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Twenty years ago, Puchong was a typical sleepy Malaysian town. It had one main street lined by rows of two-story shop houses out of which the mostly Chinese population did business, selling goods and services to the surrounding oil-palm plantations, tin mines and rubber smallholdings. Though it lies only 18 kilometers from the center of Kuala Lumpur, Puchong could have been any of hundreds of similar towns throughout the country: the indigenous Malays largely working the land, the Chinese dominating business in the towns.

Today, looking at Puchong, you could be excused for thinking that 100 years had passed, not just 20. Puchong is a thriving metropolis with a multiracial population of almost 560,000, many of them Malays working in nearby factories, offices and small businesses. Now effectively a suburb of the capital, it boasts two four-lane highways that are filled with streams of cars from early morning until late at night. Among the high-rise apartment blocks and shopping malls are rows of shops offering KFC chicken, McDonald's hamburgers and scores of cell-phone models. There is even a pair of superstores from international giants Carrefour and Tesco, and the huge parking lot of each could comfortably house all the vehicles owned by the townsfolk back in the early 1980s.

Just as it was once a microcosm of the old order, the bustling Puchong of today is a neat symbol of the new Malaysia as envisioned by Prime Minister Mahathir Mohamad: modern, prosperous, peaceful, admired. Mahathir, 78, is scheduled to step down at the end of this month, after 22 years in power. His retirement signals the end of an era during which, through the sheer force of his convictions and his personality, he transformed the character of an entire nation and its people. Last week, at a press conference in Bali after his final attendance at a summit of the Association of Southeast Asian Nations, Mahathir was in characteristically feisty form—cracking jokes, skewering other governments (he lambasted Australia for playing "deputy sheriff" in the region) and showing no sign that his imminent departure was weighing on his mind.

He was leaving, he said, because "everything is in place. That's the right time to leave. You don't want to leave after people kick you out." Belying his good humor, however, Mahathir's departure raises difficult questions about Malaysia's future. Can the economic momentum be sustained?

Can Mahathir's successor, Deputy Prime Minister Abdullah Badawi, match the achievements of his predecessor? Will there be greater democracy and transparency?

The sentiment in Puchong is a barometer of what Malaysia has achieved under Mahathir. The town retains one habit from the old days: the pasar malam, or night market, where row upon row of stalls are set up under neon lights each evening for hawkers to sell anything from grilled-to-order satay to traditional herbal remedies to a pair of Levi's jeans. In a large, brightly lit tent at one corner of the market, they can also plunk down a $25 deposit and reserve a brand new car. "I already have a Wira," says Ibni Hajar Itam, referring to a popular model of the national car built by the country's main automaker, Proton. "Now I'd like to buy a smaller car, a Kancil, for my wife." Each of the four models on display is surrounded by prospective buyers inspecting the wheels and peering inside while their children swarm through the cars, banging doors, pressing buttons and switches and generally making the salesmen nervous. Ibni, who was born in the rural town of Batu Pahat and migrated to Kuala Lumpur when he was nine, has spent 17 years at a nearby factory run by the Japanese electronic giant Matsushita. Should he decide to buy the cheapest Kancil on offer, the soft-spoken 33-year-old supervisor will pay only about $95 a month for the seven-year loan period. "One of Mahathir's great achievements is that almost every Malaysian can own a car," Ibni observes with satisfaction.

Indeed, from the cars that Ibni buys at fire-sale prices to his job—Matsushita was one of the first multinationals to take advantage of tax breaks and other incentive offered in the early years of Mahathir's premiership—he gives credit where it is due, to the Prime Minister and his single-minded vision of a developed Malaysia. Few would dispute that Mahathir's decision in the mid-1980s to welcome foreign investment was the chief catalyst in the economy's transformation from the world's biggest rubber and tin producer into a global player in products such as disk drives (it's the world's largest manufacturer), silicon chips and air conditioners. In the process, Malaysia's per-capita income has risen to Asia's fifth highest, trailing only Japan, South Korea, Taiwan and Singapore.

