Oleh/By		:	DATO' SERI DR. MAHATHIR BIN MOHAMAD 
Tempat/Venue 	: 	PUTRA WORLD TRADE CENTRE 
Tarikh/Date 	: 	02/12/85 
Tajuk/Title  	: 	THE OPENING OF THE THIRD ASCOPE 
			CONFERENCE AND EXHIBITION 




Honourable Ministers; Your Excellencies; Distinguished Delegates; Ladies
and Gentlemen; 

On behalf of the Government and people of Malaysia I would like to welcome
you all to Kuala Lumpur and to the Third ASEAN Council of Petroleum
Conference and Exhibition. We are proud to play host to this distinguished
gathering of energy experts from all over the world, that will over the
next few days exchange experiences and knowledge in an area which is of
great importance to us.

2. This is also the first time that Malaysia is hosting an energy
conference and exhibition of this magnitude. According to alphabetical
order Malaysia should have hosted the second ASCOPE meet but the honour
was give to the Philippines because we had no facilities then. Now that we
have the Putra World Trade Centre, Malaysia is very pleased to host the
Third ASCOPE Conference and Exhibition.

Ladies and Gentlemen, 

3. Where Petroleum is concerned, the ASEAN grouping is peculiar in that
three members -- Indonesia, Brunei and Malaysia -- are not only
self-sufficient but are actually nett exporters, while three others are
importers of petroleum and related products. In addition Singapore,
although a non-producer, is the third biggest petroleum refining centre in
the world. Our interests must of necessity differ. Indeed they are in
conflict. The fact that we agree to have an ASEAN Petroleum Council
implies that there is some common interest, or at least some need to
cooperate. It is important to remember this, if we are not to end up
pulling in different directions.

4. The escalation in oil prices in the first half of the 70s has been a
mixed blessing for the ASEAN countries. While some suffered initially,
others prospered as petroleum revenues increased while new fields became
economic to explore and produce. Even those of us which have no oil
benefited for the abundance of investments and funds created jobs and
lucrative contracts which accrue directly or indirectly to us. Thus
Singapore not only benefited from refining but become a manufacturing
centre for oil rigs. Philippines and Thailand gained contracts and jobs in
oil and development projects in the Middle East.

5. One thing that is worthy of note is that while the price of crude rose
by 2000% at one stage, the retail price of products rose only by 300 to
400%. Even if we deduct Government taxes the retail price increase is only
in the region of 600 to 800%. We can attribute this to greater efficiency
in processing, transportation and marketing. But we cannot help but
conclude that prior to the oil price escalation the big petroleum
companies must have made huge profits. We, particularly the countries like
Malaysia have a lot to thank the Arabs and the OPEC for raising crude
prices. We would not be producers otherwise and we would still be the
markets for overpriced products.

6. The developing countries which have no oil did suffer, but not to the
extent indicated by the rise in crude price. The massive generation of
funds by the big oil producing countries filtered down to many countries
via numerous chanels. Only those who are not willing to grab the
opportunities or who want to stay home suffered. Remitances home during
the oil boom must have been the highest in the history of the world's
economy.

7. More than the big oil producing countries, the biggest beneficiaries of
the price escalation are the developed countries. Not only do the
petro-dollars flow in their direction to help finance numerous economic
activities, but huge contracts and supplies to the petroleum countries
ensure that whatever the developed countries spent on importation of
high-priced oil, returns to them with interest.

8. The picture is rapidly changing now. The price of petroleum is going
down. Where once it was $40/- a barrel, it is now only $26/-. If the
escalation in petroleum price is a cause of recession and hardship for
poor countries, then surely declining prices should result in economic
stability if not an upturn. But the fact is that declining oil prices seem
quite incapable of stablising the world's economy, much less reverse the
recessionary trend. What is happening is that the developing oil producing
countries are getting desperately cash short, while the non-oil producing
developing countries are becoming worse off than they were when oil prices
were high.

9. It would seem that escalating oil prices do not mean economic decline
even for the non-oil producers among the developing countries, nor does a
declining oil price lead to economic well being for them. For the oil
producers, escalating oil prices means prosperity while declining prices
certainly lead to economic hardship. Still one would hesitate to say that
all developing countries would be better off with rising petroleum
prices. It would be more correct to say that everyone would be better off
if the prices remain steady at a level that will make neither the
producers nor the poor consumers suffer.

