Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : THE NUSA INDAH CONVENTION CENTRE,
BALI, INDONESIA
Tarikh/Date : 04/03/91
Tajuk/Title : THE INTERNATIONAL CONFERENCE ON
"THE ASEAN COUNTRIES AND THE WORLD
ECONOMY: CHALLENGE OF CHANGE"
Excellencies;
Distinguished Participants;
Ladies and Gentlemen,
I would like to thank the organisers for inviting me to
address this crucial conference. It is crucial because we
meet at a time when the international situation is more
fluid than at any time since the Second World War.
2. Despite the Age of Confrontation and Cold War being be-
hind us we still do not seem to know where we are going.
Our future history is very much in the making with no clear
indication as to the direction it will take.
3. At this crucial turning point, the course that the
states of Asean must take cannot just be to let others shape
that history. We cannot be mere objects of international
relations. With the "East" in turmoil, the "South" in con-
tinuing crisis, and the "West" on an economic collision
course, an active Asean can contribute positively. It is
incumbent upon us to play a productive role in the making of
the new international economic order.
4. This is a time, therefore, for the most creative Asean
initiatives for a productive peace. Our joint collaboration
must go beyond our Asean sub-region, beyond the region of
Southeast Asia, beyond East Asia, even beyond the Pacific
region.
5. We must of course be aware of our limited weight in the
international arena. There is every reason for humility.
But the corruption arising from a sense of powerlessness is
as bad as the corruption of power.
6. If we do not in our own modest ways try to shape his-
tory, then we must not bemoan our fate later.
7. In the last two generations, too much of the creative
energies and resources of the world were diverted from pos-
sible cooperation to deadly East West confrontation, from
the task of enhancing the prosperity of the world's peoples
to the pursuit of national security imperatives. Too much
of the world's resources were diverted to conflict, diverted
away from the demands of development.
8. We have seen the spread of democracy and democratic
tendencies, most spectacularly, of course, in Eastern
Europe. Democracy may mean freedom from political op-
pression but not necessarily from economic and developmental
oppression. The proponents of democracy are not averse to
international dictatorship.
9. The process of turning battlefields into market-places
is continuing apace.
10. Throughout the world, most dramatically of course in
what was once called the Socialist Bloc, we see a swing to-
wards the free-enterprise system. The collapse of Communism
as an ideology and the command economy as an economic method
and the turn towards the market system, can contribute to-
wards higher productivity nationally and greater prosperity
for the entire global economic system.
11. But at the same time, we would be extremely foolish not
to be fully aware of the negative side of the equation.
12. There is today an economic recession in the United
States, Canada, Australia, New Zealand and the United
Kingdom democracy and the free market notwithstanding.
Japan and Germany have slowed down. In the 1960s, the OECD
countries, on which so much of Asean's economic performance
is hinged, grew by an annual average of 5 per cent. In the
1970s, they grew on average by 3.1 per cent a year; in the
1980s by an average of 2.9 per cent. Whereas there is every
hope that the recession economies will not be down for long,
we would be foolish to predicate our future on a vigorous
and fast growing world economy.
13. In the 1990s we must also expect international trade to
grow at a less than robust rate. This again will be no sur-
prise given that in the 1960s world trade grew annually by
an average of 8 per cent, in the 1970s by 6 per cent, in the
1980s by 4.4 per cent.
14. A less than vigorous trade growth regime in the
forseeable future should also be no great surprise given the
rise of protectionism and managed trade, the movement to-
wards trade blocs, and the general erosion of the global
trading system. We can only hope that GATT will not in the
end stand for a general agreement to talk and talk and no
more than that.
15. Real commodity prices will continue their downward
trend and will offer no relief to heavily-indebted develop-
ing countries that are still dependent on the exports of ag-
ricultural and other raw materials. The global debt crisis
too will not go away.
16. There is a danger of a global credit squeeze arising
out of the diversion of German financial flows to the east-
ern part of Germany and Eastern Europe, the reduced sur-
pluses of Japan, the sustained high deficits of the United
States, the problems of the banking and financial system in
Japan, the United States and elsewhere, and the investment
of Japanese surpluses increasingly in their own domestic de-
velopment.
17. There are a host of problems for the world arising out
of the structural weaknesses of the world's biggest economy
and biggest debtor nation, the United States. We now live
in a world where the developing countries are deprived of
the past leverage of "defection to the other side". There
is the sole American giant, with immense problems at home
and no longer driven by the imperatives of the Cold War
abroad. We must surely expect a more demanding United
States, desirous of greater "help" and "adjustment" from
others.