Ibni, and almost any other Malaysian, will also tell you that the country's prosperity is built on, and buttresses, Mahathir's other great triumph: maintaining racial harmony. In Malaysia, where about two-thirds of the population is Malay, a quarter Chinese and the rest of Indian descent, memories of the 1969 racial riots that left hundreds dead are fading. But the riots remain a pivotal event in the country's history, and the job of preventing a recurrence—in large measure by raising the economic status of the Malays, who have long lagged their Chinese compatriots in commercial matters, and so reducing resentment—has been Mahathir's central preoccupation while in office.

Although they are happy to credit Mahathir for Malaysia's economic successes, many Malaysians have grave doubts about other aspects of his legacy. Mahathir "excelled in the physical development of the country, creating jobs, building highways," Ibni says. "But I still feel angry at how Anwar was treated. We are Malays, and we don't assault and jail our leaders."

Anwar. A name Mahathir would probably be happy never to hear again, particularly during the valedictory paeans filling his last weeks in office. In Kuala Lumpur's corridors of power, Anwar Ibrahim's name is hardly ever mentioned these days. But talk to any ordinary Malaysian about Mahathir—particularly a Malay—and the name soon crops up. Anwar was Deputy Prime Minister and heir apparent until he challenged Mahathir politically. Fired from the government and expelled from the party in September 1998, Anwar launched a campaign of street demonstrations calling for the reform of what he claimed was a corrupt, crony-ridden establishment presided over by Mahathir. Within weeks he was jailed, beaten in prison by the chief of police (who was later jailed for his actions) and then convicted of sodomy and corruption. The fairness of his trials was questioned by a broad range of voices in and out of Malaysia, including the U.S. State Department. Today, Anwar, 56, still has nine years of his 15-year sentence to serve.

For many of Mahathir's critics, the Anwar affair was simply the most extreme example of what is both Mahathir's greatest strength and biggest weakness—his implacable will. Longtime opposition politician Lim Kit Siang says Mahathir's burning sense of mission means that the Prime Minister has no compunction about sweeping aside anything standing in his way. Lim should know: he himself spent two years in prison under tough internal-security laws that allow detention without trial. This dark side of Mahathir has systematically "destroyed and undermined Malaysia's democratic institutions," Lim says, echoing a lament voiced by oppositionists and activists throughout the country. "Although he is capable of great good," Lim adds, "he is also capable of great evil because of his single-mindedness, especially when there are also no checks and balances."

Hishamuddin Rais knows all about a lack of checks and balances. The 50-something journalist, activist and filmmaker was helping to organize "Free Anwar" rallies in April 2001 when he was arrested along with six other opposition politicians. Malaysia's chief of police explained at the time that the demonstrations would threaten the country's security and mentioned that some of the planners had at one time attempted to buy arms, such as rocket launchers, for use against the police.

After a month of solitary confinement and an average of 10 hours a day of interrogation, explains Hishamuddin—still twitchy months after his release and smoking his fifth cigarette in an hour—he broke down and told his questioners whatever they wanted to hear. "I regretted being born. It damages you. I carry it inside me every day." He glances out the open balcony doors of his apartment. The hill opposite, until recently covered in thick foliage, has been clear-cut, and bulldozers are busy nosing the piles of raw, orange soil into place for the construction of a new condominium. "I was flushed into the sewer that maintains the whole system," Hishamuddin finally continues. "Malaysia's facade is the tallest buildings in the world, the international airport and so on. But there is a price to pay." After two months in solitary, Hishamuddin spent two further years in a detention camp. He was never charged and not once during that period was he questioned about attempts to obtain arms, he says.

Mahathir, who declined TIME's requests for an interview, has in the past been characteristically pugnacious in defending such actions, saying they are necessary to preserve the peace in a multiracial country like Malaysia. In 2001, he told a conference in Dubai that "some countries must be ruled by dictators" to avoid the pitfalls of multiparty democracy. So long as "good people" are in charge, he added, feudal kings and dictators could provide good governance. Two years earlier, when asked by this reporter if he had made any mistakes, Mahathir thought for a long moment before answering: "I've gone against the stream many, many times, and it just so happens that in most instances I have been proved correct."

