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Oleh/By		:	DATO' SERI DR. MAHATHIR BIN MOHAMAD 
Tempat/Venue 	: 	THE WALDORF ASTORIA HOTEL, NEW YORK 
Tarikh/Date 	: 	30/09/86 
Tajuk/Title  	: 	THE MALAYSIAN INVESTMENT SEMINAR 




Ladies and Gentlemen, I am pleased to be here this afternoon to meet
distinguished American businessmen and industrialists. I may have met some
of you in previous gatherings here and some of you may have already
visited Malaysia. I hope my talk today will induce more of you to visit us
or even invest in our country.

2. I feel that the time has now come to forge closer economic cooperation
and business links between the United States and Malaysia. I regret to say
that the US presence in Malaysia's industrial sector is minimal in
relation to your standing as the world's leading industrialised nation. To
date, US investments in Malaysia's manufacturing sector totalled a mere
US$128 million in terms of paid-up capital and US $358 million in terms of
fixed assets. Although these figures by themselves place the United States
among the top five nations investing in Malaysia, by comparison with total
U.S. investments abroad, they are literally a drop in the ocean.

3. I believe there are many reasons why there is a lack of American
investments in Malaysia. Apart from the lack of traditional ties between
our two countries resulting in an information gap about Malaysia among
Americans, Southeast Asia conjures up certain negative images to many
Americans : images of the Vietnam war, images of the strife in Kampuchea,
and images of political upheavals in the region. These images, however,
are quite irrelevant to us. We have been blessed with continuous political
stability since independence. Even our independence was obtained from the
British without the usual armed struggle and bitterness. We negotiated
across the table. There has never been any wide spread social or political
strife in Malaysia, except for one short period in 1969. During the recent
elections the ruling party again won with a thumping majority, repeating
its spectacular success in 1982. The elections were peaceful, and nothing
untoward happened after results became known. Consequently the country
would follow its consistent policy of encouraging foreign participation in
its economy.

Ladies and Gentlemen, 

4. Malaysia has for long relied on the production and export of such
primary commodities as petroleum, rubber, timber, palm oil and tin, for
her six to eight percent yearly growth since independence. Now that the
bottom has fallen out of the commodity market, Malaysia's diversification
into manufacturing has taken on vital significance. The twenty percent
role that manufacturing contributes to the economy must be rapidly
increased in order that growth will continue.

5. That Malaysia can achieve the targets set for manufacturing can be
adduced from past performances. Between 1980 and 1985 exports of
manufactured goods increased from US$2.4 billion to US$4.7 billion.

6. Thus today, Malaysia is a leading exporter of manufactured goods such
as semi-conductor devices, room air-conditioners, and natural rubber
products, especially latex gloves and catheters. Through the next decade,
we intend to further accelerate the development of other industries
utilizing our natural resources of rubber, timber, palm oil, tin, clay and
silica. We hope, in the near future, to be a leading exporter of items
such as tyres, precision and industrial rubber products, wood mouldings
and furniture. Of course our highly skilled, educated work force can be
utilised by all kinds of assembly and processing industries, as is the
case with microchip production.

7. For the coming decade, the emphasis of Malaysia's development will be
on export oriented industrialisation, accelerating growth in priority
industries selected on the bas is of world comparative advantage, manpower
development, and the acquiring of technological capability. We do not want
to be grounded in the mediocrity of mere assembly operations. We want our
Malaysian workforce to improve their skills for we believe that our future
lies in the greater value-added secondary and tertiary processing of our
raw materials and in higher technology industries.

8. To achieve our goals, ladies and gentlemen, Malaysia needs the help of
our friends, especially those from the industrialised countries, in the
East as well as the West. We recognise the need for foreign capital
investments, technological capability, management know-how and your entree
into world markets. As the leading industrialised nation, the United
States can play an important role in Malaysia's development efforts, and
thus we need American investors such as your goodselves.

9. The Government and the people of Malaysia would like to invite you to
be partners in our progress and hope you can be the impetus and engine of
growth in our economic development. The Malaysian Industrial Development
Authority (MIDA) was formed with the tasks of promoting and coordinating
industrial development in the country. Today, MIDA stands ready to assist
you in every way possible for the realisation of your industrial projects
in Malaysia.

