 And we are here with the Prime Minister of Malaysia, Prime Minister Nagib Bintak Abdul-Razaq. It is a great honor and a great pleasure to have you, Prime Minister. Thank you. I want to start with something you wrote. You wrote an article for the New York Times in which you said the central challenge, or one of the central challenges facing the Islamic world, is the problem of Muslim youth. Explain what you meant. What is that challenge? It is evident that the pressure for change came about from the youth. In the Arab Spring. In the Arab Spring. And if in any country for that matter, not only Muslim country, if unemployment among the youth runs at 25 percent or even more and coupled with a rather autocratic system, which is not responsive to the needs of the people, then you have a very lethal combination, which eventually resulted in a massive demand for change, even a violent demand for change. And that's exactly the challenge, I think, facing most countries, particularly the Muslim world, that we have to take care of the young people. We have to give them jobs. Most importantly, we have to give them hope for the future. Is that about education? Is it mostly about jobs? It is, I think, the whole raft of things that you have to do. Basically, you start with education. But beyond that, you have to have a system that will actually deliver. You've got to deliver them jobs. You have to give them a promise of a better future. And if these people are marginalized, for whatever reason, then you get situations in which they will be very restless. You talk about, in a sense, kind of getting the society moving, getting the dynamics so that you have these jobs and opportunities. What about the point that other people make, that no, no, no, you need to reform it within Islam, that you need to de-radicalize elements of Islam? What do you say to them? I think, in a sense, we in Malaysia, if I can use Malaysia as an example, we would take the initiative for change, because I'm a great advocate of a planned change, systematic plan, transformation, because that will give you the outcome that is more desirable than a violent change. And until today, those countries embroiled in the Arab Spring have not really fully recovered. They've not got the dividends of that. And it will be some time before they can really kind of stabilize the situation. Maybe it's stabilized today, but in terms of getting the kind of growth, getting more jobs, getting a better future, I think there's quite some way before that will happen. And with respect to Islam itself, I think the whole interpretation of Islam has to be predicated on the fact that Islam is fundamentally a moderate and progressive religion. And that's exactly how we've tried to do it in Malaysia. But you have had critics, you have had fundamentalists in Malaysia who wanted much more extreme, puritanical, call it what you will, version of Islam. How do you diffuse that kind of criticism? By engaging them, by communicating to the people that Islam is essentially a moderate and progressive religion. The fact that we don't have the hudud laws in Malaysia doesn't mean that you're not an Islamic country. I mean, Egypt doesn't have hudud laws. Explain what those are. Those are the full Sharia laws, amputation for stealing, for example, and stoning for adultery, things like that. Because the fundamental objective for Sharia law is actually to achieve justice. And that is important not to lose sight of the fact that that is fundamental to the objective of Sharia, is to achieve justice. And that Islam is essentially about advice. It's not about punishment. It's about prevention. It's about advice. It's about educating people. The tarbiyah, as I say, in Arabic. It is educating people. How do you rate the dangers of Islamic radicalism, jihadi groups, militant Islam, terrorism, that whole spectrum in Southeast Asia today? After 9-11, as you remember, there were many fears. And there was the Bali bombing right after. It was the first major terrorist attack after. And so people thought, well, maybe Southeast Asia is going to be the next place where all this bubbles up. Where do we stand in 2013? I think most of it is behind us, actually. I think we've dealt with the radical Islam, the extreme version of Islam in a positive way. Of course, some form of military-type actions were unavoidable. But by communicating what Islam is all about, and also, you must have read that we were involved in solving the Southern Philippines, Bansumoro problem that went on for 40 years, and it caused the lives of 120,000 people. That meant the whole potential of that area being radicalized, being linked up with al-Qaeda directly or through the various groups. And that has been eliminated. So that's a huge contribution towards peace and a more moderate form of Islam in Southeast Asia. So your intelligence services sense that the kind of things that they're worried about in 2002, 2003, it's waned, it has declined. It has receded quite substantially. But the threat really comes from Indonesia because some of the madrasas that they have there has been a source of some of the radical preachings of Islam. And from Indonesia, they went to Malaysia. Abu Bakar Bashir, for example, preached in Malaysia, and he radicalized a few Malaysians. But the Indonesians have been more effective now, dealing with it. So I think the whole threat of militant Islam, I think it has receded quite substantially in Southeast Asia. You have set yourself a goal, a somewhat ambitious goal of getting Malaysia out of the middle income trap. This is a range of per capita GDP, you know, somewhere between $6,000, $6,000 and $12,000, $13,000. But countries do get stuck. There are very few that have made the transition out of it. You know, like over the last 20 or 30 years, you see Taiwan, Singapore, Hong Kong, South Korea, but that's sort of it. What are you going to do? Is there a silver bullet that gets you out of the trap? It's exactly what we realized. When I came to office 2009, I realized that we have recovered. Once we recovered from the Asian financial crisis of 1997, but growth was slowing down. It was not at the breakneck speed. 