Among the plans Mahathir allows he may have got wrong was Perwaja. The state-owned steel plant was an early Mahathir scheme to accelerate the country's industrialization. Today, Perwaja has so far cost Malaysian taxpayers some $2 billion and still shows no sign of making a profit. Just as the Anwar affair was to some merely the logical outcome of Mahathir's growing authoritarianism, to the Prime Minister's detractors Perwaja is merely the most glaring example of a series of ill-conceived, grandiose schemes that have depleted the country's coffers. In the 1980s, Mahathir, so vitriolic about currency traders and hedge-fund managers, presided over speculation in the foreign-exchange market that cost the central bank $6-$11 billion. Even the national car so beloved by the likes of Ibni is not immune. Despite massive government subsidies and tariffs on competitors of up to 300%, Proton reported that its August sales plummeted by almost a quarter from a year earlier. Foreign-car sales, in contrast, rose 40%. "Economically, it is a very mixed legacy for the Deputy Prime Minister," says Shahrir Samad, a former Cabinet minister and current member of the supreme council of the United Malays National Organization (UMNO), the political party that leads the national ruling coalition. "What does he do with things like Perwaja and Proton? Those are very difficult burdens to carry and manage."

There's also the lingering issue of cronyism, Mahathir's policy of favoring certain entrepreneurs by granting them government contracts. He has justified this in part as a means of creating Malay millionaires who could act as role models. Following the Asian financial crisis of 1997, Mahathir made a real move to address concerns about crony mismanagement. Some of those most criticized for benefiting from favoritism, such as Malaysia Airlines chairman Tajuddin Ramli, were ousted and new management installed at their conglomerates.

Analysts and diplomats in Kuala Lumpur say the Prime Minister was soon back to his old ways, noting that a businessman from Mahathir's home state of Kedah, Syed Mokhtar al-Bukhary, suddenly seemed to be winning an inordinate number of government contracts. Syed Mokhtar's associates counter that he gets the contracts because he delivers. "I have not seen the group fail on any of its major projects," says one businessman close to Syed Mokhtar. "These aren't given on a platter." But, says an investment banker close to Abdullah, "there's a lot of concern" about Syed Mokhtar's expansion. The fear is that Syed Mokhtar is involved in so many different businesses that in the event of another economic crisis the empire might be sufficiently dented that it could present a systemic risk. Some analysts believe that Abdullah will distance himself from Mahathir's practice of pampering favored tycoons and baby-sitting the Malay community. "The relationship between politics and business under Mahathir is very, very strong," says activist and academic Charles Santiago. "What we'll see is a phasing out of that relationship under Abdullah."

Politically, the new PM will face a delicate task, distancing himself from his predecessor without seeming disloyal. There's no doubt that the genial Abdullah, 63, with his reputation as a corruption-free family man descended from a line of Islamic scholars, will be able to draw some voters back to UMNO. But it will still be hard to heal the wounds caused by the Anwar affair, which led to UMNO's worst showing ever in the latest general elections, in 1999. Abdullah's supporters are already gently preparing the ground, talking of a change from "magisterial to managerial" rule and emphasizing that their man is a consensus builder, a listener. Abdullah has also begun staking out ground of his own on the corruption issue, giving regular speeches on the need to clean up the civil service, for example.

If fence sitters like factory supervisor Ibni are anything to go by, the Abdullah camp's careful strategy could work in the next general elections, widely expected around next April. Back in Puchong, it is getting late, and Ibni has put off for another night the decision on buying the car. Before leaving, he sums up his thoughts: "I still cannot rationalize or accept Anwar's fate. But I am prepared to give [Abdullah] a chance." And what about Mahathir? Here one of the more ebullient car salesmen, Zamzury Rahman, breaks in: "Nobody is perfect. We don't say Mahathir is perfect. But he has done a lot of good for this country. And when you have an excess of good, you forgive the bad." With almost two-thirds of households owning TVs and cars, with smoothly flowing highways to drive on, with decently paid work still widely available and with the different races at peace, many Malaysians agree.

• Simon Elegant | Kuala Lumpur
• After 22 years in power, Mahathir Mohamad is stepping down. Can Malaysia thrive without him?