Karim Raslan is author of Ceritalah: Malaysia in Transition and is a founding partner of Raslan Loong, a leading Malaysian financial company.

Kuala Lumpur - Recent events in the Middle East would seem to confirm American fears about the wisdom of engaging with the Islamic world. However, the ummah (congregation of believers) is extremely diverse, and while the Arab world in particular has failed miserably in terms of governance, human rights and democracy, the same cannot be said of all Muslim societies.

In Southeast Asia, the Muslim-majority nations of Indonesia and Malaysia are faced with the same trio of economic, political and theocratic challenges. Instead of succumbing to the forces of religious obscurantism, incompetence and repression, the region's Muslims are set to provide a template for modernist believers across the globe.

Politically, both nations are vibrant if flawed democracies. Indonesia's freewheeling and robust media stand out. And while the ballot box has remained sacrosanct in the two countries, the independence of the judiciary (witness the trials of Tommy Suharto and Anwar Ibrahim) has certainly been called into question.

In economic terms Malaysia has eclipsed Indonesia. With a population of only 23 million people, the country has developed into an economic powerhouse, growing at more than 3 percent per annum and exporting well more than $100 billion worth of merchandise-twice as much as India and the equivalent of Israel, Iran and Turkey combined.

Interestingly, United States Secretary of State Colin Powell, concluding an Asia-Pacific tour, has also discovered Southeast Asia's charms. The leading regional grouping, the Association of Southeast Asian Nations (ASEAN), has inked a high-profile anti-terrorism pact with the US.

The fact that ASEAN's members (three of whom are Muslim-majority nation-states) was able to sit down-at this highly emotional juncture-and hammer out a treaty that is broadly supportive of the US reveals a great deal about the region's inherent pragmatism and plurality.

Certainly, substantial American foreign direct investment over the past decades as well as the recent resumption of economic growth in the region after the debilitating Asian financial crisis of 1997 has contributed to a sense of well being. In much of Southeast Asia (the Philippines and Vietnam excluded), America, unlike Britain and the Netherlands, is still remembered for its historic commitment to self-determination and anti-colonialism.

However, this does not mean that American foreign policy, especially vis-a-vis Israel, is popular among the region's Muslim communities. Far from it. The White House's perceived partisanship in the Middle East and the continuing fixation with Iraq has done untold damage to American prestige and moral authority. Malaysian Prime Minister Mahathir Mohamad's vituperative criticisms of Israel's leader Ariel Sharon are by no means isolated. There is no doubt that support for the region's moderate Muslim leaders is undermined by continuing American hard-headedness in the Middle East.

Still, the region's 230 million Muslims (more than in all of the Arab Middle East) remain a bastion of democracy, modernist scholarship and openness in the Islamic world: a vital counterweight to the narrow-minded bigotry and Wahabi-inclined conservatism of the Arab world. Indonesia-in this instance surpassing Malaysia-is an acknowledged center for liberal Islamic scholarship. Moreover, unlike Egypt or Saudi Arabia, in Indonesia moderate Muslim academics and thinkers occupy senior positions in leading Islamic institutions.

The country's moderate Muslim scholars are not effete, Western-educated secularists. Most of them emerged from rural pesantrems (religious schools), are fluent in Arabic and are trained in fiqh (Islamic jurisprudence). They are well equipped to debate substantive religious issues and do not retreat from confrontation. As Shafie Ma'arif, the head of the 30 million-strong Muhammidiyah association, declares, "We are Koranic scholars who believe in the enlightening impact of education (including for women) and social welfare. We maintain our moderation in the face of challenges from the conservatives. We must draw from the Holy Koran, and we must always consider the practical dimension of our arguments."

With more than 30 million members apiece, moderate associations such as the Muhammidiyah and the Nahdatul Ullama have had a deep impact on the community. Their enduring commitment to civil society, interfaith dialogue and secular education has helped halt the slide to conservatism.

Their schools and colleges churn out thousands of religious scholars every year-dwarfing the numbers produced by the extremist groups such as the Laskar Jihad. Moreover with universities such as the State Academy of Islamic Sciences (IAIN), a new generation is being imbued with modernist thinking, tolerance of other faiths and sensitivity to gender rights.

Indonesian liberals are engaged in a battle for the hearts and minds of Muslims as well as an epoch-making attempt to extract the prophetic truths from the Holy Koran in a manner that shows the inherent compatibility of modern-day concerns with the sacral texts. And at a recent international conference on progressive Islam in the Malaysian capital of Kuala Lumpur, Malaysian scholars spent many hours listening to and learning from their Indonesian counterparts.

Much of this is due to Southeast Asia's extraordinary racial and religious diversity. While Muslims constitute the majority in Malaysia, Brunei and Indonesia, they are the largest minority in Catholic Philippines, Buddhist Thailand and Confucian Singapore. Unlike the Middle East, minority rights and pluralism are a fact of life in Southeast Asia.

It is also important to bear in mind the peaceful manner with which Islam's eternal message of truth and justice was spread in the region. Unlike the Subcontinent, conversion was generally achieved through a process of persuasion rather than brute force. As a consequence, underlying Hinduistic and Buddhist cultural mores have been adopted and adapted rather than expunged. This in turn has encouraged Southeast Asia's Muslims to be more accommodating on issues such as faith and ritual.

Malaysia has an important role to play in the promotion of modernist Islamic thinking across the globe. It is clearly in America's interest that this moderate and highly developed Muslim democracy, with its thriving multiracial ethos, succeed and prosper.

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