8, 9% we used to have. It was slowing down in a region of 3 to 4%. And then it was then that we realized that we were in the so-called middle income trap. So we needed a breakout strategy. And the breakout strategy was the new economic model. The new economic model was predicated on two important programs. One is the economic transformation program. The other one is the strategic reform initiative, SRIs. So if I can use an analogy, the ETP would be akin to a vehicle, a car, that's traveling fast. But the SRI, the reform initiatives would be like the highway. You do need a quality highway in order for you to drive quite fast and get there safely. So with the combination of both, we have managed to turn the situation around. We have achieved 5%, growth rate, third quarter last year was 5.2%. Since 2009 when I came in, the income per head GDP was $6,700. Last year it was $9,750. That's a 45% jump in income per capita within 4 years. So the results speak for themselves. Real change and real progress is taking place in Malaysia. Now you have one big advantage that a lot of middle income countries don't, which is you have oil and natural gas. And oil prices are high in historical terms. Has that been a cushion that has allowed you to get through this? Yes, but you have to use your oil wealth in a very prudent way. Because there is of course the oil trap as well. I think basically we've done quite well with oil resources, but we should not use too much of that for subsidy for example, because that's short-term consumption. You need to use the oil wealth to increase your productive capacity, to invest in productive investment that will generate higher incomes in the future. Should you go even further and adopt the model that a country like Norway does, which is that all the oil revenue goes into a trust and is not used for current governmental expenditures? A small portion of that has gone into that trust. I think we can do a lot more, may not be quite like the Norwegian model, but for as long as that kind of income is used in terms of productive investment, even short-term productive investment, which will yield dividends over a longer period. You have had relations with Singapore, I mean Malaysia that have been sometimes cordial and sometimes not so cordial. Where would you say things stand now? I think there's a realization, I think between Sianlog and myself, that we should put the past behind us, that our future of Malaysia and Singapore are inextricably linked, and if we can work together in a more cooperative way, then both Malaysia and Singapore would benefit. Certainly Iskandar, for example, you talked about Iskandar, the development opposite Singapore, it's hugely dependent on Singapore. And Singapore is also dependent on Malaysia, because they need the space, because the cost is going up in Singapore. So I told Sianlog recently that, I don't mind, you can be the Manhattan, but we'll be New Jersey. Prime Minister, you lost the two-third majority you had in Parliament, Amno has been a dominant party. Why did you lose, and what does it tell you about what are inevitably going to be the upcoming elections in Malaysia? We're dealing with a more difficult vote today. I think a few things have happened. It's structural in nature. It is not cyclical as such. I see the advent of ICT, social media, as both something good, but also our pain could be our Achilles heel as well. And I'll see the level of expectation increasing, and people are much more educated and therefore more critical. Having realised that, therefore as the government, we need to do things differently. We need to realise that people are not going to give their vote to you based on how much you've done in the past. I mean, nobody can deny the fact that Amno and Barissa are national, we are the people who fought for independence, we are the people who developed the country. But the people today are saying, okay, that's in the past. What we want to know, what can you do for us now and in the future? And that's important for us to realise that the levels of expectations have increased by leaps and bounds, and therefore the kind of performance that we have to deliver as the government has indeed, you know, the bar has been raised very considerably. But we are committed, we are working as hard as possible, and I think I'm encouraged by the support that we have received by the people, and hopefully we'll get a good mandate this time around. Do you think Anwar Ibrahim is your most formidable foe? Well, certainly he's head of the opposition, and we'd like to present our agenda to the people, and I believe that the people will see that our agenda for the country is more credible. What about the preferences that are given in Malaysia for the Malays? A policy that is controversial, particularly with the Chinese business community, which feels that it is not moving in the direction of modern country should, which is meritocratic and based on achievement and reward. You still have many, many preferences. Will you rethink that and will you implement a change? In fact, the process has started. For example, entry to university now is based on merit, and that has increased a percentage of Chinese