Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : TOKYO
Tarikh/Date : 19/10/92
Tajuk/Title : THE INSTITUTE OF MITSUI AND COMPANY
FOR TRADE AND ECONOMIC
STUDIES INCORPORATION
Mr. Kumagai,
Chairman of the Institute of Mitsui & Company
for Trade and Economic Studies Incorporation;
Distinguished Guests;
Ladies and gentlemen,
I would like to express my appreciation to Mr. Kumagai,
Chairman of the Institute of Mitsui and Company for Trade
and Economic Studies Incorporation who has given me this op-
portunity to speak here today.
2. I have been looking forward to meeting with a gathering
of Japanese business luminaries, such as this. I wish to
thank everyone concerned for making this possible.
3. I understand that this institution is the first re-
search organisation established by a general trading com-
pany. It is fitting that Mitsui and Company with over one
hundred years of worldwide business knowledge and experience
to pioneer in this field of research.
Ladies and gentlemen,
4. Malaysia's relations with Japan has been long and en-
during, nurtured by a sincere desire for cooperation between
neighbours. Over the years, our relationship has deepened
through our interdependency in trade and through industrial
linkages. It is hoped that this relationship will broaden
and deepen so as to achieve greater mutual benefit.
5. While Japan is already a developed country, Malaysia is
determined to become one by the year 2020. Towards this am-
bitious goal we will promote industrial linkages between
foreign and local companies and we will continue to promote
investments, particularly those which can upgrade our tech-
nological capability. We will produce from our educational
and training system the right mix of professionals, sub-
professionals, craftsmen and artisans to meet our industrial
development needs. We are grateful that an increasing num-
ber of Malaysians have been accepted by Japan to undergo
special training. Since the early 80's, the Japanese Gov-
ernment and the private sector have been quite responsive to
Malaysia's training needs, particularly those of our youths.
Japanese companies often go out of their way to make our
students and trainees feel at home. Of particular interest
to us is the Japanese work ethics and our trainees have been
able to absorb them. We are very appreciative of the
Japanese response.
6. The success of our industrialisation programme has cre-
ated a minor problem. Workers are no longer plentiful. To
a minor extent we have been able to overcome this by bring-
ing in some foreign labour for selected industries. This is
however not a good solution. The better solution is to have
more capital intensive and technologically- sophisticated
industries. In other words we should take the path Japan
has taken domestically. Investment in foreign countries
cannot be our solution to labour shortage. The development
of intermediate and capital goods industries will also be
promoted. Where the parties are willing we would like to
see more joint-ventures where technology transfer can take
place more readily. The listing of foreign companies in our
stock exchange is welcome. This will enable the foreign
companies to raise capital in the local market while ful-
filling the objectives of joint-ownership. Control over the
companies will not be lost by the foreign investors. Yet
they will benefit from whatever favoured treatment which lo-
cal companies are entitled to.
7. It would also be beneficial if the Chambers of Commerce
of the two countries establish good working relations. We
know how very useful MAJECA and JAMECA have proven to be.
Regional chambers in Japan can augment this.
Ladies and gentlemen,
8. In terms of trade, Malaysia is happy that trade between
our two countries is very substantial, constituting about 21
per cent of Malaysia's global trade. In 1991, our total
trade with Japan was US$15.9 billion. Despite this figure,
Malaysia is concerned with the accelerating trade deficit
currently facing us. This is because exports of raw materi-
als no longer constitute the major portion of Malaysia's
trade. Sixty-four percent of our exports are now made up of
manufactured goods largely produced by foreign-owned compa-
nies, a large proportion of which is Japanese. The foreign
exchange earnings from this do not really accrue to
Malaysia, as raw material exports do. Nevertheless Malaysia
benefits a little from the export of these manufactured
goods, produced usually by tax-exempt companies. It is im-
portant therefore to enlarge manufactured exports and buy-
back arrangements by Japanese companies can contribute much.
