Crossing the street in Kuala Lumpur it hits you-most of the brightly colored cars careening down the city’s sun-dappled streets are unfamiliar. They are Protons, products of Malaysia’s national car company, Perusahaan Otomobil Nasional. Created in the early 1980s by then Prime Minister Mahathir Mohamad, the company was devised as a catalyst to, quite literally, drive his dream of transforming the country from tropical backwater to industrial powerhouse by 2020. Mahathir believed entry into the automobile industry would set Malaysia on the road to an industrial revolution similar to those that followed the United States’ and Japan’s 20th century forays into automobile design and manufacturing. To that end, the Malaysian government enlisted the assistance of Japan’s Mitsubishi Corp. Its first car, the Proton Saga-essentially a Mitsubishi Lancer rebranded with a Muslim-star-and-crescent-moon logo-took to the road in 1986.

Throughout Mahathir’s 22-year tenure as prime minister, the Malaysian government poured significant capital into the national car company, nicknamed Proton, building plants, showrooms and corporate infrastructure. New models debuted, including the Satria, a compact two-door hatchback, and Waja, a four-door luxury sedan. To fuel the dream, Mahathir proposed and oversaw development of a sophisticated nationwide highway system. He also sheltered the fledgling company’s market position by imposing tariffs of up to 300 percent on competing automobile imports.

Despite criticism from naysayers who predicted the demise of Proton, and even of the dream of industrialization, the company thrived. By the time Abdullah Ahmad Badawi became Malaysia’s fifth prime minister last October, more than two-thirds of the cars zipping past Asia’s tallest communications tower and along Kuala Lumpur’s crowded streets and elevated roadways were Protons. What’s more, Malaysia Airlines, the nation’s award-winning national carrier, had established a route network serving more than 100 destinations on six continents, ushering travelers from around the world through Kuala Lumpur’s sleek and modern airport to enjoy Malaysia’s sunny climate, distinctive hospitality and fabulous shopping.

It is Abdullah’s task to steer the country through the final phase of industrialization. Next year, Malaysia will open its markets as it becomes a full member of both the Association of Southeast Asian Nations Free Trade Agreement and the World Trade Organization. Malaysia will no longer be allowed to tax imports more than 5 percent. The country’s numerous industries are preparing for the increased competition. In February, Proton rolled out Gen.2. This sleek little number features the company’s first 100 percent Malaysian-engineered-and-built engine; it was produced in its new state-of-the-art plant on an assembly line manned by more than 280 robots.

An Eye to the West

In Malaysia’s classrooms, math and science teachers speak to their students in English. Of all the far-reaching elements of Mahathir’s 2020 plan, perhaps this is the most revealing. Malaysia is very dependent on Western investment, and a large number of multinational corporations have established regional headquarters here, among them Boeing, General Electric, Intel and Motorola. Mahathir understood that offering an educated, skilled, multilingual workforce is essential to attracting Western companies. Eventually, the availability of skilled labor will increase costs, but for now doing business in Malaysia costs about half as much as in Hong Kong or neighboring Singapore. The government has also established a number of incentives, including simpler application processes for work passes and tax breaks for foreign-owned corporations.

An educated workforce and tax incentives are only part of the picture. Mahathir also saw to it that Kuala Lumpur, epicenter of Malaysia’s industrial transformation, could offer an established infrastructure to meet the needs of multinational corporations. State-of-the-art technology includes the massive Menara Kuala Lumpur, a giant communications tower that sits atop Bukit Nanas. Road construction, including new elevated highways, has eased the congestion that once plagued the city. Ease of transportation is further enhanced by Kuala Lumpur International Airport (KUL), the city’s sleek high-tech airport, which opened seven years ago.

Stretching from Kuala Lumpur to the airport, located in nearby Sepang, construction continues on what may well be Mahathir’s greatest legacy-the Multimedia Super Corridor or Cyberjaya. The $8 billion project is a city outside the city. Dubbed Putrajaya (www.putrajaya.net.my), it’s a collection of business parks boasting facilities for technology research and development companies, conference centers, even a university.

