Upon his return to Putrajaya, Dr Mahathir Mohamad wasted little time in reminding Singapore of the reason it was glad to see him leave in 2003, according to an article in Nikkei Asian Review.

“Just 74 days into his second stint as prime minister, Mahathir is challenging a high-speed rail link between Kuala Lumpur and Singapore.

“He is threatening to charge the city-state more for water. He is demanding renegotiation of the Trans-Pacific Partnership, a regional trade pact that includes Singapore,” wrote William Pesek, an award-winning Tokyo-based journalist.

However, Pesek said there could be a silver lining for Singapore with regard to Mahathir making a comeback because the island state's government led by Prime Minister Lee Hsien Loong is in need of a jolt.

He pointed out that World Bank data now showed Malaysia was on track to regain its GDP leader over Singapore.

“Admittedly, such comparisons can be superficial...

“But two caveats add drama to the contest between Malaysia and Singapore. In 2015, Singapore, population 5.6 million, rejoiced over surpassing Malaysia, population 32 million.

“It was drenched in national pride, coming around the time Lee Kuan Yew died - a crowning achievement for the father of Singapore. And Malaysia is not so much gaining as Singapore is treading water in terms of development,” Pesek added in his report.

According to World Bank numbers, he said, Malaysian output hit US$314.5 billion (RM937.21 billion) in 2017, just US$9.4 billion (RM28.012 billion) below Singapore's US$323.9 billion (RM965.22 billion) and the gap is expected to narrow further with Malaysia's projected 5.5 percent growth exceeding Singapore's projected 3.1 percent.

“Malaysia, to be sure, is no economic role model. That voters tossed out Najib's (former prime minister Najib Abdul Razak's) BN coalition marks great progress.

“It is heartening that Mahathir's Pakatan Harapan coalition is bringing Najib to justice with lightning speed. And it is certainly great that Mahathir is acting transparently.

“The Najib government's questionable economic data made Beijing statisticians blush. Mahathir's administration is shining light on the true state of Malaysia's finances, regardless of the consequences in the financial markets,” he added.

Mahathir must reinvent a system he helped create

On the same note, Pesek pointed out that Malaysia's rot took decades and did not happen overnight.

“Though headline GDP growth looked decent, the fruits went to ethnic Malays benefiting from affirmative action policies dating back to 1971, a decade before Mahathir's first stint as leader.

“Policies disadvantaging Chinese and Indian minorities impeded innovation and productivity. They fed corruption and enabled tiny Singapore to overtake Malaysia easily in terms of GDP.

“Mahathir's successors, Abdullah Ahmad Badawi and Najib, both pledged to end the economic apartheid which turned off foreign investors, only to deepen the policy. That leaves Mahathir, 93, with the tall - and awkward - task of reinventing a system he helped create,” Pesek added.

Based on this, he argued that Malaysia could be the catalyst Singapore needed at a pivotal moment and Mahathir's return also turned up the pressure.

“Malaysia must do Herculean amounts of heavy lifting to raise its own game. But his focus on retooling the economy could generate a healthy rivalry, not just for Lee's government but for several throughout the region.

“The message from Mahathir in his second stint as prime minister to Rodrigo Duterte of the Philippines, Prayut Chan-o-cha of Thailand and other leaders whittling away at democratic norms is to beware the wrath of your people. The signal to Indonesia's Joko Widodo is that nothing good comes from tolerating economic nationalism.

“To Vietnam's Nguyen Xuan Phuc, it is about the dangers of tightening the noose around the media. To Cambodia's Hun Sen, it is the futility of decimating opposition forces. And to Lee's Singapore, it is the costs of complacency in what is essentially a one-party state,” he added.

Though Singapore's economic achievements remained impressive, Pesek claimed that it was suffering from a midlife economic crisis.

“Even with zero natural resources, its per capita income is S$58,000 (RM162,400) to Malaysia's roughly S$10,000 (RM29,800). And Malaysia has enviable stores of petroleum, natural gas, palm oil, timber and other deposits like the water supplies it sells to Lee's nation.

“Yet decades after beating the middle-income trap, Singapore is having a midlife economic crisis. Wages are stagnant, inequality is rising and the population is ageing rapidly. At the same time, fierce competition from China, India, and Indonesia make Singapore an expensive property in a cheap neighbourhood. The only way to grow incomes is to create new wealth, not to try to compete on price.

“Lee's government must take bold and creative steps to increase productivity and entrepreneurship. With tax incentives and regulatory tweaks, it can empower millennials with an idea and a dream to disrupt the model Lee's father built.

“Steps in March to raise the goods and services tax and stamp duties on property to finance social-welfare spending were constructive. But it is time Singapore manufactured a more dynamic and innovative future - one that relies less on factories and more on the natural resource it does have: a smart and determined workforce.

“The sudden burst of reformist energy in Malaysia could make Mahathir an unlikely ally in that enterprise,” Pesek added.