William Pesek is based in Tokyo and writes on economics, markets and politics throughout the Asia-Pacific region. His journalism awards include the 2010 Society of American Business Editors and Writers prize for commentary. Read more opinion SHARE THIS ARTICLE Share Tweet Post Email

Photographer: Mohd Samsul Mohd Said Photographer: Mohd Samsul Mohd Said

Asia-based journalists have missed Mahathir Mohamad since he left office in 2003. The former Malaysian prime minister's mercurial governing style and fiery rhetoric made for great copy. I was in a Hong Kong ballroom in 1997 when Mahathir -- the man credited with turning the agricultural backwater Kuala Lumpur, which literally means "muddy river," into one of Asia's most impressive skylines -- responded to his country's crashing economy by castigating hedge fund managers. He singled out George Soros as a "moron."

Mahathir now has a new target -- Najib Razak, Malaysia's current prime minister. The daily squabbling between Najib and his predecessor has unsettled Malaysian markets, with the ringgit falling to its lowest value in a decade. But Najib has nobody to blame but himself for the attacks, given the country's underlying economic distress. Malaysia's prolonged slow growth, which has Fitch now threatening a downgrade of the country's credit ratings, traces back to Najib's refusal, or inability, to make good on his pledges to dismantle race-based policies that strangle innovation, feed cronyism and repel multinational companies.

You don't have to take Mahathir's word for it -- Malaysia's most successful entrepreneurs say the same thing. Just ask Tony Fernandes of AirAsia.

The man often referred to Asia's Richard Branson has been waging his own battle with the government on Twitter. Fernandes has been decrying, 140 characters at a time, the Malaysian government's misguided priorities and its utter lack of accountability. "Government and opposition spend so much time on race and religion. Will there ever be a truly Malaysian party that puts people first?" he tweeted recently. Another message reads: "Good education, good hospitals, fair distribution of wealth, an economy that creates jobs, honest clean government. Transparent leadership."

My favorite was Fernandes's take on the kind of national culture the government should be cultivating: "Where all Malaysians respect each other's culture, religion but work together to benefit all. If you need an example look at AirAsia."

This last point deserves closer attention. AirAsia has admittedly had a rocky six months, beginning in December with its first crash (killing all 155 on board) and culminating in today's share-price plunge (its accounting practices are being questioned by GMT Research). But Fernandes has earned his status as a major player -- and Malaysia's most recognizable face -- on the global stage. With his Bransonesque daring and social-media savvy, the billionaire Formula One team owner personifies the heights to which the Malaysian economy might climb if the country's dysfunctional politics didn't stand in the way.

Indeed, AirAsia might never have gotten off the ground if Najib had been in office at the time of its inception, rather than Mahathir. Fernandes had three big strikes against him when he started out 14 years ago: He's not Malay (the majority ethnicity coddled by Malaysia's affirmative-action policies); he was intent on challenging the flagship Malaysian Airlines; and he was starting an airline just as the Sept. 11, 2001 terrorist attacks in the U.S. was sending the industry into the throes of an existential crisis.

Nonetheless, Mahathir's government gave Fernandes the green light to create the company. In the interim, AirAsia has literally changed the world. Although the company's "Now Everyone Can Fly" slogan seemed somewhat trite at the time of its founding, it has gone on to inspire myriad developing-world copycats.

Malaysia needs more homegrown success stories that raise living standards and the country's global status. Sadly, when Malaysia makes headlines these days, they're often about the government's dysfunction -- whether the never-ending effort to jail opposition leader Anwar Ibrahim on sodomy charges, legal tussles over who exactly is permitted to utter the word "Allah," or clueless castigations of foreign tourists (a group of whom allegedly caused an earthquake by taking nude photos atop Mount Kinabalu).

Since becoming prime minister in 2009, Najib should have worked to level Malaysia's playing field for would-be entrepreneurs. Instead, he has protected race-based quotas and deepened the economy's reliance on oil and gas production. Najib seems to be more concerned about retaining power for his ruling Barisan Nasional coalition, which has been in power for almost six decades, than attending to the aspirations of Malaysia's 30 million people.

Meanwhile, some of his supposed reforms are dragging down the economy. A case in point is 1Malaysia Development, the state investment company Najib created, and which Mahathir claims is missing "huge sums of money" and buckling under debt. The scandal has contributed to the plunging of Malaysia's currency some 13 percent over the past 12 months.

The ringgit's fluctuations are a decent summary of the country's wayward course in recent years. It's now close to 3.80 to the dollar, the level where Mahathir pegged it during the 1997-1998 Asian crisis. Mahathir now says it may be time to peg the currency anew to stabilize it. That speaks to how little progress Najib has made internationalizing the economy -- and how urgent new political leadership (or a return to old political leadership, as it were) would be for entrepreneurs like Fernandes.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:

Willie Pesek at wpesek@bloomberg.net

To contact the editor on this story:

Cameron Abadi at cabadi2@bloomberg.net