On Thursday, Mahathir Mohamad, Malaysia’s 92-year-old strongman who ruled the country from 1981-2003, staged an upset by unseating one-time protégé Najib Razak of the Barisan Nasional party. Mahathir led a coalition of opposition forces, Pakatan Harappan, which includes a prominent group led by 70-year-old Anwar Ibrahim. Ibrahim was his deputy, and is now serving his second jail term on sodomy charges after a falling out with Mahathir in the late 1990s. In a remarkable turnaround, Mahathir has now said that he will secure Ibrahim’s release, enabling Ibrahim to share the term with him as prime minister. Interestingly from the Indian point of view, the election was fought over GST, introduced in 2015 and now a sore issue with most Malaysians, who hold the 6 per cent tax as responsible for higher prices and profiteering. Mahathir has promised to replace GST with the earlier sales tax. Notably, the anti-profiteering clause was introduced in India’s GST law with an eye on Malaysia’s experience. While India’s multi-layered GST differs from Malaysia’s, its impact on small enterprises, particularly in labour-intensive sectors with a long domestic value chain such as garments, did emerge as a political issue in Gujarat. If GST compliance issues remain unresolved, they could dog the ruling BJP in forthcoming elections.

Mahathir is remembered for the way he steered Malaysia out of the 1997 East Asian crisis. He repudiated the IMF’s offer of financial assistance, and by implication the IMF’s prescription of austerity policies, and opted for capital controls to stem currency volatility. Malaysia’s economy bounced back, and is today growing at about 6 per cent. Mahathir’s suspicion of "currency traders" such as George Soros set the context for a debate in India in the 1990s on the pros and cons of capital account convertibility — the point being whether "hot money" flows actually influenced macros rather than the other way round. Mahathir is likely to retain his misgivings on global finance. He expressed apprehensions about unbridled Chinese infrastructure investments, while being open to the idea of a modified Trans-Pacific Partnership. The new government is likely to influence ASEAN’s trade interface with the US and China, at a time when Washington is rapidly changing the rules.

There are indications that the Bumiputera or "sons of the soil" policy that favours indigenous Malays (making up nearly two-thirds of the population) over Chinese and Indians (7 per cent of the population) will be reviewed. As for human rights, Mahathir’s reputation is undeniably poor, as is Razak’s. A change of guard does not imply that democratic institutions will get better.