Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : HOTEL SHANGRI-LA, KUALA LUMPUR
Tarikh/Date : 28/08/87
Tajuk/Title : MAJLIS MAKAN MALAM TAHUHAN
INSTITUSI-INSTITUSI KEWANGAN
Yang Berhormat Encik Daim Zainuddin,
Menteri Kewangan;
Yang Berbahagia
Tan Sri Dato' Haji Basir Ismail,
Pengerusi Persatuan Bank-Bank Dalam
Malaysia;
Yang Berbahagia
Tan Sri Dato' Jaffar Hussein,
Gabenor Bank Negara;
Dif-Dif Kehormat;
Tuan-tuan dan Puan-puan sekalian.
Saya mengucapkan terima kasih kepada Ahli Jawatankuasa
Penganjur Majlis Makan Malam Tahunan Institusi-Institusi
Kewangan Malaysia, kerana menjemput saya dan isteri saya ke
Majlis Makan Malam ini.
2. Ini adalah kali yang keenam saya menghadiri Majlis
institusi kewangan ini. Pada majlis-majlis yang lalu saya
mengambil kesempatan untuk memberikan pandangan dan pendapat
saya mengenai keadaan ekonomi negara serta peranan dan
prestasi institusi-institusi kewangan di negara ini. Dengan
izin, saya bercadang untuk meneruskan amalan ini pada kali
ini juga.
Ladies and Gentlemen,
3. In three days time, we shall celebrate the 30th
Anniversary of our Independence. It is timely for us to
reflect on our achievements as well as our failures in
banking and finance in the last three decades. They say that
to understand the future, we must know and understand the
past. Then and then only can we plan for the future.
4. You may recall that at the point of Independence, our
financial system was made up of the Joint Currency Board, 26
banks, of which only 8 were local banks, a handful of
insurance companies, the post office savings bank and the
Employees Provident Fund. Total assets of the financial
system then amounted to less than $2 billion ringgit.
Today, I am told, the assets of the Malaysian financial
system is no less than $200 billion ringgit, with 38 banks,
47 finance companies, 12 merchant banks, 7 discount houses
and a host of other specialised institutions including
development banks and enterprises serving the capital
market. The domestic institutions now dominate the market.
The reality of electronic banking and instantaneous funds
transfer is taken almost for granted. Today, we can move
funds rapidly not only throughout Malaysia, but also to and
from other parts of the world. All these are real
achievements own reconstruction and the balance of payments
deficit.
7. Today, after successive oil shocks and the onset of the
deepest recession in the post-war period, we have witnessed
national and corporate fortunes change by the day. Since
the beginning of the 1980s, we have seen exchange rates
fluctuate wildly, with the US dollar rising and falling some
40 to 50% against the other major currencies. As a
consequence of hard work, Japan has emerged as a major
financial and economic power. Five out of the six largest
banks in the world are Japanese. These have been achieved
by a nation that has almost no natural resources, that
imports almost all its oil requirements and raw materials,
and was completely devastated by war only forty years ago.
It goes to show how sheer grit, discipline, drive and
management skill in the face of adversity can triumph
against all odds.
8. We live today in a competitive world. Most developing
countries have land and labour in abundance, and to a
varying degree, access to capital. What then makes one
country more developed than another? More than eighty years
ago, an economist characterised development as the process
through which entrepreneurs innovate to create new products,
to invent new techniques of production, to create new
markets, to find new uses of materials, and to evolve new
institutions or industrial combines. By expanding into new
horizons through innovation in products, technology, markets
or institutions, the entrepreneurs create wealth which when
distributed lifts the living standards of society.
9. The same far sighted economist said that there are
three key characteristics which make a successful
entrepreneur. First, the vision or dream to create new
things, markets or organisations. Second, the competitive
spirit, to prove excellence or superiority, and to succeed
because success is in itself a reward. Financial gain is
secondary. Finally, the joy of creating, of simply
exercising one's energy and ingenuity. Underlying these
elements is the pioneering spirit to venture where no men
had dared before; to literally bring about change hopefully
for the betterment of mankind.
10. Frankly, these values are by no means absent in
Malaysia. Yet, something is missing. We seem to lack the
real entrepreneurship to pull all these together
particularly in the manufacturing field. Business is at its
best when there is both private profit and social gains; at
its worst when profits are made at society's expense. All
too often, the Malaysian entrepreneur has been mostly of the
'hit and run' variety, with long-term
desires to have short-term profits. Consequently, we see
little or no commitment to the future, only shoddy
'products' in most cases that have great difficulty in
successfully competing abroad. The recent recession, with
the help of the bankers, has wiped out quite a number
of these so-called businessmen. Unfortunately genuine ones
have gone under too.
11. However, all is not lost. I am told that in the United
States some venture capital funds will not seriously
consider a project unless the entrepreneur has failed two
or three times. If nothing else, this proves that the
promoter has the determination to try and try again. This
should be no less true in Malaysia. We have faced the first
real recession in Malaysia in nearly three decades of
prosperity since Independence. Those who survived should be
much wiser and fitter to try again. Those who failed need
not feel ashamed so long as they have tried their honest
best. They too should try again provided lessons are learnt
from their failures. Those who have cheated and squandered
deserve to be where they are today.
