Daim Zainuddin - Political Career

Political Career

In 1984 he was appointed Minister of Finance. He never lost his love for the banking industry and after he retired he started investing in small banks overseas in Europe and Africa. As the business expanded, the banks needed to be organized under a bigger parent bank and he therefore acquired Hock Hua Bank (which he renamed International Bank of Malaysia Berhad) which was one of the smallest banks in Malaysia. Again he had to dispose of his stake when he was reappointed Minister of Finance in 1998. After his second retirement he is now again actively involved in the banking industry.

Apart from business, politics have always interested Daim. His earliest exposure was as a student in London whereby though not actively involved in politics, he shared his fellow students interests in the political issues of the day particularly independence and post-independence implications on the socio–economic and religious mosaic of pluralistic Malaysia.

His first encounter with real politics albeit covertly was when in 1966, as a lawyer with Allen & Gledhill, the firm was appointed by the Federal Government of Malaysia to act for the Governor of Sarawak in a case against the Chief Minister of that State. Back in Kuala Lumpur, Daim was asked to attend a Cabinet meeting whereat he briefed the Cabinet members of the political situation in Sarawak and impressed upon the Cabinet the need for emergency to be declared to avert a worsening of the situation caused by the demonstrations against the Chief Minister’s minority government. Emergency was declared. However, the security risk persisted and the Governor as advised by the central government suspended the Standing Orders of the House and called for a meeting of the Assembly using emergency powers. Daim assisted in drafting the statement of the Governor that the Assembly was to debate; the Assembly met, the Chief Minister’s government was voted out of office. Impressed by his legal skills and political knowledge, the Prime Minister offered Daim a seat in Sungai Petani in the 1974 general elections but Daim declined, choosing instead to establish his credentials in business.

Come 1977, Daim decided that he was financially comfortable enough to retire. His retirement plan then was to go back to school and so he enrolled at University of California Berkeley to pursue a course in Urban Planning. At around the same time, he enjoyed a close rapport with the then Deputy Prime Minister Tun Dr. Mahathir Mohamad.

In 1978, Daim met Mahathir in Los Angeles and San Francisco, when Mahathir urged Daim to return to Malaysia and contest in the general election that year. At the same time, Daim was also offered the Chairmanship of the Urban Development Authority (UDA) by the Public Enterprises Minister. Daim was not interested in taking up the Chairmanship of UDA which he deemed too big and widespread, too bureaucratic and doing too many things at the same time. Instead he suggested that UDA should form a holding company and transfer all its commercial property and commercial assets to it; only then would be agree to manage it. Hence, Peremba was established and Daim became its Non–Executive Chairman with a team of young and bright hand–picked officers assisting him. While not many could take his punishing rigours and demands of work and discipline, those who did went on to become successful entrepreneurs and notable amongst these were Tan Sri Wan Azmi Bin Wan Hamzah, Tan Sri Halim Bin Saad, and Tan Sri Samsuddin Bin Abu Hassan. In 1980, Daim was informed that the Prime Minister Tun Hussein Onn had appointed him as Senator in the Upper House of Parliament.

When Mahathir became Prime Minister in 1981, he sent Daim on a number of missions. The first was to the United States of America (USA) to deal with the problem posed by the USA’s General Services Administration (GSA) tin stockpile releases which caused the price of tin to tumble, thus adversely affecting the Malaysian tin industry, it being a major producer of tin. Knowing that the tin miners’ hardship would not move the Americans but that the communist threat would, Daim decided to take on this hard line in his negotiations with them. It worked and the GSA agreed to limit their stockpile releases to 3,000 tonnes a year for three years.

In 1981, the Government of Malaysia announced the adoption of the ‘Buy British last’ policy which actually was a culmination of a series of problems with the United Kingdom (UK). Prevalent was a new spirit of Malaysian nationalism which was manifested in the acquisition of Guthrie Estate by Permodalan Nasional Berhad, the Government–owned national equity corporation; the return of Seri Carcosa (premises which had been given to the British by Tunku Abdul Rahman Putra Al–Haj, Malaysia’s first Prime Minister;) and the steep hike in fees of British Universities. To this day, very few Malaysians are aware that Daim was instrumental in working behind the scenes to resolve these issues and restore good relations with the British.