18. We see a situation today of a dramatic rise in the pol-
itical, diplomatic and military clout of the US and a severe
erosion in its economic position and welfare. We can expect
the application of that enhanced political, diplomatic and
military clout to shore up the economic position and to en-
hance the US economic welfare. The increased pressures will
be political and social as well as economic. Military ad-
ventures cannot be excluded.
19. We cannot rightly expect the clash of the economic gi-
ants -- the United States, Japan and the European Community
-- to attenuate. We should expect it to escalate, making it
incumbent upon us to make sure that we are not squeezed in
the middle, and caught in the cross-fire.
20. We should take into our calculations the possibility of
greater Eurocentricism, and a greater EC to include the
Eastern European countries. We must expect continuing and
serious instability in the previously tightly controlled
states of the Soviet Socialist Republics and Eastern Europe.
Ladies and gentlemen,
21. This rough balance sheet of longer-term positive and
negative fundamentals and uncertainties reminds me of the
very first paragraph of Charles Dickens' historic novel, "A
Tale of Two Cities". Let me quote the entire paragraph,
written in one long sentence, to describe the Europe of
1775. Dickens wrote of that period:
"It was the best of times, it was the worst of times,
it was the age of wisdom, it was the age of foolishness,
it was the epoch of belief, it was the epoch of incredulity,
it was the season of Light, it was the season of Darkness,
it was the spring of hope, it was the winter of despair,
we had everything before us, we had nothing before us,
we were all going direct to Heaven, we were all going
direct the other way -- in short, the period was so far
like the present, that some of its noisiest authorities
insisted on its being received, for good or evil, in the
superlative degree of comparison only".
22. I believe that what Dickens wrote of the Europe of 1775
is superlatively apt in describing our world of the early
1990s. It is indeed the best of times and the worst of
times. It is indeed the age of wisdom and the age of
foolishness. It is indeed the epoch of belief and the epoch
of incredulity. It is indeed the season of Light and the
season of Darkness. It is indeed the spring of hope and the
winter of despair. We do indeed have everything before us
and nothing before us.
23. In the case of Europe after 1775, there was an era of
turmoil and devastation, culminating in the Napoleonic Wars.
Order was only restored with the Congress of Vienna of
1814-15.
24. Our world today cannot afford two generations of tur-
moil. And Asean must contribute to the collaborative peace,
through balanced economic development worldwide.
25. Globally there is a chance for a more effective and
productive United Nations. Asean should act in concert to
ensure that the United Nations develops into an even-handed
global authority, the conscience of all mankind and protec-
tor of the weak against the aggression of the strong. We
should work together to make sure that the United Nations is
re-invigorated and will serve to deny Thucydide's Conclu-
sion: "that in the affairs of states, the strong will demand
what they will and the weak must yield what they must".
26. The Asean countries and many developing nations which
are so dependent on an open trading system -- much more de-
pendent than any of the great trading nations such as Japan,
Germany and the United States -- must make the GATT system
work. The tide of protectionism must be halted and rolled
back. The movement towards mercantilist, inward-looking,
and "the rest of the world be damned" trading blocs must be
reversed. The trend towards managed trade, bilateralism and
unilateralism, must be stopped dead in its tracks. Asean
must help to secure the open trading system that will save
not just ourselves but the very nations which are busy
erecting trade barriers.
27. However before Asean can hope to influence the economic
course of the world, we must strengthen Asean itself, all
the three parts of Asean. We must strengthen the Asean
Peace, the Asean Concert and the web of economic and social
relationship between us in the Asean Community.
28. First, the Pax ASEANA which we have successfully con-
structed since the mid-Sixties must not be taken for
granted. It has been one of the great successes of the
post-war world, the more remarkable because it has been a
Pax without an Imperium. The statesmenship of the founding
fathers will be prominently recorded in the history of the
region. The leadership of Asean will be required in the
days ahead to strengthen the Asean Peace. We would be very
foolish to take for granted the structure of understanding,
mutual respect, trust and goodwill that has been estab-
lished. The Asean Peace must be an active peace, which must
be in constant upkeep, and in perpetual construction.
29. Second, the Asean Concert, our joining of hands to deal
with the outside world. The wide agenda for Asean initi-
ative cannot be actualised without a substantial strengthen-
ing of the Asean Concert in the days ahead, when the
"Cambodia cement" and the defensive anti-Communist impulse
will recede further into history.
30. Third, we must indeed launch bold and innovative initi-
atives with regard to enhancing the level of economic coop-
eration between us. We should aspire to achieve a level of
performance on the economic front that we have secured with
regard to our political and diplomatic cooperation.
31. There is now a clear Asean consensus on the strengthen-
ing of the Asean Secretariat, to enable it to respond to the
challenge of internal cooperation and the challenges of ex-
ternal action in the 1990s. We must quickly turn consensus
into concrete reality.
