Speechs in the year
Tempat/Venue 	: 	THE MERLIN HOTEL 
Tarikh/Date 	: 	18/01/83 
Tajuk/Title  	: 	AT THE OPENING OF THE 7TH. 

Yang Berbahagia Professor Datuk Mokhzani, Presiden, Persatuan Ekonomi
Malaysia, Dif-Dif kehormat, Tuan-Tuan dan Puan-Puan yang dihormati
sekelian, Terlebih dahulu saya mengucapkan ribuan terima kasih kepada
penganjur Konvensyen ini, khususnya Professor Datuk Mokhzani, kerana
menjemput saya dan memberi penghormatan kepada saya untuk melafazkan
sepatah-dua kata bersempena dengan pembukaan Konvensyen ini.

2. Saya juga mengambil kesempatan ini untuk mengucapkan setinggi-tinggi
tahniah kepada Persatuan Ekonomi Malaysia kerana berjaya meneruskan
tradisi mengadakan Konvensyen Ekonomi yang mana, pada pendapat saya, telah
menjadi satu acara yang sentiasa dinanti-nantikan oleh ahli-ahli ekonomi
tanahair. Dengan kehadiran pakar-pakar dan berbagai golongan, Konvenyen
yang dianjurkan oleh Persatuan ini merupakan satu forum yang bernilai bagi
membenihkan idea-idea baru yang boleh membantu kita dalam menganalisa
isu-isu, masalah-masalah serta cabaran-cabaran yang dihadapi oleh kita,
sebagai anggota masyarakat ekonomi dunia.

Ladies and gentlemen, 

3. The theme of this Convention, "The Malaysian Economy at the
Crossroads: Policy Adjustments or Structural Transformation," is to my
mind well chosen. It is relevant and timely because the 20-year NEP
Perspective plan is already well into the third quarter, while at the same
time, the world and our own country, is passing through a most difficult
period economically. The need to attain political and social targets very
often gets in the way of economic planning and implementation . It is,
therefore, important to re-examine policies, and make structural changes
so that policies and structures do not become objectives in themselves,
but rather the means of achieving achievable economic, social and
political targets.

4. There is no totally unregulated economy in this day and age. The most
liberal of the countries, practising the free enterprise system, are as
full of regulations as are the socialist countries. Indeed while socialist
countries may have just one regulation forbidding private enterprise the
free enterprise nations may have a huge number of regulations in order
that the freedom of the free entrepreneurs would not impinge upon the
interest and needs of members of the public, other enterprises and the
nation as a whole. The nett result is likely to be "hell" for the
entrepreneur as he tries to negotiate his way through the maze of
obstacles and traps that are gleefully thrown in his way. Nevertheless,
some countries are less regulated than others, and some bureaucrats are
more understanding and flexible than others.

5. Malaysia is a free enterprise nation but its economy is subject to a
variety of regulations as are all free enterprise economies. But if a
comparison is made even with the so-called liberal western countries it
will be found that Malaysia is less regulated than most. If the other
countries appear more liberal it is because they are not tested or
threatened. If they are, their reaction is invariably to slap on drastic
regulations. Thus ostensibly there was no regulation on foreign purchase
of shares when such purchases were rare and limited to acceptable
countries. But the moment the practice becomes common and some upstarts
get into the act, regulations were drawn up to limit free
enterprise. Similarly foreign banks are often excluded from some countries
while equity in enterprises are strictly regulated. Subsidies for
inefficient economic activities are very common in the powerful free
enterprise nations. It can almost be said that the concept of subsidy was
invented by them. Free trade was freely advocated as the ideal commercial
relationship between nations until the flow of goods was
reversed. Suddenly protectionism became a part of the vocabulary of the
liberal free enterprise market economy nations.

6. The list is endless. The free-enterprise, free-trade, and market
economy nations are anything but free. Tariff and non-tariff measures,
subsidies and stockpiles and pure and unmitigated harassments are all used
to regulate the economies of free-enterprise nations in order to get the
greatest advantage for themselves.

