The process of rapid capitalist development was taken off during Mahathir era (1981-2001). His political ideology revolved around nationalism, capitalism, Islam populism and authoritarianism. All these issues were the core of Mahathirism. Furthermore, it shaped Malaysian politics on three elements: Religion (Islam), tradition and modernity. 19 Though Mahathir did not play any role in framing NEP, he spoke on intra-ethnic disparities in income, employment ownership and redistribution of wealth more equitable in ethnic terms.20 In other words, Mahathir provided the ideological soul to the NEP. In his opinion, the way out for the Malay backwardness was inherited in the capitalist mode of production in Malaysia.
However, socio-economic problems arose due to NEP, it marked increased Islamic activism. Later on, Mahathir controlled Islam through State and linked it with economic development. The period of Islamization (1981-97) witnessed strong State intervention in economic development. According to Malaysian Institute of Economic Research (MIER), Malaysian economic growth in 1990 reached the rate of 10 per cent, the highest in South East Asia.21 The secret of Mahathir’s success was that he saw the solution of the crisis in rapid growth and development, which would increase the size of the economic pie, thus relieving tensions between the ethnic communities as well as with the Malay community.
On political front, he used Islamic ideology as a potential tool for authority of the State. He knew that Islamism had a strong social base in Malay society. He utilized Islam as a means to pursue capitalist development. Additionally, Mahathir argued that it was a moderate Islamic UMNO and State that could provide ethnic peace. Non Malays accepted moderate Islamism as a necessary step to contain radical Islamism.22
Mahathir put forward the same argument regarding foreign investment, which was the crux of Mahathir’s growth strategy. He suggested that foreign investment had to be in accordance with Islam. Mahathir was perhaps the first UMNO leader who fully conceptualized the meaning and potential of reinventing the secular post-colonial State on a Islamic state.23 His policies like “Look East and buy British last”, criticism on Western values and imperialism had given him strong support from the Islamic constituencies. In the process, the Government was convened with the impact of Islamic activism against foreign investment which damaged Malaysia’s international image. Malaysia became the world’s largest exporter of component assembled and tested mainly in electronics and then mainly for American firms. 24 In order to contain religious forces Mahathir co-opted Anwar Ibrahim, the leading light of Angkatan Belia Islam Malaysia (ABIM) which was the Islamic Youth movement. Thus, ABIM supplied Islamic legitimacy to UMNO, and provide it with intellectual and organizational tools to control Islam. Moreover, Anwar Ibrahim’s most important contribution to UMNO and the State was to legitimize the conceptual foundations of Mahathir’s Islamization initiative.
In conclusion, the Islamization period in Malaysia lasted for two decade (1979-97). Lacking a strong ideology, State leaders used Islam a tool to control State and Society. Islamization was not so much about Islam as it was about the State. The State control Islamic radicalism by initiating its own brand of Islam. Moreover, Islamizaiton served the State’s goal of economic growth and development. On political front, the State successfully divided Islamist forces and co-opted some of them. Islamization in Malaysia produced a strong ruling party and state institutions -whose interaction and cooperation ensure state power. 25