COMMENT | In 2006, when Dr Mahathir Mohamad was granted an honorary doctorate of letters by Waseda University, he affirmed that he has always been impressed with Japan, by virtue of how it rose from the ashes of World War II in 1945, just after two atomic bombs hit the country, to become a major economic juggernaut by 1960, all within a span of 15 years.

Coincidentally, it has been 15 years since Mahathir's retirement in 2003, before recently becoming the country’s prime minister again, in 2018. Although the national debt now stands at RM 1.09 trillion ringgit, almost 350 percent more than in 2003, the same "can do" spirit once displayed in Japan has now imbued Malaysians from all walks of life as well.

When Mahathir announced the importance of Look East, he wasn't asking Malaysians to mimic Japan, or for that matter, South Korea. Rather to learn from their collective discipline on how to work together as a nation, leaving no stones unturned on anything ranging from unfair contracts to improper concessions and systemic corruption.

The appointment of Lim Guan Eng and Azmin Ali as the minister of finance and minister of economic affairs respectively is the first arrow across the bow. Both have helped Selangor and Penang to reach a surplus budget despite the constraints with which Putrajaya had imposed on them, under the reign of Najib Abdul Razak.

But "Look East 2018" has to be understood in a new geopolitical and geo-economic context altogether, without which Malaysia would be learning all the wrong lessons. In the first version of Look East in 1982, for instance, Malaysia tried to transform the country into a Malaysian Incorporated; not unlike how the Sogoshosha (commercial groups) in Japan had become the backbone of the economy.

The cabinet ministers, by analogy, work as the senior middle management that is capable of executing the orders from the top. But the Malaysian Inc has become all mangled and maligned since 2004, when Abdullah Ahmad Badawi and subsequently Najib, failed to transform Malaysia into an economic powerhouse.

In the case of Abdullah Ahmad Badawi (photo), the fifth prime minister, the economic transformation came in the form of allowing government-linked investment companies (GLIC) and the surrogates which they spawned, to operate abroad. The goal, not least, was to overcome the structural and other constraints in Malaysia due to its relatively smaller population size of about 28 million people. Thus the profitability of the GLICs and government-linked companies now operating abroad became the staple of government revenue as extracted through corporate tax.

Najib, on the other hand, turned to the creation of 1MDB, with disastrous effects, piling the national debt several times over. By dipping into the state coffers to attempt several bail-outs, the fiscal position of Malaysia was practically weakened. All these are lessons which Malaysia cannot afford to repeat, even as Malaysia once again looks east.

If anything, the new Malaysian Inc must ensure the quality of the underlying assets/projects before being guaranteed by the government. This involves learning from Japan, especially the intricate relationship between the Japanese government and the Keidanren (the Japanese business federation) on how to ensure good governance. Should Malaysia learn from Japan only, or, in relation to Japan's membership in the Organisation of Economic Cooperation and Development (OECD)? Japan, not unlike South Korea, are both members of OECD. This is a club of developed countries. Does Looking East at the same time also suggest the need to understand what Japan and South Korea, and indeed, China, have learned from the West?

An 'eminent persons' group

Indeed, in systems with good governance as in both the UK and the US, projects are carefully evaluated with clear lines of responsibility. The same ethos is now very strong and entrenched in Japan. In such situations, the probability of default is minimal. But the same does not apply when one has guaranteed projects like 1MDB and SRC, as provided by the government. In addition, even in others, there may be padding of costs.

There is also another feature in Japan that one should learn from - automation and emigration. In the former, the city of Tsukuba in the outskirts of Tokyo has been designated as the centre for research, especially in robotics and engineering. If the world proceeds to excel in 4D printing, Japan would be at the cutting edge of all forms of nano and microtechnology. By allowing more and more international students to study in Japan, close to 260,000 at this stage, Japan has also enhanced its immigration procedures to allow these students to work and study at the same time, thus relieving the Japanese economy of labour pressures as Tokyo Olympics 2020 begins to build up.

The new version of Look East also comes with responsibility too. Japan cannot outsource or provide inferior technology to Malaysia, as it once did with Proton Saga, which was essentially a rebadged model of the Lancer from Mitsubishi. Such collaboration weakens the Look East policy over time as the spirit of genuine transfer of technology is absent. One should note that Mahathir has emphasised the importance of placing and training a skilled Malaysian management force. Japan has a duty to find ways to promote and enhance the career prospect of Malaysians, with or without the Japanese language proficiency, as long as they can produce the deliverables coupled with a strong balance sheet.

Japan should also not confuse Look East with Malaysia's attempt to constrain or counter-balance China in tandem with what the US-Japan Security Treaty might want to do. Looking East means appealing to the culture of peace and excellence of Japan, South Korea and China, and indeed, to the extent to which they have become the centre of global economic activities where their intra-regional trade alone has reached 80 percent of the total in Asia Pacific - while Asean continues to hover at 25 percent or less, a figure that is almost the same as in 1970.

More importantly, Japanese universities should find a way to work with local Malaysian institutions of learning, including vocational institutions and even high schools. Beyond such academic collaborations, Japanese banks, including agencies like the Japan International Cooperation Agency (Jica) and the Japan Export-Import Bank, should consider useful soft loans that can help address the infrastructure needs of Malaysia, ranging from water pipelines to potentially high-speed railways, again, but on fair and reasonable terms.

Soft loans can also be sourced from Japan with very favourable interest rates and these loans can be used to retire the loans taken with high-interest rates during Najib’s tenure. This will reduce the overall interest costs that the government will have to fork out annually.

Given the greying crisis in Japan, Malaysia knows Japan may not be able to offer a comprehensive set of solutions to Malaysia, especially in lifting Putrajaya out of the national debt. Thus a first step might require Japan and Malaysia to create a bilateral Eminent Persons Group, not unlike the Council of Eminent Persons in Malaysia, to look at ways and means with which the relationship of both countries, indeed, both Southeast Asia and Northeast Asia, can be improved. Looking East indeed means looking deep at what each can offer in a reciprocal manner.

RAIS HUSSIN is a supreme council member of Bersatu and heads its policy and strategy bureau.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.