Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : SHANGRI-LA HOTEL, KUALA LUMPUR (K.L)
Tarikh/Date : 07/10/91
Tajuk/Title : THE MEETING OF ASEAN
ECONOMIC MINISTERS
Let me first of all bid you a warm welcome to Kuala
Lumpur and to this 23rd meeting of the ASEAN Economic
Ministers. I hope that your two days of discussions and
your subsequent meeting with the United States Trade Repre-
sentative will be successful in bringing about greater ASEAN
economic cooperation and integration. As you know, next
year the Fourth ASEAN Summit will be held and ASEAN leaders
will again be reviewing the progress achieved and so plan
new directions for the future. Unfortunately the record of
achievements, particularly in the field of economic cooper-
ation, has been dismal. This AEM meeting must, therefore,
come out with bold and concrete recommendations to the ASEAN
leaders that will push ASEAN economic cooperation forward
and fast. This is crucial if ASEAN is to survive as a via-
ble organisation in view of the dramatic changes that are
occurring worldwide.
2. The political and economic scenario of the world under
which ASEAN existed in the 70's and 80's has been radically
transformed. The socialist-command economies of Eastern
Europe have collapsed and are being replaced by a free mar-
ket system. The Soviet Union is undergoing a political and
economic upheaval of unprecedented proportions which will
move it away from the rigid centrally planned economies of
the past to a more market oriented system. China has been
opening up her economy to world trade and investments for
the past decade and has fairly successfully juxtaposed a
free market system with a centrally planned economy. There
is no doubt that China today is economically healthier than
the China of the Cultural Revolution and Maoism.
3. Elsewhere the trend is the same. Countries are stead-
ily discarding ideologies and structures based on state mo-
nopolies and protection which had failed to generate
economic growth and improve their people's standard of liv-
ing, in favour of more liberal open-market policies and the
active participation of the private sector. This is evident
in Latin America, parts of Africa and Asia.
4. The ASEAN countries have always been free marketeers.
The rapid economic growth of ASEAN members since their inde-
pendence is testimony to the effectiveness of a free eco-
nomic and trading environment. However it is important to
remember that the mere espousal of free trade and democracy
will not generate economic growth or equitable wealth dis-
tribution. We are seeing now the early failures of the free
market and democracy in the former communist countries. In-
deed their situation now is worse than when their economies
were centrally planned. To succeed, the people must under-
stand the limits of democractic freedom and the skills of
entrepreneurship and management necessary for the free mar-
ket system to deliver results. Additionally, free trade
will not succeed if the trading partners practice
protectionism.
5. It is ironical that while we have adopted the liberal
economic policies based on free and open markets recommended
by the West, they are now forming trade blocs which would
effectively restrict entry of our products into their mar-
kets. The failure of the GATT talks and the Uruguay Rounds
is due to the erstwhile free traders abandoning free trade
and opting for managed trade. Trade blocs are being formed,
by whatever name they may be called. Tariff and non-tariff
barriers are being openly erected. Left unchecked there is
a very real danger that international trade will not only be
restricted, but will be restricted by those countries most
capable of restricting trade.
6. It is therefore in the interest of the world economy
that the Uruguay Rounds is brought to a successful conclu-
sion. ASEAN and other countries which believe in free trade
must use whatever influence they have on the developed coun-
tries, in order that they will continue their commitment to-
wards the success of the Rounds.
7. The reality of the situation is that the ASEAN coun-
tries are dependent on exports to the developed countries
for their growth. If the developed countries close their
markets, then ASEAN economic growth will be retarded. It is
imperative that ASEAN countries cooperate closely in order
to ensure that free trade continues. But ASEAN by itself is
not strong enough to protect free trade. Its combined mar-
ket is only one-tenth of the market of the NAFTA countries
or the single European market.
8. If ASEAN is to have a bigger say in trade negotiation
internationally, then it must work together with the East
Asian countries. The East Asia Economic Group or EAEG will
be sufficiently strong to gain the respect of both the EC
and the NAFTA. Even presently the countries of South East
and East Asia together form a formidable market. But the
potential for growth of the EAEG is far greater than that of
the EC and NAFTA. This fact will also increase the clout of
the EAEG.
9. It is important that the EAEG should not be a trade
bloc. All the countries of the group should be free to
trade with anyone under GATT rules. But when it comes to
negotiation to maintain a free trading system for the world
then the group should meet to discuss issues and take a com-
mon stand. It would be very difficult for the trading blocs
of Europe and America to ignore the common stand of the
EAEG. Since the EAEG stands for free trade, its strong in-
fluence in the GATT rounds is likely to yield positive re-
sults.
