In 1981, Dr Mahathir Mohamed initiated the ‘Look East Policy' to learn from Japan the road to national development with the ultimate objective of establishing Malaysia as a modern progressive state.

One of the main thrust of this policy was to accept Japan's Official Development Assistance loans to accelerate the building of infrastructure such as expressways, power stations and airports.

Now after more than two decades and several milestone projects such as the Dayabumi Complex, KLIA, power stations and the sewerage treatment plants, what were the actual benefits for the country?

While there are many tangible evidences of the fruit of this policy as can be seen in the tall skyscrapers and modern transportation facilities, a niggling question at the back of my mind is, ‘What was the price the nation paid?'.

The ODA loans come under the purview of the Ministry of Foreign Affairs, Japan and the main objectives are not altogether altruistic in that apart from diplomacy, they were aimed at projecting the use of Japanese technology and materials.

Therefore, these loans are on the surface attractive because of the low interest but there is a catch. In return, the borrower is required to use Japanese goods and services which are specified in the contracts. As much as 80% of the contract's service and goods are sourced from Japan.

In the tendering process, elaborate procedures are required to be followed to give an appearance of transparency and thoroughness but in reality, they are designed to weed out contractors other than Japanese and to give an advantage to a contractor who has already been favoured.

The selection of contractors has now become an issue in Japan. This is an old story dating back to 1993-94 where several major contractors were charged for bribing politicians to obtain contracts for construction projects.

Apparently, there was a moratorium among the major contractors in 2005 to use such a devious method. The current slush fund scandal involving Nishimatsu Construction Co shows that old habits die hard.

The modus operandi is to set up dummy companies to contribute to influential politicians to obtain construction projects. The money for these illegal contributions comes from slush funds which were established in places outside of Japan such as Hongkong.

These slush funds were also alleged to have been used to bribe Bangkok city officials to win a contract for the construction of flood drainage tunnel.

The situation must be bad for the Ministry of Foreign affairs, Japan to set up a special information desk to receive reports of bribes and bid- rigging. I certainly hope that this contagion is not prevalent in ODA loan projects in Malaysia.

Can we now say that a contractor who was selected to construct a project is necessarily the most qualified and offered the most competitive price? Where whither shall we go then? Seems to me, it is time to discard the Japanese model. A fresh impetus is required from the new prime minister.

The current financial and economic meltdown has shown the resilience of the Chinese economic model. The G-20 summit meeting in London has shown their ability and readiness to exercise leadership.

With the new leadership of Najib Tun Razak, this could a good time to look north instead of east. By the way the Chinese have made their first low interest loan to Malaysia for the Penang Second Bridge on very favourable terms. This need not be the last.