However, the event that truly launched Daim’s political career was the day before nominations for the 1982 General Elections, when Mahathir rang Daim to say that he was to contest the Kuala Muda Parliamentary seat. Within the short span of the next two years, his rise in politics was meteoric as he was appointed the Minister of Finance in 1984. At that same time the burgeoning economy kept up its momentum despite the high rate of borrowing and spending to keep the economy healthy. The full impact of the world recession on Malaysia was only felt in 1985. Internally too, there were many abuses involving the financial institutions brought about by lack of proper supervision and control. By the time he took over, Daim could not avert the scandals, crisis and failures. However, Daim set about implementing a strict code of monetary and financial management to prevent the disease from becoming terminal for the whole economy.

He stopped the practice of borrowing to beef up funds for spending, he curtailed expenditure to suit income, he slashed the allocation for the public sector – upsetting many quarters. In the years 1987, 1988 and 1989, Malaysia paid off about RM6.8 billion of her foreign debts which was earlier than scheduled, a record repayment for developing nations. Interestingly, the Far Eastern Economic Review which had made dire predictions about Malaysia’s economy in 1986, admitted in its issue of September 1, 1988 that Daim’s effective management style had contributed positively and tremendously to Malaysia’s economic recovery.

Daim resigned as Finance Minister in March 1991, and the news caused a stir both in Malaysia and abroad because it was not in the Malaysian culture to resign from a high office. Therefore, when it happened there was a great deal of speculation as to why, and of course the most prominent was that which cited the irreconcilable differences with the Prime Minister, Tun Dr. Mahathir Mohamad. For Daim, the reason was that he had accomplished his tasks – reorganized and improved the country’s financial position. Further, the Prime Minister reiterated by saying that “Daim had agreed to take the post on condition that he stay only to help reorganize and improve the country’s financial position. He said he had fulfilled this task and it was time I let him go.” In accepting his resignation, the Prime Minister also welcomed his readiness to contribute his ideas to the nation. To crown it all, the Prime Minister recommended Daim for the “Tun” title – the highest honour of the land. And so on June 5, 1991, the Yang di-Pertuan Agong Sultan Azlan Shah conferred on Daim the Seri Setia Mahkota award, which carries the title “Tun”.

Prior to his resignation, in 1991, Daim’s contribution was succinctly summed up as thus: “Despite having much of his tenure clouded in controversy, the outgoing Finance Minister has nonetheless earned the reputation as one of the country’s ablest economic architects, having steered Malaysia through recession into four straight years of high growth.” In another article, “Daim exits office having earned the distinction of being a hard–driving technocrat, who resisted pressure by rival ministers who wanted to alter fiscal policy for political expediency ….”

It was also recognized that during his tenure as the Finance Minister, Daim had implemented four broad strategic structural reforms during the 1986 to 1991 period namely the mobilization of the private sector, active external policies, the supportive role of the private sector and the rehabilitation of the public enterprises. To this day, the tenets of his economic policies are held in high esteem and are continually pursued to either jump start or sustain the Malaysian economy.

Although technically out of the Government, Daim was still perceived as a man to be reckoned with – an entity greater than the sum of his overt responsibilities when he was appointed Economic Advisor to the Government, Chairman of the Northern Growth Triangle, the Labuan Development Authority and the Langkawi development Authority and also the Treasurer of the United Malays National Organisation (UMNO), the leading party in Malaysia’s ruling coalition, Barisan Nasional (National Front). He was also Malaysia’s representative to the East Asean Growth Area (EAGA).

In 1997 when the Asian crisis swept through Asia leaving behind devastated economics in its wake, Daim Zainuddin was recalled to public service.