Wednesday, January 1, 2014

Buy British Last Policy of Mahathir

Mahathir Mohamad
Prime Minister Mahathir Mohamad led Malaysia over a diplomatic clash against its former colonizer, Great Britain. Malaysia was a former British colony that gained independence in 1957. By 1981, the Federation of Malaysia was a developing nation, striving to achieve a status of an industrialized and developed country. In July of the same year, Mahathir Mohamad, a Malaysian nationalist became Prime Minister. And few months after taking office, events took place that led to what was known as the Buy British Last Policy.

Causes of the Buy British Last Policy

The Buy British Last Policy was announced by Malaysian Prime Minister Mahathir Mohamad in 1981. The policy was a retaliation from a number of British aggravations. The main spark involved the large British rubber company of Guthrie. Guthrie owned about 200,000 acres of rubber plantation in Malaysia. In 1981, the Malaysian Perbadanan Nasional Berhad or the National Equity Corporation launched a dawn raid at the London Stock Exchange that resulted to the acquisition of Guthrie. But the takeover of Guthrie was a reaction by the Malaysian government for the British company’s decision to sell its subsidiaries to the Multi-Purpose Holding of the Malaysian Chinese Association (MCA). This selling to the MCA was against the agenda of the Malaysian government under the New Economic Program, which aimed 30% corporate ownership by ethnic Malays in the country by 1990. The British government was shocked from the audacious takeover and decided to change the rules of the London Stock Exchange to avoid another dawn raid and take-overs.

Another grievance done by the British to the Malaysian government was its decision to increase the tuition fees of foreign students studying in Great Britain. The increase was threefold, from about £300 to £900. The increase highly affected the Malaysians, having 13,000 government-sponsored students studying in Britain. Henceforth, it made sending students a heavier burden for the developing Malaysia/

The two events resulted to the dismay of the Malaysians. The change of rules blocked any hope of owning any further British companies that had significant assets to the natural resources of Malaysia. The tuition increase resulted to the rise of government expenditures for sending students to Britain. As a result of the British government’s action, Prime Minister Mahathir announced the Buy British Last Policy.

Under Buy British Last Policy

Under the Buy British Last Policy, restrictions were placed on British imports and contracts. All contracts and imports from Britain must first be approved by the Prime Minister’s Office through a request. But upon sending for a request, a list of possible substitutes from non-British companies or products must also be sent as well. Eventually, the bureaucratic red tape imposed by the policy hampered trade between Great Britain and Malaysia.

The initial reactions to the Buy British Policy were mixed. The Malaysians, especially the young members of Mahathir’s party, the United Malays National Organization (UMNO), were ecstatic by the policy. A sense of nationalism aroused from many Malays and memories of British colonialism were remembered once again. Importers of British goods and British companies looking for contracts in Malaysia were also concerned by the restrictions. Doing business in Malaysia became difficult and caused expensive delays. Great Britain, under the Iron Lady, Margaret Thatcher, also became concerned with the policy. For starters, a lot of trade in Asia was conducted with Malaysia. Another, the tendency of Malaysia ceding from the British led Commonwealth of Nations became highly probable, a huge blow to the international prestige of Great Britain. The cause of concern had been brought by Malaysia’s decision not just to boycott British contracts and products, but also the Commonwealth Heads of Government Meeting (CHOGM) in 1981 in Melbourne. Mahathir’s boycott of the CHOGM was again followed in 1983.

The Iron Lady Strikes Back and the Carcosa Hill Incident

Thatcher wanted the tension resolved. But unlike her actions in the Falklands, she wanted to resolve the issue with Malaysia diplomatically. She sent her Foreign Minister, the Baron Carrington and her Defense Minister John Notts to negotiate with Mahathir for the end of the Buy British Last Policy. But before that, Anglo-Malaysian relation further soured. In 1982, the Malaysian government took control  of the Carcosa Hill. The Carcosa Hill was a property of Great Britain and was the home of the high commissioners of Malaysia. The hill became a property of Britain after Malaysian independence when the first Malaysian Prime Minister, Tunku Abdul Rahman, gave the hills to Britain as a sign of good faith. As an act against Britain, Mahathir had the property taken back. The two ministers sent by Thatcher negotiated with Mahathir for a resolution on numerous issues. However, the two ministers failed to convince the outspoken and strong Prime Minister to reverse his policies.

When her envoys failed in resolving the issue, the Iron Lady decided to take the matters on to her own hands. She invited Mahathir to visit London and have a discussion with her in March 1983. The meeting of the British iron lady and the Malaysian strong man resulted finally in the resolution of tensions. Both leaders earned the respect of the other. 


After the meeting, Mahathir announced in London that as he returns to Kuala Lumpur, the policies would be reversed. The issue of tuition fees was resolved with the British government’s decision to create a $160 million fund to aid Malaysian students in Britain. In May 1984, the British decided to return the Carcosa Hill to Malaysia, and in turn, Mahathir offered a new site as a replacement for the hill. By April 1985, Margaret Thatcher’s visit to Malaysia cemented the return of good relations between the two countries. The good mending ties were even further strengthened when Mahathir attended the 1985 CHOGM meeting. To the surprise of many, he offered Malaysia to chair the 1989 CHOGM which Malaysia did lavishly, and bided for the 1998 Commonwealth Games, which again, Malaysia hosted. 

See Also:
Look East Policy
Margaret Thatcher

Cheah, B. Malaysia: The Making of a Nation. Singapore: Institute of Southeast Asian Studies, 2002. 

Dhillon, K. Malaysian Foreign Policy in the Mahathir Era, 1981-2003: Dilemmas of Development. Singapore: NUS Press, 2009. 

Leifer, M. Dictionary of the Modern Politics of Southeast Asia. London: Routledge, 1995. Milne, R. Malaysian Politics under Mahathir. London: Routledge, 1999.

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