32. Much will have to be done at the Fourth Asean Summit
that will be held in Singapore. And much will need to be
accomplished in the run-up to the Summit. With regard to
this, I believe it is time for Asean to consider a new ele-
ment, an Asean Informal Meeting of Heads of State which
should meet regularly in a relaxed ambience between the
formal Summit Meetings. Such an informal gathering, away
from the cameras and the pressure to produce some dramatic
out-come, held for the purpose of merely exchanging views
and perspectives and keeping in close touch, would contrib-
ute to the process of ensuring fullest consultation between
us. This should be over and above the bilateral meetings.
I believe that it cannot be stressed enough that we of Asean
at all levels must be engaged in a constant process of can-
did consultation.
Ladies and Gentlemen,
33. Let me now turn to a broader geographical canvas: what
Asean should now be actively considering with regard to
Southeast Asia. International relations in Southeast Asia
has moved from a situation of warm war to cold war. We have
now progressed to a cold peace. It is time to move our re-
lationship towards a cooperative peace.
34. The time has come for Asean to prepare for the making
of a new Southeast Asia. Asean must move forward with the
creative and comprehensive engagement of the other states of
the region.
35. Southeast Asia should no longer be at sixes and threes.
The mountain of distrust and misunderstanding must be re-
moved. A divided region is not in the interest of any re-
gional state. It is in the interest of all of Southeast
Asia that we secure a system composed of states which are
economically prosperous, socially dynamic, strategically se-
cure, domestically at peace and politically unpolarised.
The Asean states should act now to hammer out the acceptable
modalities and the most appropriate mechanisms.
36. In 1967, we together launched the first act of regional
reconciliation. The outcome was Asean.
37. We must now stand ready to launch the second phase of
regional reconciliation, to achieve the objective Asean set
out from the moment of its birth: the creation of a South-
east Asian system of states that are at peace with each
other, involved in a dynamic and vigorous economic and poli-
tical relationship of mutual respect and mutually beneficial
cooperation.
38. Asean now already has the Bali "Treaty of Amity and Co-
operation in Southeast Asia" which sets out the fundamental
precepts for political, economic, social, technical and sci-
entific cooperation between us. Papua New Guinea, amongst
the non-members of Asean, has acceded to the Treaty. Asean
should now welcome any initiative taken by any of the re-
gional states to accede to this admirable and comprehensive
treaty.
39. The idea of inviting initially the foreign ministers of
Vietnam, Laos and Myanmar to a dialogue with the Asean For-
eign Ministers, and the Heads of Government of these coun-
tries to a dialogue at the next Asean Summit has also been
put forward. These are suggestions that should be given se-
rious study. In the meantime, let me inform you that the
Government of Malaysia encourages the fullest private sector
participation in the economies of the non-Asean states of
Southeast Asia. Southeast Asia is now no longer a
battleground. Let us proceed as fast as we possibly can to
turn it into one prosperous marketplace.
Ladies and Gentlemen,
40. Let me now turn to the proposal for an East Asia Eco-
nomic Group (EAEG).
41. In the first place let me emphasise that the Group is
not intended to be a trade bloc. Regional economic
groupings are acknowledged as legitimate means for
neighbours in a region to improve their economic well-being.
Accordingly preferential treatment and the removal of trade
barriers within a group are legitimate and proper.
42. But a grouping becomes a trade bloc when the member
states are no longer allowed to negotiate trading terms on
their own with nations outside the group. The European Com-
munity claims that it is not a trade bloc but the fact is
that even now import quotas and preferential treatment are
based not on the requirement of individual member countries
but on the EC as a whole. In 1992 this will be formalised
and there is justifiable fear that trade between the EC
countries will be classified as domestic with all that that
implies and quotas will be fixed for imports from outside of
Europe, quotas designed to protect the industries and agri-
cultural produce of Europe as a whole.
43. The United States for its part has entered into a free
trade union with Canada and will shortly do the same with
Mexico. The United States declared objective is to make the
whole of North, Central and South America a single economic
grouping. The degree of exclusivity in trade that will re-
sult from this grouping is as yet a matter of speculation
but such a grouping cannot but be protectionist to a degree.
44. The countries of Europe and America have a reputation
for economic arm twisting, though not always by Governments.
Thus "human rights" records, trade unionism, exchange rates,
media treatment, environment protection, "democratic prac-
tices", quality and health standards and a host of other is-
sues are used for the suppression of the economic growth of
potential competitors. The action taken against the so-
called NICs are illustrative of this. Alone and bereft of
friendly support, these countries are not in a position to
even protest. Indeed open protest might invite even more
severe punitive pressures.