10. The ASEAN experience is that although our association
is not basically economic, the members of the group are able
to learn from each other the best way towards developing our
countries. It is not an accident that of all the developing
countries of the world, the ASEAN countries are the most
consistently successful in development.
11. There will be members of the EAEG which will be econom-
ically weak. If the experience of ASEAN is anything to go
by, these weak countries will learn from the mistakes and
methods of the successful countries of the groups and will
soon develop and prosper. And when they prosper they will
become better markets for ASEAN goods and so contribute to-
wards ASEAN prosperity. Thus the EAEG will evolve into a
very strong grouping able to influence trade negotiations in
favour of free trade for the whole world.
12. Unless we have this group, ASEAN and everyone will be
at the mercy of the trade blocs of Europe and America.
There will be so many conditionalities and linkages with
non-trade issues that the growth of ASEAN countries will be
retarded. We will all remain developing countries forever.
13. I have been extolling the virtues of the East Asia Eco-
nomic Group as an instrument to keep world trade free. We
expect this meeting of ASEAN Economic Ministers to endorse
fully the positive recommendations of the officials tasked
with examining the concept. However we will understand if
consensual endorsement is not possible. Malaysia values its
association and friendship with its South East Asian
neighbours above everything else. It does not wish to be a
cause of embarrassment to anyone.
14. While we strive for the formation of the EAEG we should
continue to work on the liberalisation of the ASEAN market.
Malaysia welcomes the proposal of the Prime Minister of
Thailand for an ASEAN Free Trade Agreement. The potential
for intra ASEAN trade is big but we have to open up our mar-
kets if we are to realise this potential.
15. The economic liberalisation policies undertaken by
ASEAN countries mean that the private sector must assume a
greater role in promoting trade and economic cooperation.
It is disappointing to note that the number of ASEAN joint
ventures is still small despite the existence of the AIJV
and the Brand-to-brand Complementation and the preference
given to their products under the PTA. The ASEAN private
sector must prepare itself to meet the challenges by foster-
ing greater linkages and networking among themselves.
16. ASEAN industries must increase their efficiency and
competitiveness in order to survive and prosper. They could
not depend any longer on a closed and protected home market
while ASEAN countries are striving to forge a bigger ASEAN
market by reducing tariff and non-tariff barriers. They
must be ready to face the challenges and the opportunities
that will arise out of a greater ASEAN economic cooperation.
17. The world is already moving towards a globalised pat-
tern of production in which locations and nationalities have
given way to efficiency and competitive advantage. ASEAN,
and particularly its private sector, cannot afford to remain
parochial. It must exhibit drive and dynamism and be the
prime mover for ASEAN's progress.
18. In business, economies of scale is most important. And
economies of scale depend on markets. While the markets in
each ASEAN country may be able to support some industries,
there are other industries which can only be viable and com-
petitive if the market is ASEAN-wide. For these industries
the ASEAN countries must be prepared to share their markets.
Duplication of such industries in every ASEAN country will
only reduce viability and competitiveness. In the small and
medium industries which play a supporting role to the major
major industries.
19. It would be far better at the initial stage, at least,
to allocate certain industries to each one of the ASEAN na-
tions -- whether major industries or the SMIs. When the
market in each country grows sufficiently that each country
can have the particular industry and still be viable, then
the country concerned should have that industry for itself.
20. All that I am saying is not new of course. It was the
basic idea behind the AIJVs. But logic and reason and even
economic sense do not always prevail. And so today the
ASEAN countries are still very far from becoming an economic
group. We are more successful in cooperating politically.
However we should persist. One day ASEAN may yet be an eco-
nomic group.
21. Environmental issues have lately come to the fore to
join other economic and trade issues which already burden
ASEAN economies. I have spoken at length on these issues in
other fora and have pointed out the dangers of using them as
leverage in trade negotiations. This problem can only be
solved by cooperation between developed and developing coun-
tries and not through confrontational campaigns by some
groups.
22. We in ASEAN can no longer remain passive and indiffer-
ent to these campaigns hoping that they will, in time,
fizzle away. They have assumed serious proportions and are
being used to obstruct the economic growth of the developing
countries. The particular NGOs have enormous resources and
have the support of the so called 'free western media'.
