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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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