On his return from South Korea, Prime Minister Dr Mahathir Mohamad marveled at the miraculous recovery of the Korean economy from the recent Asian financial crisis, and was anxious to know how the Koreans had succeeded to manage their economy so well.

Mahathir particularly wondered at the speed with which South Korea had repaid in full the US$56 billion IMF loan taken at the height of its economic crisis, and how its automobile industry had boomed to 2.6 million units a year with a population of only 46 million, capped by a successful penetration to the US market.

Wonder no further, Mr Prime Minister. The answers are right at your doorstep.

To start with, the Korean people had the good fortune and the good judgment of electing a life-long "Mr Opposition" and "Mr Clean" to be their new president, just at a time when they needed such a leader most to clean up the mess strewn by his predecessors.

The financial and economic crisis that South Korea had found itself in at that time was not dissimilar to Malaysia's own crisis then: reckless expansion by the elitist Korean chaebols (conglomerates) made possible by equally irresponsible lending by banks in an ambience of 'over-cosy' (read: corrupt) relationship between the ruling power and the privileged business powerhouses.

The new president has done an honest job by trimming the overblown chaebols down to size, ruptured the umbilical chord between politics and business, restructured financial institutions and stamped down on corruption and cronyism. These genuine political and economic reforms have revitalised the country's economy and foreign direct investments have flocked in at unprecedented levels that are multiples of those before the crisis.

All the above events stand in stark contrast to the Malaysian scenario under Mahathir's continued leadership. Malaysia has continued to mire in economic malaise, with dwindling local and foreign investments that now pale in comparison to the pre-crisis levels.

So-called corporate reforms are phony, being spoilt wines in new bottles. True, prominent cronies like Halim Saad and Tajudin Ramli are toppled, but these are mere manifestation of an internal purge within the ruling clique. The corrupt system itself has not changed and in fact it even exhibits signs of deterioration, as billions of ringgit of government contracts are dished out without proper tenders and transparency at even faster speed under Mahathir's current economic policy of pump priming to keep the economy afloat.

In the hurry to finish spending the allocated multi-billion ringgit packages by certain deadlines as ordered by Mahathir, impressive buildings and structures have suddenly sprouted up all over the country and even roads in remote areas have been given a new dressing extensively.

Needless to say, the taxpayers are once again the biggest suckers, having to pay increasingly exorbitant prices for diminishing economic returns. In the meantime, new cronies have sprung up to take the place of old cronies, and corruption and cronyism run unabated.

On the political front, the past four years following the Asian Financial Crisis have seen Malaysia going through its worst regression. The economy almost collapsed in a crisis of confidence due to gross mismanagement. Justice system is in tatters, as so glaringly demonstrated in the persecution of Anwar Ibrahim.

Public funds in billions of ringgit have been unabashedly used to bail out cronies. Elections have been blatantly manipulated to make a mockery of democracy. Vocal opposition leaders of the reform movement are arrested and imprisoned without justification.

During this period, Malaysia's international image has been further stigmatised by Mahathir's constant foul-mouthing of foreigners, who have been found to be convenient whipping boys for Mahathir to vent his anger over the sudden collapse of his crony capitalist empire, which was painstakingly built up by him, and of which he took so much pride.

Of course, the public torture of the highly popular Anwar, with the police and judiciary acting as henchmen, only caused Mahathir to be further repudiated by world leaders, and in the process, cast doubt on Malaysia' s commitment to the rule of law.

In fact, Malaysia had already fallen from the grace of foreign investors when it abruptly and dishonorably froze the CLOB shares (mostly held by foreigners) from trading with risks of confiscation, and prohibited foreigners from moving their assets out of the country when Malaysia imposed currency control in 1998.

These bad images of Malaysia have and will continue to act as deterrent to foreign investment, so long as the country's political leadership remains unchanged.

By a stroke of luck, Mahathir's dimming political career was given a second lease of life through the political earthquake thrown up by the Sept 11 terror attacks in US. The revival of his political fortune has emboldened him to hasten his repressive acts in spite of public outcries. Blatantly undemocratic legislations are rammed down the throat of the people that remove the last semblance of free and fair election. Democratic institutions are further subverted through the appointment of notorious henchmen to key posts (Human Rights Commission chief, attorney-general, Federal Court judge, etc.).

Progressive voices of dissent are silenced by brute police force and a cowed press. The tentacles of repression have even reached the sanctuary of learning, the universities and colleges, where students and teaching staff are forced to sign pledges of 'good conduct' to the ruling power, and spies from the ruling party are planted to make sure the institutional community comply.

Apart from the above political and economic regression, Mahathir's aspiration to enumerate the economic achievement of South Korea is sheer wishful thinking, due to certain structural flaws of the Malaysian society.

First, we do not have a cohesive society. This country is compartmentalised into different racial groups of Malays, Chinese, Indians, etc., with the racial barriers being periodically strengthened to ensure the power base of the ruling Umno is intact and secure.

A permanently fissured society cannot hope to march ahead forcefully in any direction (including the direction of fast economic progress), as the various racial groups inevitably do not march at the same speed. Much energy is dissipated in racial squabbling and much speed is lost due to the necessity to harmonise the differences.

Second, we do not have a culture of free and fair competition. Protectionism is everywhere, whether in politics, education or trade; or whether between our country and others, between one race and another, between one privileged business group and others, between the ruling clique and the opposition etc.

For instance, in politics, competition for the presidency of Umno (No l party in the ruling coalition Barisan Nasional) has been banned for more than a decade; competition for party posts in the coming MCA (No 2 party in BN) convention has also been banned; BN has been insulated from meaningful challenges from the opposition for decades due to massive abuses of the democratic process.

In education, due to racial preferences, the ambience of active competition in public universities is absent. The bumiputra do not feel the pressure to compete as seats are reserved for them, while most non-bumiputra do not even attempt to compete as the openings to them are too little.

In business, due to the absence of transparent and fair tenders for government contracts and privatised projects, the spirit of competition as a vital tool to uplift productivity is lost to our economy. Under the present system, competition is more centered on building illegitimate influences with the government, rather than on improving efficiency.

This is a deadly flaw that breeds corruption and cronyism and strips the economy of vitality. Not only efficiency will drop but genuine entrepreneurship will also be suppressed, as in this environment, rewards go only to those who have illegitimate connection to the government, but not to those who are efficient and hardworking.

In trade, our industries have been overprotected from foreign competitions for decades, without any effort to remove or reduce these protections. A good example is our national car Proton Saga, which still struggles financially (requiring cash injection from Petronas) in spite of the 16-year long high tariff protection, which was not only directed against foreign manufacturers but also against local car assemblers.

No effort has been made to at least gradually lower its protection against local competitors. As a result, Mahathir has to request an extension of time for our cars to join the AFTA (Asean Free Trade Area).

Third, we are a society where meritocracy is taboo, perhaps the only one in the world with the possible exception of Fiji. Such a society is doomed to failure for obvious reasons. (Incidentally, the call by Mahathir last year to introduce meritocracy to our universities was only meant as a shock therapy to convince the Malay students that this country could not afford to practise meritocracy).