9. At the regional level we are happy to note that the
Indochina states - Vietnam, Laos and Cambodia - are embark-
ing on reconstruction and economic development. Valuable
resources can now be channelled to develop their economies
and provide a better life for the peoples who have long been
deprived of basic amenities. Malaysia, has particularly
good relations with these countries and this provide many
opportunities for three-way joint-ventures involving Japan,
Malaysia and the host country. Already several Japanese com-
panies are involved in ventures involving Malaysia and
Vietnam. Malaysia's keeness to rehabilitate the economies
of the Indochina countries stems from its belief that pros-
perous neighbours not only become good trading partners but
are less likely to be belligerent.
10. Malaysia is also pleased that Japan is now participat-
ing in the U.N. peace-keeping mission in Cambodia. We ap-
preciate Japan's rejection of war as a solution to
international problems. But serving with the U.N. in order
to restore peace is not the same as resorting to war.
Whether we like it or not force is sometimes needed in order
to stop violence. The situation in Bosnia-Herzegovina is a
case in point. Resolutions not backed by forceful enforce-
ment get us nowhere.
11. The Cambodians cannot resolve their problem by a con-
tinuous civil war. It will destroy them completely. With
outside help, peace and democracy may be achieved. After
that the work of reconstruction will also need foreign help.
Again Malaysia is particularly interested because it wants
peaceful prosperous neighbours and trading partners. I am
sure Japan also desires the same.
12. We, in Malaysia in particular, and ASEAN in general
welcome Japan's call for a consolidation of relationship
based on mutual confidence, trust and heart-to-heart under-
standing, espoused by Prime Minister Takeo Fukuda in Manila
in 1977. The "Fukuda Doctrine", as it has come to be
called, also reject the role of Japan as a military power.
The "Fukuda Doctrine" pledged positive cooperation with
ASEAN countries, together with other like-minded countries
outside the region.
13. We have since given due recognition to the important
role that Japan plays, and I wish to add, that this role has
been well appreciated. Japan has made full use of its eco-
nomic strength to bring tremendous economic development
through massive ODA, investments and transfer of technology.
The keen competition between Japan and the West has also
proven beneficial in that prices of most products and ser-
vices have been prevented from rising unreasonably.
14. We have high regard for Japan's membership of the G-7.
As Asia's only member, Japan has given voice to Asia's con-
cerns at the G-7 summits. We appreciate the consultation
between the Japanese and Asian Governments prior to summit
meetings and the reporting back afterwards.
15. We continue to be hopeful that the Uruguay Round of
Multilateral Trade Negotiations will come to a successful
conclusion. But the scenario is not promising. The con-
flict of interest between Europe and America will continue
to stymie the negotiations. Only a powerful voice from out-
side of these two blocs will enable progress to be made.
16. It is for this reason that Malaysia proposed the East
Asia Economic Group (EAEG), later renamed East Asia Economic
Caucus (EAEC). We are not proposing a trading bloc, al-
though we would be fully justified in setting up one, con-
sidering that both Europe and America have each set up very
powerful trading blocs. What we are after is a single voice
from East Asia in the defense of worldwide free trade. The
East Asian nations together constitute a large market. More
than that it is a rapidly growing market. The united voice
of this large segment of the world's economy cannot be ig-
nored. If we say that the Uruguay Round must be concluded,
then the Europe/America bickering will have to stop. The
EAEC can cause this to happen.
17. The EAEC will serve another purpose. We have noticed
that cooperation and competition between the ASEAN countries
have helped not only their economic development but also
their policies and outlook. They have become development-
oriented and adopt similar policies and approaches. It is
very likely that the creation of the EAEC will have the same
results in the less developed countries of East Asia.
18. The fact is that whether we form the EAEC or not,
Europe and America have opted for protectionist trade blocs.