Malaysians into university. But interestingly, the Malaysian Indians have fed badly, so they won a quota system. Because the previous system, they got about 7%, but now it's down to about 3%, but that goes to show that it is based on merit. And helping people who deserve to be helped, for example, with whose income level is $3,000 per month, that's across the board, irrespective of ethnic background, so everybody gets it. So we are moving towards a policy on the basis of needs, as opposed to the basis of race. But there's still a feeling that with government contracts, with all those things, there's still a lot. But even government contract, I think quite a bit of it is based on open bidding. Some of it, of course, is some preference for Bumi Putra. But by and large, the non-Malaysian, non-Bumi Putra Malaysian, don't actually oppose affirmative action. But what they want is to be seen the way you implement that policy should be done in a more transparent and fairer way. And what they deserve as Malaysians, the non-Bumi Putras, then they should also get what they deserve. As you look at East Asia, do you worry about the rise of China? Many East Asian countries over the last two years, Philippines, Vietnam, certainly Japan, of course, have been quite worried about what they see as Chinese moves territorial, otherwise, that are something of a departure and suggest a new assertive China. I think the rise of China is inevitable. I think we have to come to terms with that. And if you accept the fact that China will be the economic power and the size of the economy, not per capita but certainly the size of the economy, will exceed that of the United States by maybe 2030 or even sooner, then you realize that there are opportunities that you can leverage on the size of that economy. And that's taking a very positive attitude towards China. And China has become our number one trading partner, total trade between Malaysia and China, taking into account trade from third countries. It's approaching $100 billion a year, and that's huge. So China is a big market for us. China is also becoming a bigger investor to Malaysia. Interestingly, the first Chinese university that has been allowed by the government to have a foreign branch campus is Malaysia. And that university will be a reality in a couple of years' time. So we have this very, very positive and mutually beneficial relationship with China. But a China that's big is also a China that's going to be more assertive, that goes with it. And therefore, we need to manage that. And I believe that we can negotiate, we can enter into dialogue with China and try to find peaceful, makeable solutions, particularly to the South China Sea issue. You had a diplomatic foray recently. You went to Gaza and you visited the leadership of Hamas. Is it not fair to say that Hamas remains a principal stumbling block on the road to peace because in order to have a two-state solution, the Israelis would argue, you need the Palestinians to accept the right of Israel to exist and Hamas does not accept the right of Israel to exist? I think we should go step by step. I think one of the first things is to have a unity government in representing the entire Palestinian people. Without a unity government, I don't think any kind of a peaceful solution would be possible. Did you tell that to Hamas? I did, in no uncertain terms. Privately as well as my speeches. First of all, I said I came here for humanitarian reasons. I did not come here to side with Hamas. I did not come here to interfere with the internal politics. I came here with a mission, mission of peace, mission for humanitarian reason and basically to tell them, look, you have to be united, form a unity government. And once you have a unity government, then you should negotiate with Israelis. I am a believer that a two-state solution is the only viable solution. But mind you, the Israelis must also play ball, so to speak. Increasing settlements on Palestinian soil is not helpful at all and some of the sharp rhetoric as a run-up to the elections in Israel are a great concern to us. Do you believe that when you look at the future of Southeast Asia, it will be able to maintain its kind of association, its multilateral groupings, will they deepen or is it going to be swamped into a larger Asia, particularly with the rise of China? I think the centrality of ASEAN is something that we will try to maintain and there is recognition of that. In the meetings, ASEAN plus one, ASEAN plus three, even at East Asia Summit, it has been emphasized over and over again that the key to the regional architecture, the only viable approach would be the centrality of ASEAN. What do you think of President Obama's so-called pivot to Asia? I think it's good. I think the fact that we are able to get the U.S. president two years running to attend our summit and is committed to attend the next round as well. I think it speaks volumes of the importance of ASEAN and our part of the world. President Obama knows that for the United States to maintain itself as a Pacific power, it has to be based on a viable kind of a partnership with ASEAN as well, plus East Asia. So the fact that he is committed towards ASEAN and East Asia Summit, I think will be good for us. If you do get re-elected in this next election, what is your major focus going to be in the next term? We have a job to complete, right? We have said it publicly, unashamedly, that of course we want to be a fully developed nation by the year 2020. And I'm committed to do everything and anything possible to make it happen. And if I get my second term, that's exactly what I would do. Mr. Prime Minister, pleasure to have you. Thank you.