decade before becoming finance minister. Is he still enjoying the job as much as he said he was when he took office last year?

“I think I enjoyed it more when I was chief minister of Penang,” he says. “You can really make a difference [in local government] because you’re dealing with people, all about delivery of basic services.

“This is where you can make a difference, whereas here [as a federal finance minister], you’re basically doing policy meetings and you don’t see the implementation and you don’t see the difference that you have created so directly on the streets. So, it is much more… analytical, where you need a lot of brain power. It is always understanding, analyzing, breaking it down, finding solutions.

“I’m not a good policy wonk, so you have to do a lot of meetings. That’s why it is a bit more disconnected.”

In Penang, he says, “you have that human feel, you see that your constituency or your voter appreciates that change. You get that feedback, and that reinforces you.”

In the capital, Lim says “you’re a bit cut off, because you’re dealing with policy issues all the time. And you don’t see the results of your policy change.”

Lim says the US-China trade war has been beneficial to Malaysia in the short run, as investors have shied away from China and looked again at regional manufacturing bases in Asean and even Taiwan.

“We’re going to get hit too,” he says. “Many countries are now suffering in terms of reduced economic growth. It is only a matter of time before Malaysia gets hit. Maybe sooner rather than later. Because as you know when global growth slows, as a trading country, you can’t avoid being infected.”

Malaysia’s relations with China have also been under strain after Mahathir reviewed some big deals agreed with Beijing under Najib that were fashioned as part of China’s Belt and Road Initiative, some involving 1MDB. Lim says Mahathir’s apparent reluctance was because of that connection.

“After detoxifying [1MDB] and rationalizing, going through a cost rationalization of these projects, he’s now open,” says Lim. “And he has expressly said that Malaysia supports One Belt One Road. We have now cut down the cost of the projects significantly, and that makes it at least more palatable for us.”

As for the relatively sluggish economy, Lim expects 4.7% growth this year, with the proviso that international turbulence, particularly when generated by US president Donald, is contained.

“No matter how much you perform, how well we perform, one Tweet from you-know-who can unravel everything,” says Lim. “Or, we may be performing poorly, but one Tweet can make our stock market soar. So, we are all so dependent on external Tweets, or external events.

“It all depends on the [US-China] trade deal. We’re all very dependent on external events. The stock market went down because the Chinese side indicated that the trade deal or partial settlement of the trade deal may still take some time. We’re just hopeful that the trade war can be resolved, so that we can go back to do what we’re supposed to do, and the market will be influenced by the results.”

As Malaysia reforms, Lim says, it offers a bargain opportunity for foreign investors: “Now they should come and invest in Malaysia. You get the assets cheap, so get in while it is cheap, because by the time Malaysia is back on track, then it’ll be too expensive.” 



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