Although focused on the present, this well-structured, well-written, and elegantly produced book adopts a historical approach to reflect on what might be termed “the state of the Malaysian economy.” That phrase is apt given the upsurge of government intervention in the Malaysian economy during the 1970s and resumed in the wake of the 1997–98 financial crisis in Southeast Asia. This retrospective coincides (just about) with the golden anniversary of the formation of the Malaysian federation, in 1963—that is, the fusing of the former British-controlled Federation of Malaysia (independent from 1957) with the ex-British colonies of North Borneo (Sabah), Sarawak, and Singapore (though the latter famously left Malaysia in 1965 to form a separate independent republic). Readers of this journal will not find the sections on Distribution, Public Finance, and Federalism immediately relevant, but will be drawn to Part 1, “Development Stages,” focusing as it does on Malaysia's political economy since the decolonization period. As the 1965 Singapore split underlines, Malaysia was not a nation “expected to succeed” (p. xv). But in defiance of contemporary skeptics, the authors tell us, “Malaysia's generally impressive economic development has been largely due to appropriate government interventions and reforms, which have not crowded out, but have instead induced private investments” (p. xv).

Nevertheless, Jomo (as Sundaram is known) and Wee, revisiting themes in Jomo's earlier extensive work on Malaysian political economy, find “success” has not been without its costs and disparities. A particular problem has been the rise of “crony capitalism.” The rot started in the New Economic Policy of the 1970s, a program of affirmative action that greatly expanded state involvement in the economy in an attempt to equalize living standards across Malaysia's multiethnic society. The government had hoped to create a new managerial and entrepreneurial class from within the previously marginalized bumiputera communities—Malays and other indigenous ethnic groups. The drive towards privatization in the 1980s was not incompatible with this vision, since it was intended to create a Newly Industrializing Country (NIC) under bumiputera leadership, but the outcome was often the entrenchment of a politically well-connected elite class of rent-seekers rather than genuine Schumpeterian entrepreneurs. Privatization did not prove a “universal panacea for the myriad problems of the public sector” (p. 131). Utilities and transportation remained monopolistic, while “the problems of SOEs [state-owned enterprises] have not been due to state ownership per se” but rather issues of corporate goals and managerial systems (p. 132). The advancing and protecting of crony business interests was confirmed further by the government bailouts of previously privatized SOEs during the 1997–98 currency debacle. “Cronyism” was not the cause of the great crash but certainly prolonged and exacerbated the agony. Compared to the East Asian NICs—Korea and Taiwan especially—Malaysia has underperformed, say Jomo and Wee, particularly in the development of a genuinely independent industrial class, given ongoing reliance upon foreign capital and technology in the manufacturing sector. Tax regimes, meanwhile, have become steadily less progressive, and—in resource extraction, for example—have tended to favor large corporations (whether expatriate or Malaysian-owned) over small and medium-sized enterprises.

This is a very welcome study in many respects, and it will serve as a highly useful work of reference given its numerous tables and graphs detailing various indicators of economic development from the mid-1960s onwards. But some of the generalizations about the nature of late colonialism and decolonization require qualification. For example, Jomo and Wee claim that the postcolonial regime “continued to promote private enterprise and encourage foreign investment inflows, while the economic interests of the ex-colonial power were protected” and was “committed to defending British business interests in Malaya” (pp. 4, 12). But my own Business, Government, and the End of Empire: Malaya, 1942–57 (1996) and British Business in Post-Colonial Malaysia, 1957–70: “Neo-colonialism” or “Disengagement”? (2004) (neither of which are cited by Jomo and Wee) have demonstrated a rather more complex and nuanced interplay of business and government in the 1950s and 1960s. Far from a “bargain” being struck by British interests and the “Malayan elite” in the decolonization process, it was precisely the absence of “strings attached” at independence that allowed the Malayan/Malaysian state much more room to maneuver and much less resentment toward alleged “neocolonialism” compared to the stormy course of postcolonial Dutch-Indonesian relations (p. 62). Nor was the creation of Malaysia itself driven primarily by Britain's desire to “protect its business interests in the region”; rather, imperial policy was underpinned by a concern to preserve treasured geostrategic interests, namely Malaysia's and Singapore's role in the outer defense of Australasia (p. 135). In addition, a major omission on the longer-term historical development of Malaysia's political economy is Shakila Yacob's The United States and the Malaysian Economy (2008).