In the last 15 years or so, however, Malaysia has seemed to lose that status as a shining example
'If you want to know whether Islam, democracy, modernity and women's rights can coexist," US Secretary of State Hillary Clinton said in 2009, "go to Indonesia." As the outside world watches the progress of revolutions in Libya, Tunisia and Egypt, this remains an elusive model. Will these states prove that the combination Ms Clinton mentioned is possible? Or will Islamists, who are always regarded as a monolithic and extremist movement bent on nothing other than repression and the subjugation of women, end up coming to power and showing that Islam and democracy, as the West understands it, are ultimately incompatible?
There is much anxiety in the chancelleries of Europe and North America, and this will not have been helped by the Muslim Brotherhood's indignant reaction to Turkish prime minister Recep Tayyip Erdogan's recent remark that he hopes "there will be a secular state in Egypt". Even more so, given that Mr Erdogan himself is considered by many to be a not-so-closet Islamist who wants to dismantle the progressive reforms of his secular predecessors. If the leader of a country now thought of in Washington as a tarnished model of how democracy and Islam can work together is too liberal for the forces emerging from the Arab Spring, what hope is there for the choices they will make?
Not so long ago there used to be much talk of another model with a far greater track record than Indonesia (which has only been a democracy since 1998), which embodied the coexistence Clinton lauded: Malaysia. A democracy ever since independence in 1957, Islam was the religion of the state but the constitution guaranteed freedom of worship. The legal system was based on common law - a mild form of Sharia applied only to Muslims - and it was a country where citizens of different races and faiths worked and flourished side-by-side, while many prominent offices from cabinet posts to governorship of the central bank have been held by women.
In the last 15 years or so, however, Malaysia has seemed to lose that status as a shining example. The international press has focused on stories that suggested the country's historic tolerance had all but vanished - a fatwa banning yoga, tales of forced conversion and victimisation of Hindus and Christians - no matter that these were unrepresentative and mainly isolated incidents. Meanwhile, despite the opposition's success in defeating the government coalition in several states, the dominant personality of the former long-time prime minister, Dr Mahathir Mohamad, and in particular the jailing of his former deputy, Anwar Ibrahim, encouraged the belief that it had become a democracy in name only.
There was a perception, encouraged by those who appeared to regard a "clash of civilisations" as something to be welcomed rather than avoided, that this was an inevitable trajectory in Muslim states. This view was almost unintentionally confirmed by Dr Mahathir's successor, Abdullah Ahmad Badawi, in a speech in Oxford in 2004 during which he warned that unless the West changed its attitude towards Islam, "those who want to carve a moderate space in the middle ground will be labelled apologists and worse, apostates".
This is why reforms announced last week by the current Malaysian premier, Najib Tun Razak, are so welcome and could help make the country a beacon of hope once more. The loathed Internal Security Act and Emergency Ordinance, which allow for indefinite detention without trial, are both to be abolished, while restrictions on media licences and public assembly will be considerably loosened. These, along with previously promised electoral reforms, are dramatic and historic measures - the ISA has been on the statute book since 1960, for instance - and provide real substance to Mr Najib's stated "commitment to making Malaysia a modern, progressive democracy".
Some have scoffed at his previous initiatives, such as the "1Malaysia" concept, which aims to break down the barriers among the country's different races (principally Malays, Chinese and Indians) and build a united national identity, or the Global Movement of Moderates for which he has called at the UN. But the doubters have had the ground pulled from beneath their feet by this latest move. It unequivocally marks an expansion of freedom in Malaysia which any future government will find very hard to restrict again. Mr Najib deserves some applause for his bravery.
I use the word "bravery" advisedly, because there are those who will disapprove strongly. Behind the scenes, Mr Najib will face considerable opposition, from the forces of conservatism and of Malay chauvinism, and from entrenched interests who do not wish the light of a freer and more vibrant political culture to expose their dubious practices. But his opponents will not be "the Muslims". In fact his entire programme of change shows that there is nothing unIslamic whatsoever about opening up a society, trying to reduce racial and religious tensions and building a participatory space and an economy in which all can share.
What worries Europe and North America about the newly liberated countries of Arab North Africa is that they are not looking sufficiently West. But why should they? There is no need. If they want examples of how to become modern, progressive, prosperous, egalitarian Muslim democracies, they can look East. To Indonesia, as Ms Clinton said. And, once again, to the original model - to Malaysia.
Sholto Byrnes is a contributing editor of the New Statesman and a frequent commentator on South-east Asian politics and religion