10. There is another important factor that complicates the effect of oil
on the economy of nations. For historical reasons perhaps, petroleum is
priced in American dollars. A hardening of the dollar against local
currency or a de facto devaluation of the dollar would make nonsense of
the best planned of national budget. Remedies for the fluctuating dollar
exchange rates are not easily found. A hardening of the dollar would
obviously increase fuel cost. A producer country should feel happy except
that the cost of servicing loans and imports would nullify the gains. For
those countries which have to import fuel the burden would be greater. On
the other hand if the dollar is devalued, producr countries earn less and
if they have borrowed Yens or other hard currencies, they will be in
trouble. The consumer countries will gain a little with dollar devaluation
but again they will have to find more local currency to pay off loans made
in other currencies. On balance, any movement in value of the dollar would
result in more negative than positive effects on the economy of a
developing nation. A stable or steady exchange rate on the other hand can
be accommodated through imports or borrowings within the means of a
country.

Ladies and Gentlemen, 

11. We are going through a very bad patch in the history of the world's
economy. When oil prices first escalated in 1973, it was predicted that
the world's economy would go into recession. It didn't really. But the
spectre of recession hovered over the world since then. Today recession is
not a spectre. It is a reality. And there is little doubt that although
oil is not the sole cause or even the main cause, it is nevertheless an
influence that requires to be managed if there is going to be a return to
economic stability.

12. Clearly what the world needs is a reasonably stable price that is
neither too low nor too high and that stable price must be real and not
subjected to the vagaries of currency fluctuation. I am sure even the oil
producing countries would want this. The world economy is sick because it
no longer relies on trade. Instead it gambles on commodity prices and
currencies.

Ladies and Gentlemen, 

13. Malaysia is a commodity exporter. Petroleum is one of the commodities
it exports. We are not the greatest in this field but petroleum exports is
a major contributor to our foreign exchange earnings.

14. We believe we understand commodities, particularly in the context of
third world producers. There was a time when the nations of ASEAN
exchanged their spices for trinkets and glass beads brought by the
merchants from the countries of the West. That situation has not
changed. We are still getting trinkets. The recent breakdown in the tin
market has once again illustrated the fragility of our commodity marketing
system. Now petroleum is going through nearly the same process.

15. We know very well that low commodity prices benefit the rich consumers
most. But we are quite unwilling to act as if all we need to do is to
undercut the prices of our competitors. We overproduce as if that will
earn us more.

But all that happens is that the more we sell, the less we earn. If this
goes on, a point will be reached when we cannot even recover the cost of
production. All these as we know are logical and real but we go on doing
these things and refusing to acknowledge that where commodity trading is
concerned, discipline and long-term gains are more important than the
transient prosperity of a short-term approach.

16. I must hasten to explain that all these observations are my own, a
person untutored in economics, much less in the intricacies of the
petroleum market. Still I feel they are valid observations resulting from
having to deal with the vagaries of oil and its prices on the economy of a
developing country like Malaysia, neet exporter of petroleum though it
is. I am sure the experts who are here for this Conference know better.

17. I suspect you will be hearing a lot about projections on future
demands and prices of petroleum at this Conference. That is
interesting. But Governments and people are not overly concerned about the
prospect for the petroleum industry. They are interested in their nations'
cost of living. Whether the people use petroleum products or not is quite
irrelevant to them. If they can find a substitute then they will use
it. Even Malaysia is interested in substitutes for petroleum. That is why
we have diversified our energy sources. That is why we are doing research
on palm-oil diesel.

18. It is obvious that the future of the petroleum industry is very much
linked to prices. When you talk of the possibility of increasing demands,
you are hoping that prices can be jacked up and more profits made. I think
that is the wrong frame of mind. If profit are to be made it must come
from increased volume rather than prices. Had oil prices gone up to $70.00
as once projected, the plants to produce oil from coal and shale would
have been put up. But because the price declined these plants were
abandoned. By the same token unless oil prices are steady and reasonable,
alternative energy sources would not challenge petroleum.

Ladies and Gentlemen, 

19. As a Government leader my interest is more in the general well-being
of the country than in the petroleum industry as such. Even though
Malaysia exports petroleum we see it only in the context of our overall
economy. We like the money we earn from petroleum. But if price increases
result in costlier imports, then we would rather stick to a steady and
comfortable income.

20. You will of course see the petroleum industry from a different
angle. Still I think you need to appreciate that the petroleum industry is
just a part of the whole economy. What is good for the petroleum industry
is not necessarily good for the different countries you represent or
indeed for the world.

21. As I said at the beginning, the ASEAN Grouping on Petroleum is
peculiar in that the perspectives and relevance not only differ between
the members, they are frequently in conflict. It will be diffcult for you
to find common ground. Perhaps the Conference is intended to educate us so
that we will be better able to handle the problem of petroleum and related
subjects. If that is so then there is no doubt that we will be better able
to manage our economy, knowing but not necessarily trusting the
projections that you will make.

22. Whatever may be the result, I am glad that in yet an other field the
ASEAN countries are cooperating. Only good can come of this cooperation.

23. And now I take great pleasure in declaring this Third ASCOPE
Conference and Exhibition open.

Thank you.