Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : NEW YORK
Tarikh/Date : 29/09/88
Tajuk/Title : SPEECH BY THE HONOURABLE DATO SERI
DR. MAHATHIR BIN MOHAMAD THE PRIME
MINISTER OF MALAYSIA TO
AMERICAN BUSINESSMEN
Ladies and Gentlemen,
It gives me great pleasure to be here today to address
all of you on the subject of the Malaysian investment
environment. I would like to thank the organisers for the
efficient way they have arranged this programme and I would
also like to thank you for your response.
2. Malaysia is today probably no stranger to the United
States of America. The picture may have been different
several years ago, but most certainly today, with American
participation in more than 121 companies in production in
the Malaysian manufacturing sector, involving total fixed
assets exceeding M$840.6 million (US$317 million) the
situation is most certainly somewhat different. The 121
companies in production, represent only the tip of the
ice-berg for we have in fact approved approximately 311
manufacturing companies with various degrees of American
participation during the period 1971 to July 1988. These
companies with proposed American paid-up capital exceeding
M$488.3 million (US$184 million) have the potential to make
the United States of America a force to be reckoned with in
the Malaysian manufacturing environment. The presence of
such big names as ESSO, Goodyear, Baxter, General Electric,
Monsanto, National Semiconductor and Motorola and also a
number of small and medium-sized American companies is an
indication that Malaysia is becoming increasingly well-known
in the United States.
3. Still, despite this indication of the confidence of
American investors in the Malaysian investment environment,
some of you may have had your impressions coloured by the
reports that have appeared in some international media over
the last year or so. But Malaysia would not be economically
and financially sound today if the reports were accurate.
We would welcome anyone to come and cross-check the facts.
Ladies and Gentlemen,
4. I would like to take this opportunity to mention to you
some key aspects of the Malaysian investment environment
that could be of interest to you. In respect of the
political situation in our country, we have one of the most
stable democratic governments among developing countries and
in fact even among some developed ones. Recent inter-party
disagreements that you may have read or heard about is
nothing new within the democratic process and in fact is an
indication of a healthy and vibrant democracy. I should
think that western societies, concerned with the status of
democracy among developing countries, should be more
apprehensive if there is a total lack of dissension within
and between political parties.
5. Realising the importance of racial unity, political
stability, development and economic growth, 13 political
parties in Malaysia have joined together to form the
National Front, the coalition which forms the government.
The result is that all the different races are represented
in the Government and issues or problems are discussed in
the meeting rooms frankly and rationally and the consensus
arrived at are in the interest of all races. We have no
need for differences to be resolved in the streets. The
result is that there is peace and stability in Malaysia.
6. The fact that the National Front and its predecessor,
the Alliance, have won the elections and formed the
Government since independence 31 years ago, clearly reflects
the people's endorsement and confidence in the government's
policies. At the same time the opposition have always been
able to win seats and to make their voices heard in
Parliament and elsewhere. Clearly democracy works and
delivers in Malaysia.
Ladies and Gentlemen,
7. I would now like to briefly touch on the various
aspects of Malaysia's overall economic performance. The
Malaysian economy continues to accelerate its growth from a
rate of 5.2% in 1987 to a projected 7% in 1988. About
two-thirds of the growth originates from expansion in
private spending with consumption growing at 7.3%, whilst,
in the first eight months of 1988 investments have
significantly increased eight times over the same period in
1987. Malaysia's strategy of export-led growth, in which
American companies are playing an important role, is
continuing to pay dividends and strong exports indicate that
output growth for the manufacturing sector will accelerate
to reach 14%. The sheer magnitude of export earnings
brought about by strong performances in both commodity
exports and exports of manufactured products has allowed the
economy to enjoy a substantial current surplus in the
balance of payment of about M$6 billion (US$2.3 billion).
And this is achieved despite substantial growth of imports.
8. Since independence the Malaysian bureaucracy had grown
rapidly. Much of this is due to the formation of statutory
authorities and Government business enterprises. This huge
bureaucratic machinery has been a burden to the nation.
Accordingly we have decided to shed some of it through
privatisation of numerous Government run services. Todate,
the government has privatised 14 government-owned or
operated projects and these include, among others, a
container terminal, a national airline company, a national
shipping company, roads and bridges, a water supply project
and a power transmission project. The government is now in
the midst of preparing a major master plan for
privatisation. Within this master plan would be programmes
relating to the privatisation of ports, public utilities and
railway. Postal services and the running of airports are
also under study for privatisation.