7. Malaysia does not claim to be innocent of these strategems. We do have
regulations and policies. But we are more open about them. We do not have
a Food and Drugs Office for the purpose of rejecting goods. Nor do we
maintain a standards institute for the same purpose. Instead we have Five
Year Plans and Trade and Investment policies that are clearly spelt
out. Indeed we spend millions every year to explain our policies. And when
some particular policy or practice is condemned by foreigners we actually
revise them in order to satisfy the people who complain. Thus visas and
work permits are now more readily 8. But we are not satisfied with what we
are achieving or doing in Malaysia. We are constantly reexamining
ourselves. An Economic Panel was set up recently for this purpose. There
is no intention to be rigid or to regard policies and laws as sacred cows
that may not be trifled with. Indeed the Economic Panel and the whole
Government machinery have been clearly directed to reexamine everything,
every policy and every practice, to see whether in fact they have served
the purpose for which they were formulated or whether they are still
relevant to the changing times. And so when you propose to discuss policy
adjustments or structural transformation in the Malaysian Economy you are
doing exactly what the Government has all along advocated. The fact that
you have concluded that we are at the crossroads; and I will agree with
you that we are, makes this discussion even more topical and relevant.

Ladies and gentlemen.

9. I would like to give some of my views on the world economy and the
Malaysian economy in order to provide a background for your
discussion. The world is undoubtedly going through a very difficult
period. The whole banking system is now being questioned and with it, of
course, the financing of international trade and investments. The pattern
of trade whereby the poor countries produce cheap raw materials and buy
expensive manufactured goods has begun to change. Having bought expensive
plants and machinery the poor countries are showing signs of success in
exporting manufactured goods. The rich countries now feel threatened and
have resorted to protectionism. This they are able to do because the rich
countries of the North are still the biggest market for raw or
manufactured goods. In other words the rich North can still dictate terms.

10. The advent of OPEC had a major impact on world economy.

But the North is too smart. The OPEC billions have to be recycled and
bankers and financial advisers of the West soon got the profits from oil
invested in their countries. Once invested there is no way the OPEC
countries can get back their money. Instead the OPEC countries must now
ensure the economic success of the rich countries if they want their
investments to yield a return. Thus OPEC has not really been able to
change the world economic pattern. It has merely become a part of that
pattern, albeit a very important and influential part. Today OPEC is
wracked by all kinds of internal conflicts, resulting in both a loss of
wealth and a loss of initiative. In the meantime the North has learnt to
live with alternative energy.

11. The last and currently the most important factor depressing the
economy of the world is the high interest rate. When an extremely rich
country decides to live beyond its means it has to borrow bigger sums from
the market. The consequence is not only to dry up the source of fund but
to push up the interest as well. High interest rates in a nation which
lives on credit means lowered consumption, lowered inventories and lowered
investments. When that country is also the biggest market, the effect on
world trade is not difficult to foresee. Indeed no foresight is
necessary. Depression in world trade is known and felt by
everyone. Talking about adjustments and transformation it is necessary
firstly to know the state of the economy and economic policies that we
wish to adjust and transform. What in fact is the premise and the starting
point for our efforts.

13. I will not talk much about the shortcomings of the Government. You
know about them already and you will no doubt be defining them, holding
them up for scrutiny and dissecting them. This is a good exercise and the
Government will appreciate and take into consideration your views. We
fully realise that we are far from perfect. By the same token the critics
and the other players in the drama of the national economy are not perfect
either. I am going to deal with their imperfections, simply because it is
easier to see the whole from the outside than from the inside. When you
are inside something, roughly 50% will be behind you and will therefore be
invisible. You may turn but then you would still see only 50%. But, of
course, you will see that 50% at closer range and in greater relief. This
is my experience in Government. I am blind to roughly 50% of what goes on
in Government but what I see, I see very clearly.

14. Now, Malaysia is, as I said, a trading nation since written
history. But while Malaysia is still a trading nation, it has become
largely an appendix of Singapore, a hinterland to a country that is now
foreign. We do not grudge Singapore and its prosperity, but the trade with
Singapore is not only depriving us of legitimate benefits but is depriving
us of the grounds for increasing our exports to our major trading

15. Now it is well-known that when countries talk trade they look at the
balance of payment. The problem is that figures regarding trade are never
identical between trading partners. This disparity is even more marked
between Malaysia and her trading partners. Invariably the countries which
have a balance of trade in their favour claim that in fact they are buying
more from Malaysia than Malaysia is buying from them. Our demand for more
exports to these countries are therefore without basis.

16. This disparity in figures is due to the differing interpretation of
the origins of imported goods. For goods finally end up. But for most
countries, goods originating from Malaysia bought via Singapore are still
considered as Malaysian goods. Consequently the total imports from
Malaysia by these countries exceed the figures recorded by Malaysia by a
considerable amount. Rotterdam and Hamburg, which frequently buy Malaysian
goods from Singapore and redistribute them throughout Europe distort the
figures even more through double counting. Holland and Germany claim to
buy more Malaysian products when in fact these were destined for other
European countries which also claim that the Malaysian goods constitute a
part of their trade with Malaysia.