12. In this period of recovery and turnaround, the bankers
as the custodians of public funds, have also become the
custodians of another key resource -- our tiny pool of
entrepreneurial talent. The fate of many of our budding
entrepreneurs now lie in your hands. To a
large extent, their survival depends on whether you think
their ideas can be made commercially viable. If they are,
then they will need financial and also management support
especially in the formative years. If only solid gold
collaterals count with you, please remember that even gold
depreciates. The recent recession has shown the weaknesses
of collateral based loans.
13. In a recession, losses are inevitable, to the
entrepreneur as well as the banker. When commodity prices
fall more than 40 to 70% in a matter of months, there
will be many casualties, including the Government. What is
important is not the losses, however painful these
may be; but whether their backers and bankers can separate
the "men from the boys". Indeed, they must continue to help
those ventures that possibly will turnaround with economic
recovery. Bankers must have foresight and must not
foreclose every project merely because they have
non-performing loans. Bankrupting all our entrepreneurs
simply because the recession has rendered them incapable of
servicing their loans will not help anyone; neither the
borrower, nor the bank nor the nation.
14. One other important reason why Malaysia seems incapable
of producing entrepreneural giants is that life is soft
here. No great effort is needed to develop estates
or housing projects or cut down trees or dig for tin. A
land concession or a licence can make almost anyone rich.But
in countries without resources, much ingenuity is needed in
order to prosper. The challenges are greater and the people
who rise to these challenges must have the qualities for
the making of good entrepreneurs. Of course, if the
challenges cannot be met, the country can even regress and
lose out completely. There are quite a few countries
which have never made it. Malaysia is not one of them. But
Malaysians need to move away from easy commodity production
into manufacturing. The banks must be more discerning and
not look at collaterals alone.
Ladies and Gentlemen,
15. Malaysia has waxed rich on the products of its
plantations and mines. It is easy for us to say now that
producing these commodities was the right thing to do.
Actually many of the early planters and miners had their
doubts and there were bad patches in their history. Indeed,
we know now that commodity production is not always
profitable. Such is our disillusionment that we have now
decided to go into manufacturing, not as a substitute for
mining or plantation but as a hedge against the vagaries of
the commodity prices.
16. Now, manufacturing is not easy. Because we have no new
products or processes to give us unique advantages, we have
to go into areas where others more experienced than us have
already rodden. This implies competition and competition
seldom favours newcomers. Many of us are going to fall along
the way. We are going to make many mistakes and we are going
to have to pay highly for these mistakes. But if we believe
that our salvation lies in diversifying into manufacturing
we have to soldier on.
17. Entrepreneurs need support and encouragement.
Competing with experienced foreign rivals is tough enough.
But when less than no support is coming from home, even the
most intrepid of entrepreneurs are likely to throw in the
towel.
18. The Government has done much to encourage
manufacturing. Admittedly there are many things more that it
ought to do. But others must chip in also. Banks should
certainly do their bit. They should be more enthusiastic and
sympathetic towards manufacturers, particularly those with
export in mind. They should not be too ready to pull the rug
from under the feet of manufacturers who look like they are
going to fail.
Ladies and Gentlemen,
19. The Minister of Trade and Industry recently said that
Malaysians are their own worst enemies. I am inclined to
agree with her. Relative to many other developing
countries, which I shall not name, Malaysia is stable and
peaceful. We have had no disorder of any consequence since
1969. But who tells foreign investors that there is tension
in the country -- the Malaysians. Foreign investors tell me
frequently that they have been told by Malaysians that the
Chinese are just about to revolt against the Government --
not in so many words of course but that is the implication.
The fact that the majority of the Chinese in this country
are loyal and want stability is ignored. The consequence
is that foreigners lose faith in Malaysia and Malaysians
of all races suffer. Why do we do this to ourselves? Is
it for the satisfaction of being able to say that the
Government has failed?
20. Bankers in this country have a duty here to correct the
erroneous impression caused by irresponsible and malicious
remarks by some Malaysians. Bankers are people of
integrity. They also have a vested interest in the
prosperity of this country. They must propagate the truth
about their country. We are not a model of racial harmony
but we are much better at finding compromises and getting
along with each other than most multiracial
countries. Foreigners should be reassured that Malaysia is
politically stable and has always been so. We can manage
our problems better than others.
Ladies and Gentlemen,
21. Banks cannot function in a vacuum. They need an
energetic and enterprising environment. The foreign investor
will have to make up for the shortage of local
entrepreneural skills for a long time to come. The banks
should, therefore, play a greater role in encouraging
foreign investors to set up plants here. They should have
special departments dedicated to this activity. They should
advise and help the local entrepreneurs to co-venture
with potential foreign investors. Banks cannot just lend
money. They must know their clients business as much as the
clients themselves so that they can really be of help -- to
their clients and to themselves.
Ladies and Gentlemen,
22. Once again, I would like to thank you all for inviting
my wife and I to your annual dinner. I wish you all a
pleasant evening and also every success in your endeavours.
Thank you.
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