45. It is paradoxical that even as the centrally planned
Eastern bloc economies espouse the free market systems as a
solution to their economic problem, the erstwhile free trad-
ers of the west are opting for a controlled international
marketing system. But the fact is that with the formation
of the European Union and the American free trading zone,
that is what is happening.
46. The question is what do we in this region do to rescue
the free trading system of the world? Do we refuse to ac-
knowledge the gloomy facts? Do we hush up things? Do we
look the other way? Do we accept them without a whimper?
Or do we confront them; the reality of those trade blocs,
that is, not the nations.
47. Two wrongs do not make one right. We in East Asia must
not form a trading bloc of our own. But we know that alone
and singly we cannot stop the slide towards controlled and
regulated international commerce; which in fact is no dif-
ferent from the command economies of the socialist soviets,
only the scale is international; which is obviously going to
replace free trade if the EC and the American Union are al-
lowed to rewrite the rules. To stop the slide and to pre-
serve free trade the countries of East Asia, which contain
some of the most dynamic economies in the world today, must
at least speak with one voice.
48. It will be impossible to do this unless we can consult
each other, unless we can have some form of grouping which
is recognisable. A free trade arrangement between us is im-
possible at this point in time. There is too much disparity
in our development. An Economic Community after the EC pat-
tern is far too structured and is well nigh impossible to
achieve. But a formal grouping intended to facilitate con-
sultation and consensus prior to negotiating with Europe or
America or in multilateral fora such as the GATT is not too
far-fetched an idea. It is also not against the GATT prin-
ciple, nor will it run contrary to membership in such
organisations as the APEC, in which the United States and
Canada are members while having an economic union with each
other.
49. Because of its market size alone, the EAEG will be lis-
tened to. But it will also have the knowledge, the technol-
ogy and the skills which can become bargaining counters in
any trade off with the trading blocs of Europe and America.
50. Membership of the Group by developing countries should
serve to remind the other members of their responsibility to
the developing world. A concerted effort can then be made
to boost the economic growth of the weaker members, and in-
deed to help the developing world generally.
51. The mere existence of the group, backed as it is by the
massive combined economic strength of the members should
help to retard the slide towards trade blocs and
protectionism. At the same time the group can foster better
trade and development within the group. Given a dedication
towards mutual help, the Group can survive without the
constrictive structuring of a formal Economic Community.
52. After the initial negativism following the mooting of
the Group, it is heartening that lately there have been more
positive pronouncements from Europe and America. The mem-
bers of Asean now understand the EAEG concept and support
it. What remains is for us to formally propose the concept
to the East Asian nations outside of Asean. This is a task
for all Asean nations.
53. I am sure that once it is understood that the EAEG is
principally concerned with trade and the maintenance of free
trade, that it does not compete with the Asean group, that
it is GATT and even APEC compatible, the fears regarding its
formation and its role will disappear. World trade would
benefit from EAEG rather than be stifled by it.
Ladies and Gentlemen,
54. As I said at the beginning, the peace dividend that
should come with the ending of the East-West confrontation
is not with us yet. Indeed the situation is very fluid,
with signs of recession everywhere and new centres of ten-
sion and instability.
55. In espousing democracy and free enterprise, nations are
finding that it is easier to declare the intention, or to
overthrow authoritarian regimes even, than to obtain tangi-
ble benefits from democratic freedom and the market economy.
56. Peoples power is fine. It can remove dictators and
corrupt Governments. But power corrupts and peoples power
can be no less corrupting. Once it is realised that poli-
tical power can be achieved through getting people on to the
streets, the potentially corrupt can also resort to this
weapon for their own ends. Indeed, the overthrow of the
corrupt often results in the installation of another leader
who is or becomes equally corrupt. It is easier to over-
throw allegedly corrupt Government than to materialise a
Government that can rehabilitate the nation.
57. Democracy must not be an end in itself. It must remain
a means to an end -- the installation of good Governments in
the true sense of the word. Making a religion of democracy,
accepting everything that is done in its name
unquestioningly will only destroy the faith in the efficacy
of the system. Forcing it down the throat of people who are
not ready for it will not do any good either.
58. To succeed, democracy has to become a culture of the
people. Its shortcomings must be recognised and accepted
and circumspection must be applied to it as with every sys-
tem of Government.
59. The end of the Cold War and East-West confrontation and
the universal acceptance of the liberal democracy concept
are to be welcomed but the dividend can only come if we ap-
preciate the need to organise and arrange the system that
will replace confrontation. There will be no dividend if in
the affairs of nations the Thucydide's Conclusion still ap-
ply: "that the strong will demand what they will and the
weak must yield what they must".
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