Ladies and Gentlemen, 

10. The Government has taken a number of measures over the past year to
provide an even more positive and conducive environment for investment in
Malaysia. In December last year, the Industrial Coordination Act of 1975,
was amended to give more freedom to manufacturers in starting up new
projects, for capacity expansion and for product diversification. Prior to
that, in July, the Government further relaxed the guidelines for foreign
equity participation in the manufacturing sector. In May this year, the
new Promotion of Investments Act or PIA was passed by the Malaysian
Parliament, providing attractive tax incentives for the manufacturing,
agriculture and tourism sectors. Besides these, the Government has
launched the New Investment Fund or NIF to channel funds at preferential
rates of interest for the financing of new productive capacity in
manufacturing, agriculture and tourism. It is hoped that these measures
would stimulate investment activities in Malaysia's manufacturing sector.

11. I take this opportunity to announce new conditions for foreign equity
and expatriate staff. These new conditions are applicable to new foreign
investments in industries whose products will not compete with products
presently being manufactured locally for the domestic market. They also
apply to expansions of foreign-owned or partly foreign- owned industries
which do not compete against existing local industries.

12. These new rules apply only to investments during the period between
October 1st. 1986 and December 1990. Investments during this period will
not be required to restructure their equity at any time.

13. The following are the new conditions:- Firstly, a company that exports
50% or more of its production is permitted to have up to 100% foreign
equity. Secondly, a company which sells 50% or more of its production to
companies in the Free Trade Zone (FTZ) or Licenced Manufacturing Warehouse
(LMW) is permitted to have whatever level of foreign equity up to
100%. Thirdly, a company which employs 350 fulltime Malaysian workers is
permitted to hold whatever level of equity it applies for. Fourthly, where
foreign equity is less than 100%, the balance to be taken up by Malaysians
should conform to the New Economic Policy rulings. Such rules will be
applied without undue rigidity. Fifthly, employment of Malaysians at all
levels should reflect approximately the racial proportion of the
country. Lastly, any company with foreign paid-up capital of US$2 million
will be automatically allowed five expatriate posts at whatever
level. Changes of personnel will not require fresh working permits. Visas
will be given automatically during the first ten years of the investment
period. Additional expatriate posts will be given when necessary upon
request.

Ladies and Gentlemen, 

14. The balance of payment problems between the seven richest
industrialised countries of America, Europe and Asia has resulted in a
decision to revalue certain currencies. For Malaysia effectively it means
depreciation of the Malaysian currency - the Ringgit. This means that
Malaysia's manufacturing costs are much cheaper now. As Malaysian workers
are trainable, productive and disciplined, the advantages of manufacturing
or processing in Malaysia cannot be exaggerated.

15. Let Malaysia be your manufacturing base for products such as
components and sub-assemblies that you can no longer produce competitively
in your own country. That way you can actually help your own workers for
they can still participate at certain phases without reducing the
competitiveness of your products. For industries which can never be made
competitive when located at home, relocation is the answer. Needless to
say the Japanese are already resorting to these measures as their revalued
Yen render production in Japan costly.

Ladies and Gentlemen,

16. Malaysia has a lot to offer you. More than thirty countries have
invested in Malaysia. Over the last five years, 1981 to 1985, a total of
1,327 industrial projects with foreign interest were approved, with total
foreign equity amounting to more than US$786 million. These figures show
increases of more than twenty-six percent in terms of projects approved
and seventy-nine percent in terms of proposed foreign equity, compared
with the previous five year period, 1976 to 1980. I believe our successes
can be attributed chiefly to our record of political stability and
economic resilience.

17. You may have heard that my party, the National Front, was recently
returned to power with a more than two-thirds majority in Malaysia's
seventh general elections since Independence. With this victory, we have
the mandate of the people for another five years and, I assure you, we
will do our best to maintain the healthy investment climate that we have
diligently built for the past twenty-nine years. The Government cannot,
and will not, allow any untoward situations to arise that will jeopardise
the economic future of Malaysia and the nation's will to join the world's
league of newly industrialised nations.

18. On this occasion, I would like to reiterate my Government's continued
commitment to the foreign investor. Our stand has always been a very
investment-conscious one. Our policies have evolved through time as a
result of the dynamics of a changing economic environment rather than from
any dogmatic ideology from within. And foreign investors now operating in
Malaysia have always appreciated this.

Ladies and Gentlemen, 

19. This is the Malaysia that we offer you today as a base for your
offshore operations. We are not looking for handouts; we have something to
offer you that we believe will ensure profits for your viable
operations. I am talking about the mutual respect and cooperation from the
inherent benefits that your company can offer Malaysia and which we in
turn can offer your company.

Thank you
 



 
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