Economies: Malaysia's progressive PM to leave post next year

PM Abdullah's achievements have been overshadowed by sniping from opponents within his own party, from former Prime Minister Mahathir and from the sidelines by Anwar Ibrahim who has now become official leader of the opposition.

Abdullah set out to beat a significantly different path from that of his predecessor, Mahathir.

Despite being Malay, Abdullah wanted to remove some of the privileges that Mahathir, who is not ethnically Malay, had put in place. He took the view that the long term wealth of the Malay community would come from equality of opportunity and the ability to exploit that rather than from policies of favouritism.

He championed media freedom and during his time in power, he has overseen a media which has become more free than many who claimed to want free media wanted. Some within his government have used hostile laws designed to prevent terrorism and insurrection to restrict the free speech that had arisen.

That freedom of speech led to open debate in the print media - including that controlled by the ruling party UMNO, and the publication of manifestos and plans for a wide variety of parties and pressure groups, something not seen for many elections.

The result of that was that his party lost seats and votes in the 2008 election - but even so held onto 54% of the vote. His opponents said he had "lost" the election for them, failing to recognise that to achieve 54% of the vote when opposition parties and pressure groups are not constrained from getting their message out is actually a great success.

In the period leading up to the 2008 election, more political rallies were approved than in previous elections.

Abdullah cancelled so-called "mega-projects" and put the resources that would have been deployed there to completing long-stalled projects including extensive road infrastructure in central Kuala Lumpur, which had turned parts of the city centre into a long-term wasteland of part finished construction and caused massive traffic disruption.

Since Abdullah's rise to Prime Minister, the Anti Corruption Commission has begun many new investigations rising from junior policemen to those close to senior members of his party. Prosecutions of allegations of money laundering and other financial crime have also increased.

Although it is slow progress, steps are being taken to provide a more effective judiciary, including the creation of a new courts document system to overcome the long standing problem of files going missing - allegedly to order.

Against all of that, Abdullah has had to cope with rapidly rising international prices that have undermined the country's long established policy of price control. Rice, petrol and meat, in particular, have put considerable pressure on the policies. Varying the controls on these things proved unpopular because of a failure to get the message as to why the changes were necessary down to the population.

Malaysia is a country of two halves: there are those that are above the breadline, and a significant number hovering around or below it. Abdullah has had to design policies that straddle that without increasing the costs of running businesses.

The effect of his decision to resign has not yet been analysed and has not yet affected markets.

Those who have been most anxious displace him are largely representative of the old guard: comparatively regressive, self-serving and with a desire to buy support for UMNO by reasserting positive discrimination policies.

That's a problem for foreign investors: ethnically-based rules on company ownership, including in public companies, and informal quotas for employment break the law at home for many companies that would otherwise consider investment in Malaysia.

But there are other issues: Malaysia is no longer the low-cost economy that it was ten years ago and competitors are lining up to attract FDI that would, perhaps, regard the former British colony as a natural home.

The consequences of Abdullah's abdication will be extensive, and in a generally unpredictable worldwide economic crisis, impossible to predict for the time being.