Venture Capital

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By Newsweek Editors

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For years, Malaysian Prime Minister Mahathir Mohamad has blamed foreigners for the ills of his country. The Asian financial crisis was a Western plot. Globalization is a scheme of rich countries to impoverish poor ones. Not surprisingly, all of his country's major financial and construction projects have been managed by Malaysians. The results haven't always been stellar. And he's about to find out whether his latest effort to boost the technology sector will do any better.

Late last year his government announced that it was putting up $132 million to start a venture-capital fund. Uncharacteristically, officials said that they were looking for outsiders to manage 40 percent of the fund and they would allow some of the money to go for non-Malaysian ventures. Managers from the United States began forgetting their prejudices against Mahathir's insular mentality and put in bids.

With results of the bidding due to be announced this month, Malaysia's semiofficial press is not inspiring confidence. Foreign managers, it says, will be required to maintain a "significant presence" in the country. The price of managing this fund, which is paltry by international standards, keeps going up.

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