Malaysia cheers leadership plan

Deputy PM Badawi will take over as Mahathir's successor

KUALA LUMPUR, Malaysia -- Malaysia has cheered news of the government's plan to phase in a new leader after the country's prime minister of 21 years leaves at the end of 2003.

After dropping a political bombshell at the weekend announcing he was quitting politics, Prime Minister Mahathir Mohamad eased a jittery country on Tuesday, when his ruling party assured citizens he would stay in office until the end of next year.

Mahathir will hand over many of the day-to-day duties of running the country to his deputy, Abdullah Ahmad Badawi, who will take over as his successor after Malaysia hosts an Islamic summit in October 2003.

Malaysia's biggest political shake-up in over two decades had given the country's financial sector a nasty case of the jitters, knocking confidence among investors.

CNN NewsPass VIDEO CNN's Maria Ressa says outgoing Prime Minister Mahathir Mohamad is transferring some duties to his deputy Abdullah Badawi (June 25) Play video   IN-DEPTH Malaysia under Mahathir  • Mahathir profile    MORE STORIES • Fundamentalist opposition party leader dies   • Mahathir: Malaysia is a fundamentalist state     CNN.com Asia More news from our Asia edition

But on Wednesday both markets and media groups cheered the plans of a long, smooth and orderly change of leadership, seeing it as a sign of stability for the country and region.

"I would expect him (Abdullah) to continue Mahathir's policy," Steven Gan, editor-in-chief of English-language Web site Malaysiakini.com, told CNN.

The Kuala Lumpur Stock Exchange's benchmark index opened 0.8 percent higher at 722.69 after two days of losses.

For its part, Malaysia's media greeted Mahathir's word to hand over power with surprise and praise on Wednesday, lionizing the man that drove the country's growth. (Full story)

In tears

On Saturday, 76-year-old Mahathir broke down in tears live on national television as he told a stunned United Malays National Organization (UMNO) annual congress he was resigning from all his political and party posts.

Quickly hustled off stage by party colleagues, it was announced about an hour later that he had retracted his decision after officials in the party's supreme council virtually begged him to stay on.

Since Mahathir's shock announcement, almost nothing had been heard of his future plans -- least of all from the man himself, who jetted out of the country Sunday for a 10-day sailing holiday in Italy.

Mahathir breaks down after announcing his resignation

Mahathir has been in power since 1981 and is Asia's longest serving political leader. He transformed Malaysia from a commodity-dependent backwater to one of Asia's richest countries, with a strong electronics exports sector and the world's tallest buildings.

He had often talked of standing down and making way for the next generation of leaders, but it is still not known what prompted his sudden and highly emotional announcement.

'State managed'

Opposition leaders have accused him of stage-managing the whole affair, purely to generate a show of total loyalty and bolster support for UMNO, which has lost ground to the opposition fundamentalist Pan-Malaysian Islamic Party (PAS).

PAS made strong gains in 1999 elections, which were largely attributed to the backlash against the government following the firing and jailing of former deputy PM Anwar Ibrahim following a power struggle.

Mahathir has been the driving force for Malaysia's modernization

Anwar, who for years was groomed as Mahathir's successor, has been convicted of sodomy and corruption and is serving prison terms totaling 15 years.

Soon-to-be new successor Abdullah served as education, defense and foreign minister before becoming deputy, but is untested in economic policy, an area where Mahathir is confident enough to hold the finance portfolio until October next year.

Unlike Anwar, Abdullah, 62, was dubbed the "Mr. Nice Guy" of Malaysian politics. He was a civil servant before becoming a politican, and is likely to rely on his advisors when he is at the helm, Gan told CNN. (The country's new leader)