9. It is the intention of the government to encourage
private sector initiative and entrepreneurship. Foreign
participation is both welcomed and encouraged in the
privatisation programme especially in areas where the
technical, business and managerial expertise can contribute
towards improving the efficiency and productivity of the
privatised agencies. Also, as the domestic capital market
may be somewhat limited in its capacity to take up the
quantum of investment required for major projects, foreign
capital participation would most certainly be welcomed.
10. Whereas we see privatisation as providing a strong
impulse for growth, we nevertheless see the future of
Malaysia basically as an economy that is based on the
production and export of increasingly more sophisticated
goods which will require continuous inputs from foreign
investors. One area is the processing of our raw materials
into finished or semi-finished products before they are
exported. Malaysia, as you all know, is among the world
leaders in the export of raw materials such as rubber, palm
oil, tin, hardwood timber, gas and crude oil. We also
export cocoa and a range of other mineral and non-mineral
products. Our attempts to move Malaysia from being merely
an exporter of primary raw materials, to an exporter of
finished or semi-finished products have already met with
some success. However, considering the quantum of raw
commodities produced by Malaysia, we feel that we are still
scratching the surface of the potential in this area.
11. In addition to our raw materials we have an abundance
of well-educated, easily trainable pool of workers and
managers. While wages are not as low as those in some
neighbouring countries, this is balanced by the good
infrastructure and services obtainable in Malaysia. Roads,
telecommunications, ports and airports, power, etc are
comparable to those in developed countries. It is for this
reason that we are now coming close to be the biggest
exporters of microchips and room airconditioners in the
world. We are also very big in the manufacture and export
of a variety of domestic appliances.
12. Malaysia's combination of raw materials, manpower,
energy, infrastructure, realistic government policies and
attractive incentives provide investors from the West an
Eastern base from which to launch the export drive into the
lucrative markets of the Pacific Rim. Most certainly,
Malaysia presents you with a springboard to the ASEAN market
and also to Japan and China. The fact that Japanese
companies, driven out of Japan by the rising Yen and other
costs, are now coming to Malaysia to manufacture their
products to be exported back to Japan, is testimony to the
strength of the Malaysian environment. I need not tell you
that the Japanese market is opening up rapidly and
manufacturing in Malaysia will make you more competitive in
this sophisticated market.
Ladies and Gentlemen,
13. I would also like to touch briefly on some aspects of
our investment policies that could have a bearing on your
investment decisions. In respect of equity, you can have up
to 100% if you manufacture for export. We are very liberal
with expatriate staff although we would advise you to use
qualified Malaysian staff in order to reduce cost. Some
American manufacturing companies are headed by Malaysians
and have exclusively Malaysian executives. And they have
done very well. But the choice is largely yours. As
regards the movements of funds, there has been no
restriction. You can take your profits and capital out any
time you want. If there is any form-filling involved, it is
only for statistical purposes.
14. The Government's policies that have taken cognizance of
the needs of foreign investors, are those that have helped
to create the investment environment that we have today in
Malaysia. Those companies that have invested and are
operating in Malaysia can attest to Malaysia's economic
strength and healthy investment climate.
Ladies and Gentlemen,
15. Malaysia is a multi-racial and multi-religious nation.
The harmony of our nation depends upon all the communities
working together in friendship and understanding for the
common good. This is happening in Malaysia. Malaysia is
known for its racial and religious tolerance. Malaysians
fully realise the importance of unity, racial harmony and
religious tolerance. Malaysia's progress, prosperity and,
indeed, survival depend on them. We cannot afford to have
demagogues preaching racial hatred and religious
intolerance. It is better to act against them before, than
after they succeed in igniting religious or racial riots and
disorderliness. Preventive detention is abominable but if
democracy is to survive, it must be protected from
irresponsible opportunists.
Ladies and Gentlemen,
16. The industrialisation programme of Malaysia cannot be
carried out by Malaysians alone. We still lack the know-how
and even the entrepreneurial skill. We accept and welcome
foreign participation. We can really help to make you and
your products even more competitive. We do hope that along
with some of your selling missions should come investors as
well, ready to participate in our industrialisation.
Ladies and Gentlemen,
17. We, in Malaysia, are aware that investors seeking
offshore bases for their operations, will be examining not
only Malaysia but also other countries, both developed and
developing, before a final investment decision is made. We
are also aware that critical parameters for any investment
decision other than the technical viability of the project,
would be factors such as political stability, economic
strength, the policies and predictability of the Government
affecting foreign investments, infrastructure, banking and
finance, the local business environment and the quality of
life that the country offers. I believe you will find that
Malaysia provides all these ingredients.
Thank you.
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