Still, the road to industrialization has not been entirely smooth. The 1997-‘98 Asian economic crisis prompted Malaysia to refuse entry into the International Monetary Fund. In 2001, the U.S. economic slowdown had a big impact here, as Malaysia is dependent on U.S. trade. Though the government took swift action to distance itself from the terrorist attack in Bali, its tourism market suffered. SARS and the U.S. invasion of Iraq, too, have taken their toll. In May, the U.S. State Department reiterated its public announcement urging U.S. citizens to take precautions when visiting Malaysia, especially along the east coast of the Malaysian state of Sabah where the Philippine-based terrorist group Abu Sayyaf has been implicated in a number of tourist kidnappings.

In May 2003, the government implemented a $1.97 billion economic stimulus package to counter the effects of SARS and the war in Iraq, incurring a deficit equal to approximately 5.6 percent of gross domestic product. So far, it seems to have worked. In May, Standard & Poor’s Rating Services affirmed Malaysia’s A+/A1 sovereign credit ratings, pointing to the country’s strong foreign reserves, balanced against its relatively high and growing general government debt. Foreign reserves have grown from $26 billion in 2001 to $51.3 billion as of March 2004.

A Watched Pot

On the surface, Malaysia’s very mixed population-especially that of Kuala Lumpur-is a fascinating blend of cultures. Here, in what appears the ultimate melting pot-Chinese Taoists work side by side with Indian Hindus, and Malay Muslims entertain expatriate Christians for business lunches-there seems to be a sense of harmony and peaceful cohabitation. Things are not always as they appear. This is at heart a Muslim nation and laws are not always what Americans expect. It is important to be careful and respectful of Muslim traditions when you meet with Muslim Malay. For example, it is illegal for a Muslim woman to be alone in a room with a man who is not her husband. It is not unusual to find a story in the newspaper recounting a government Religious Department raid on a hotel room to arrest a young woman accused of committing the crime called “close proximity.”

Overall, though, Malaysians tend to be relaxed and extraordinarily polite. Malays pride themselves on their renowned hospitality. Business here is best mixed with pleasure-you’ll find more success if you first win trust and friendship. Here it is unthinkable to say unpleasant things, so you would do best to relax into your first business meeting with a client and let a little friendly conversation lead into the work at hand. Bad news should always be delivered in private and with care. Malaysians are not used to traditional American abruptness and harsh performance reviews. Remember that when working with Malaysian employees, there exists a linguistic and cultural gulf. In many cases, attempts at humor-especially sarcastic wit-will not be understood.

A business meeting over dinner with all the social trimmings may run a little longer than those you’re accustomed to stateside; however, your client will get down to business when the time is right and Malay cuisine is among the best in the world. Take a moment to savor the experience. You’ll be glad you did.

Where to Stay

Mandarin Oriental, Kuala Lumpur

Standing tall at 32 stories, yet dwarfed beside the soaring Petronas Towers, the 643-room Mandarin Oriental is the only hotel inside the perimeter of Kuala Lumpur’s pristine City Centre Park. With its links to Suria KLCC, Malaysia’s premier shopping destination located at the capital’s prestigious commercial address, Kuala Lumpur City Centre, the hotel is a favorite with business and pleasure seekers alike. Its club floors are a hotel within a hotel, offering check-in and out services and a top-notch lounge on the 24th floor. Club members enjoy breakfast and an afternoon snack daily in the lounge, and all soft drinks and snacks are available at no extra charge until the lounge closes at 11 every night. High-speed Internet is available for an additional charge.
Mandarin Oriental, Kuala Lumpur
Kuala Lumpur City Centre, Kuala Lumpur, Malaysia
tel 380 8888, fax 389 9933, www.mandarinoriental.com

The Ritz-Carlton, Kuala Lumpur

With 248 rooms, The Ritz-Carlton would seem an unlikely candidate for “boutique” hotel status. However, that’s just what it’s positioned itself for. Its all-butler service has earned a reputation for going beyond merely fulfilling requests: Often guests report finding a fresh tube of their preferred brand of toothpaste or polished shoes upon returning to their rooms. Breakfast is always served in-room unless you request otherwise, and a visit here is not complete without sampling from the delightful bath menu.
The Ritz-Carlton, Kuala Lumpur
168 Jalan Imbi, Kuala Lumpur, Malaysia
tel 2142 8000, fax 2143 8080, www.ritzcarlton.com

