Politicians love few things more than seeing their enemies proven wrong. It's a feeling with which Malaysian Prime Minister Mahathir Mohamad is in touch these days as some former nemeses are giving him his due.
Take financier George Soros, who just four years ago was calling Mahathir a "menace to his own economy." Mahathir had just implemented capital controls to halt outflows that sent his currency, the ringgit, into freefall. Nowadays, however, Soros is reportedly putting some money into Malaysian sovereign bonds.
Ditto for Calpers, the California pension fund which earlier this year withdrew from Malaysia. Calpers also pulled out of three other Southeast Asian economies, citing dodgy corporate governance, transparency and labor standards. Calpers also was reported to be buying Malaysian debt recently.
Then there's the US, which demonized Mahathir's economic policies during the Asian crisis. At the time, Treasury officials claimed that Mahathir, by removing Malaysia from the global economy, would send his nation into poverty and chaos. Yet last week, senior US State Department official James Kelly heralded Malaysia as a beacon of stability.
Malaysia's reversal of fortune has much to do with its economy's performance. As many Asian economies limp along, Malaysia is riding high thanks to robust consumer spending, strong foreign investment and a revitalized banking system. The nation also is well positioned to benefit from the ongoing rebound in global growth, especially in the US Some analysts see Malaysia growing 6 percent this year.
"Malaysia is doing remarkably well, yet no one wants to admit it because they don't want to give Mahathir the credit," says Simon Ogus, chief executive at DSG Asia Ltd in Hong Kong.
Mahathir, after all, is an undisputed firebrand of the global economy and has made his share of headlines over the years condemning Western-style capitalism and economic globalization.
He's called for a ban on currency trading, blamed Jews for Malaysia's problems and become known for anti-market rhetoric.
Admitting that he's done some good for his economy isn't easy.
It'd only be fair at this point to do just that. We're not referring to Mahathir's capital controls a few years back -- his economy hasn't thrived because of them, but despite them. What Mahathir does deserve credit for is improving corporate governance and cleaning up Malaysia's banking system. He's marshaled through plans to force banks to write down bad loans and he's had remarkable success.
But a reality check is in order. For all its strengths, Malaysia is facing the same daunting challenge as its neighbors.
Mahathir has kept the ringgit pegged at 3.8 to the dollar since September 1998, ignoring pressure from some investors to let the currency trade freely. The currency peg may reduce volatility in the economy, but it's hurting competitiveness.
Malaysia's situation "has highlighted the problems associated with over-reliance on export-led growth," the Asian Development Bank said in a recent report.
The nation also has further to go to convince investors that its capital markets will remain open if things get dicey.
Mahathir's recent proposal of a world tax on wealthy nations to help poorer ones was but one reminder that Malaysian-style capitalism differs considerably from western ideals.
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