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 ended its status as a British colony by gaining independence in 1957. By 1981, the Federation of Malaysia was a developing nation, striving to achieve the status of an industrialized and developed country. In July of the same year, Mahathir Mohamad, a well-known Malaysian nationalist became Prime Minister. A few months later, events took place that led to the implementation of a directive known as the Buy British Last Policy.

Causes of the Buy British Last Policy

Malaysian Prime Minister Mahathir Mohamad announced the Buy British Last Policy in 1981. The policy came as retaliation from a number of British aggravations. The main spark involved the large British rubber company Guthrie, which 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 in the acquisition of Guthrie. The Malaysian government particularly choose Guthrie after 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 went 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, outraged by the audacious takeover, decided to change the rules of the London Stock Exchange to avoid another dawn raids and take-overs.

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

The two events dismayed the Malaysians. The change of rules blocked any hope of owning any further British companies that had significant assets to Malaysian natural resources. The tuition increase resulted in to 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

The Buy British Last Policy restricted the entry of British imports and contracts. All contracts and imports from Britain must first be approved by the Prime Minister’s Office through a request. In addition, the request must list possible substitutes from non-British companies or products. Eventually, the bureaucratic red tape imposed by the policy hampered trade between Great Britain and Malaysia.

The Policy received mixed reactions. The Malaysians, especially the young members of Mahathir’s party the United Malays National Organization (UMNO) ecstatically jubilated over the policy. A sense of nationalism aroused many Malaysians who remembered once again the memories of British colonialism. On the other hand, British good importers and British companies looking for contracts in Malaysia took losses while others condemned the nationalistic policy. Doing business in Malaysia became difficult and caused expensive delays. Great Britain, under the Iron Lady, Margaret Thatcher took the policy seriously. For starters, a lot of trade in Asia went through Malaysia, in particular through the Straits of Malacca. The Thatcher government also feared the possibility of a Malaysian exit from the British-led Commonwealth of Nations - a huge blow to the international prestige of Great Britain. The possibility became ever more evident with Malaysia’s decision not just to boycott British contracts and products, but also the Commonwealth Heads of Government Meeting (CHOGM) in 1981 in Melbourne and in 1983 in New Delhi.

The Iron Lady Strikes Back and the Carcosa Hill Incident

Thatcher wished to ease tensions, but unlike her actions in the Falklands, she extended the olive branch to Malaysia. She sent her State Secretary Lord Peter Carrington and her Defense Secretary John Nott to negotiate with Mahathir for an end to the Buy British Last Policy. The 2 special envoys also meant to put an end to the escalation of the diplomatic standoff.

Before the arrival of the 2 high British officials, Anglo-Malaysian relations further deteriorated with an issue regarding Carcosa Hill. In 1982, the Malaysian government took control  of the Carcosa Hill. The Hill belonged to Great Britain and once served as the residence high commissioners of Malaysia. It continued to be a British property well after Malaysian independence with the first Malaysian Prime Minister, Tunku Abdul Rahman, giving it to Britain as a token of good faith. As another 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 headstrong Prime Minister to reverse his policies.

When her envoys failed to resolve the issue, the Iron Lady took 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 Maverick finally resulted in a resolution of the tension. Both leaders earned the respect of the other. 


After the meeting, Mahathir announced in London that upon his return to Kuala Lumpur, the policies would be reversed. The issue of tuition fees resolved with the British government’s decision to create a $160 million fund to aid Malaysian students in Britain. In May 1984, the British returned the Carcosa Hill to Malaysia, in exchange for a new site as a replacement offered by Mahathir. By April 1985, Margaret Thatcher’s visit to Malaysia cemented the return of good relations between the two countries. The mending of ties 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 even 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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