JW Marriott Kuala Lumpur

One of Kuala Lumpur’s newest and most exclusive addresses, the JW Marriott rises 30 stories above the Star Hill shopping and entertainment complex on the opposite side of City Centre Park from the twin towers. Comfortably inside the Golden Triangle where most businesses are located, the hotel boasts 546 rooms and suites, high-speed Internet access, three top-rated restaurants and its own New Year’s fireworks display.
JW Marriott Kuala Lumpur
183 Jalan Bukit Bintang, Kuala Lumpur, Malaysia
tel 2715 9000, fax 2715 7000, www.marriott.com

Shangri-La Hotel, Kuala Lumpur

Following a recent $26 million renovation, the 701-room Shangri-La in the heart of the Golden Triangle is a prime spot for business travelers. Facilities include fitness center, tennis courts, excellent business center, commercial library and high-speed Internet.
Shangri-La Hotel, Kuala Lumpur
11 Julan Sultan Ismail, Kuala Lumpur, Malaysia
tel 2032 2388, fax 2070 1514, www.shangri-la.com

Where to Dine

In Malaysia, food is king. Surprisingly, some of the best samplings here will be from the countless streetside “hawker” restaurants. For business meetings or upscale dining, you might want to try one of the following venues. Meal checks include a 5 percent government tax and a 10 percent gratuity, so there’s no need to leave a tip.

Shook!
Yes, it’s in the basement of a shopping mall. But Star Hill is no ordinary shopping mall and Shook! is no ordinary food court, though the basic concept is the same-a complex offering Western, Italian, Chinese and Japanese options in a stylish modern setting.
Shook! Star Hill Centre, 181 Jalan Bukit Bintang
Kuala Lumpur, Malaysia, tel 2716 8535

Pacifica Bar & Grill

Colorful Pan-Asian fusion restaurant on the ground floor of the Mandarin Oriental next to the Petronas Towers. Delicious food takes second place only to the show ringside at the open kitchen.
Pacifica Bar & Grill, Kuala Lumpur City Centre
Kuala Lumpur, Malaysia, tel 380 8888

What to Buy

Shopping is the Malay pastime and Kuala Lumpur houses some pretty impressive temples dedicated to the gods of consumerism- Chanel, Hilfiger, Armani and Hermes, just to name a few. Honor them at the Star Hill Centre under the JW Marriott or in the largest mall in Southeast Asia, Suria KLCC, at the base of the Petronas Towers. For more earthly delights, wander the crowded byways of Chinatown and Little India, where you’ll find everything from handicrafts to bootleg CDs at prices you’ll want to write home about.

What to See

Start at the top-the observation deck atop Menara Kuala Lumpur. From there you can survey the city below. Visit Merdeka Square, the former seat of the British colonial government for a taste of colonial Kuala Lumpur. Here you’ll find what is said to be the world’s tallest flagpole. Skip the twin towers, they are better viewed from the ground and tourists are only begrudgingly permitted to ascend to the bridge at the 48th floor. After all the shopping, dining and exploring, you’ll need a break, so head to the lush verdant park behind the twin towers. If you have kids, there’s a great playground and wading pool in the center-and plenty of benches for grown-ups as well.

Want to Go?

Malaysia Airlines (tel 800 552 9264, www.malaysianairlines.com) flies nonstop to Kuala Lumpur and beyond from Los Angeles from the center of the city via a special train called KLIA Ekspres.

Though Kuala Lumpur’s layout is compact and many areas are very walkable, a dearth of sidewalks and overpasses combined with drivers who appear hellbent on setting world speed records can make going on foot treacherous. Taxis (or teksis, as the word is charmingly spelled here) are plentiful and very affordable.

For more information, contact the Malaysian Tourism Board (www.tourism.gov.my).