17. This is the insult. The injury is due to the loss of ware housing,
insurance, port dues, stevedoring, shipping agencies, freight and an
assortment of commissions. Worse than this is the deprivation of know-how
and contacts which is everything in world trade. For as long as knowledge
of the world market is not with Malaysians, for so long will it be
difficult for us to improve our trade with the world. all kinds of
industries related to the handling of ships. The Government has long ago
decided that we will develop our own ports. We have done this and we are
prepared to do more. Admittedly we are not as efficient as the traders
would like us to be. But still we can reap the full benefit of direct
export if we choose so to do.

19. The main reason for this state of affairs is a mental block which
prevents our businessmen from doing their own export themselves. They
would rather deal with the convenient middlemen. That way they need to do
very little beyond sending their goods across the causeway and collecting
their payment. Contacting importers who live in strange places, speak
strange languages and conform to strange laws is too much trouble. The
nett result is that apart from the loss of business associated with a busy
port Malaysian ringgit being one of the strongest currencies, it is not as
well-known as the Singapore dollar.

20. It would seem that we are not making as much as we should out of the
exports and imports of our products because Malaysian traders are too fond
of the easy way to trade. It is not only the villagers who are prone to
let the middlemen take the cream, the whole of the Malaysian trading
community are prone to this. For the past three years the Government has
encouraged the formation of sogo-shoshas but there is yet to be one
ringgit that is earned by a Malaysian sogo-shosha. We cannot do everything
overnight but the dismal failure in the attempt to do more direct trade is
not excusable.

21. So what has this got to do with the adjustments and transformation of
the Malaysian economy? The fact is that we are too fond of blaming the
systems when human factors are the real causes of failure. The Government
has listened to many suggestions and have implemented some of
them. Unfortunately, even when they are implemented the problem is not
solved or at the very least new problems crop up. Once it was suggested
that we should have trade commissioners in order to improve exports. They
have been around a long time now but 25% of our trade is still with our
neighbour to the south. Then it was suggested that we send trade missions
and participate in trade fairs. We have done so, but the result is
negligible. Then we are told that we should give incentives and provide
protection. The only result is higher cost to the consumers. And so on and
so forth.

22. Without wanting to throw a wet blanket I would like to suggest that we
also reexamine ourselves. Is it really true that the systems are wrong, or
is it simply that we are not making full use of the facilities
afforded? While we go about making adjustments and transformations, should
we not examine how the present policies are being used by us. I am not
talking just of trade. I am talking of everything that affects the economy
of this country. There are things that we can change. There are others
that we cannot change. Is it really worthwhile to knock our heads against
stone walls or should it be better to use the prepared passage or the soft
spots which will let us through without exhausting ourselves.

23. The NEP, for example, is one of the most liberal policies. Those who
have decided to live with it have done extremely well. Indeed, if you
study the daily quotations in the Stock Market and business reports, you
must find it extremely difficult to say that Government policy is a
hindrance. It is in fact so liberal that a lot of things happen here which
would not be tolerated by even the most liberal of free enterprise
societies. The same can be said of other Government policies and

24. Now having said that, I would hasten to reiterate that I do not
believe that the policies or the structure of the Government or the
economic system are perfect. They are far from being so. Indeed there is a
lot wanting in the way policies are implemented, and economic
administration is carried out. I honestly feel a need for constructive
criticism from the learned economists who are gathered here to participate
in this Convention. The Government may not accept all that you recommend,
but I would like to assure you that we will not ignore your findings or
your recommendations. Certainly they will form a background to any new
formulation of policy or any corrective measures we contemplate or accept.

Ladies and Gentlemen.

25. It is the lot of a Prime Minister to handle matters in which he lacks
expertise. Worse, he is often required to address experts on matters which
he knows very well he has less expertise than his audience. But like it or
not he has to do so.

26. For my part, when talking to economists on economics, I like to
imagine that really the economists are not all that bright. They are the
people who like to talk of averages. Consequently if you listen to them
you are likely to drown in a river which has an average depth of 2
feet. Or to extrapolate, I have a Chinese son because I have five children
and according to average figures every fourth child born is a Chinese.

27. These are stories that I tell myself in order to give me
"Dutch" courage to face an audience like you.

28. I would like to congratulate you on your concern and effort. I have no
doubt that your discussion will be interesting and the results useful to
the nation. I wish you all the best.

Dengan ini saya dengan sukacitanya merasmikan pembukaan Konvensyen Ekonomi
Malaysia yang Ke Tujuh ini.

Terima kasih.