ASEAN must coordinate its efforts to counter these campaigns
before they become more damaging to our economy. We can do
this through a massive information campaign at the interna-
tional level, and by adopting a common stand on environ-
mental issues. This will, no doubt, involve financial
back-ups, but the price for not doing it now will be much
higher later.
23. It must be pointed out that we in ASEAN are not uncon-
cerned about environmental pollution. We are very concerned
but our capacities to deal with them are limited. The de-
veloped countries should have a more positive approach
rather than threaten to use trade and aid as instruments to
force us into doing those things which will retard the
growth of our economy and the well-being of our people.
24. A case in point is the current forest fires which have
cast a thick haze over our countries. Forest fires are more
damaging than the controlled extraction of timber. Forest
fires destroy everything, every species of trees and plants,
animals and insects and whatever else that thrive in the
tropical forests. Forests fires lay bare tens of thousands
of acres of land which will be leached and washed into the
rivers when the rains come. The people who either live in
the forests or depend on it for their daily bowl of rice are
rendered destitute; some losing their homes and even their
lives. And when forests burn, tons of carbon dioxide and
probably other noxious gases are released into the atmos-
phere. In other words, the pollution of the environment by
fires in the tropical forests is far, far greater than that
caused by the extraction of timber.
25. But whereas the whole western world is in an uproar
over our extraction of tropical timber and threatens to boy-
cott our produce and destroy our economies, there is not a
squeak about the forest fires which periodically plague us.
Perhaps it is because the haze does not spread to their
countries. Perhaps it is because they cannot sound noble as
they do when they champion the Penans.
26. Yet there is much that is positive that the rich coun-
tries of the North can do about our forest fires. They can
mount emergency operations to put out the fires. They can
fly in their massive fleets of water-bombers to dump water
on the fires. They can provide heavy equipment and pay for
the cutting and removal of trees to create fire-breaks.
They can do massive cloud-seeding to create rain. Indeed
with their ingenuity and wealth, they can put out our fires
as they extinguish the oil-well fires in Kuwait with such
handsome profits. But as we all know none of these things
is happenning. There is not a word from the
environmentalists of the North or their proxies here.
27. On this and other issues and attempts to link non-
trade matters to trade, ASEAN must speak with one voice and
put forth our case with vigour. Individually we will be
victims of the global campaigns now being mounted to make us
permanent developing countries. United we stand a reason-
able chance. Allied with other neighbours our chances be-
comes even better.
28. Consonant with efforts to forge greater trade and eco-
nomic cooperation, ASEAN should also look into areas of
strengthening cooperation among its research institutions
both in the scientific and social fields. I realise that
this has already been done to some extent in certain areas
but more can be done. ASEAN countries spent large sums of
money each year on foreign consultants to conduct all sorts
of studies while the same expertise are available within
ASEAN at a fraction of the cost.
29. Research in commodities has been one of ASEAN's
strengths given its importance to ASEAN's economies. While
it is accepted that this is something that countries would
be reluctant to share because of its economic implications,
we cannot totally discount the possibilities of cooperation.
A good example is the case of palm oil and coconut oil.
Both these products are victims of a vicious campaign to
discredit them by certain groups overseas. Through more
sharing of information and coordination of efforts among the
institutions and agencies in the countries concerned, cam-
paigns such as these could perhaps be countered more effec-
tively and at lower cost.
30. As ASEAN forges ahead with various programmes at eco-
nomic and trade cooperation, we must not neglect the impor-
tant role of the ASEAN Secretariat in these endeavours and
indeed in the functioning of ASEAN as an organisation. It
has been said that an organisation can only be as good and
effective as the secretariat that supports it. There has to
be a revamp of the Secretariat and also of the various ASEAN
Committees to ensure that decisions are made expeditiously
and implemented. As the thrust of ASEAN's activities will
be in the economic field, this aspect will need to be
emphasised and strengthened in any future reorganisation of
the ASEAN structure.
31. It is now almost four years since the last ASEAN Summit
was held in which various proposals were made to promote
further ASEAN economic cooperation. Unfortunately the pace
of progress is still painfully slow. For various reasons
ASEAN is still unable to overcome the hurdles that lay in
the path of cooperation. We seem to lack the political
courage needed to move ahead and implement cooperative
projects that will benefit us in the long term. If ASEAN is
to enter the 21st century as an economic and political force
that will be respected by others, then we would have to take
the painful decision now before events overtake us.
32. On that note I have much pleasure in officially declar-
ing open this 23rd meeting of the ASEAN Economic Ministers
and wish it every success.
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