Mahathir Mohamad assumed the role of Malaysia's prime minister in 1981. One of his prominent contributions was the announcement of Vision 2020 in 1991, which set a goal for Malaysia to become a fully developed nation in three decades. This vision required the country to achieve an average economic growth of around seven per cent annually. Along with Vision 2020, the National Development Policy (NDP) was introduced, replacing the Malaysian New Economic Policy (NEP). The NDP was successful in reducing poverty levels, and under Mahathir's leadership, the government reduced corporate taxes and relaxed financial regulations, leading to robust economic growth.

In the 1990s, Mahathir embarked on several significant infrastructure projects. These included the Multimedia Super Corridor, aimed at mirroring Silicon Valley's success, and the development of Putrajaya as the center for Malaysia's public service. The country also hosted a Formula One Grand Prix in Sepang. However, some projects, like the Bakun Dam in Sarawak, faced challenges, particularly during the Asian financial crisis, which halted its progress.

The Asian financial crisis in 1997 severely impacted Malaysia, leading to a sharp depreciation of the ringgit and a significant drop in foreign investment. While initially adhering to the International Monetary Fund's recommendations, Mahathir eventually adopted a different approach by increasing government spending and pegging the ringgit to the US dollar. This strategy helped Malaysia recover faster than its neighbors. Domestically, Mahathir faced challenges from the Reformasi movement led by Anwar Ibrahim, who was later imprisoned under controversial circumstances. By the time he stepped down in October 2003, Mahathir had served for over 22 years, making him the world's longest-serving elected leader at the time.