To protect their high standards of living and high costs of
production they will want to exclude the competition posed
by the countries of East Asia. They will pick on any issue
to justify their discriminatory policies. Already they have
seized upon issues such as democracy, human rights, labour
policies, environment, subsidies (real or imagined) and in-
tellectual property rights to discriminate against goods and
services from outside. With the formation of NAFTA and the
single European market these discriminatory exclusions are
going to increase. If we don't do something now things are
going to get worse later.
19. Recently Canada, Mexico and the U.S. signed into being
NAFTA. Apparently there is provision for countries like
Australia, New Zealand and Taiwan to join NAFTA. Imagine a
NAFTA consisting of all the countries of North, Central and
South America together with a substantial number of coun-
tries on the Western Pacific shores led by the U.S. It will
be very powerful indeed. It can certainly put Europe in a
corner. And if Japan is excluded, the progress of Japan
will be affected. If Japan is included then there will be a
most unhealthy confrontation with Europe.
20. APEC which started as an informal group is now becoming
more and more like a regional grouping led by the U.S. Ob-
viously anything that is not in the interest of the U.S. is
not going to be adopted by APEC. Since U.S. interests must
now coincide with those of NAFTA, it would seem that an en-
larged NAFTA is already in place. Whether this will be good
or bad for the world's economy I do not know. But certainly
the situation bears watching. It is for this reason that
Malaysia does not support meetings of APEC's heads of Gov-
ernment.
Ladies and gentlemen,
21. As an economic superpower, Japan today faces rising ex-
pectations from the world community, and in particular coun-
tries in East Asia. Malaysia for one hopes that Japan will
play a more crucial role in ensuring peace and security in
addition to addressing the economic issues facing the world
today. Japan must contribute significantly towards the cre-
ation of a stable political and fair economic order for the
post Cold War era. The epochal changes that the world has
experienced in the wake of the disappearance of the Soviet
Union and the emergence of trading blocs demands that we re-
examine our policies.
22. We welcome Japan's desire for a more active interna-
tional role. In fact, in the shaping of a new international
order, Asian countries will continue to look towards Japan,
as a fellow Asian country, to exert its influence in ad-
dressing issues which are of great concern to Asians, be
they political or economic. It is very important therefore
that Japan continue to forge more positive economic re-
lations with her Asian neighbours.
23. We in East Asia firmly expect Japan to play a leading
role for the stability and development of the East Asian re-
gion. For this to happen, the mutual trust between Japan
and East Asian countries should be enhanced. This will re-
quire regular dialogues among us, so that when Japan engages
in policy coordination with other developed countries, Japan
will be in a position to effectively present the concerns
and aspirations of East-Asian countries, of which many are
developing countries.
24. We are witnessing in our region the evolution of a more
favourable political climate, conducive to economic growth
and prosperity. The rapprochment between the two Koreas and
between the Koreas with China and Russia respectively are
cause for optimism. For Japan, we are hopeful that their
outstanding issues with Russia and North Korea would be re-
solved.
25. East Asia is experiencing a level of accelerated eco-
nomic growth unseen anywhere in the world and if this expan-
sion continues at the current pace, our combined GNP will in
time exceed those of North America and the EC. We are not
merely a competitive and reliable production base but also a
major market for imports. For the period 1985 to 1990, East
Asia's share of Japan's total trade volume has expanded from
27 per cent to 29.8 per cent to enable East Asia today to
become Japan's largest trade partner. Given these inter-
linkages, Japan and East Asia have a common interest in
maintaining and further developing its free trade framework,
to support the Uruguay Round and to resist the formation of
trading blocs that are exclusionary and protectionistic. We
have a common interest in ensuring that the business and in-
vestment climate in this region will remain favourable in
order to strengthen our economic interlinkages.
Ladies and gentlemen,
26. Mitsui and Company with its world-wide network is admi-
rably placed to implement and even influence economic
progress for a better world. Your Institute can become a
centre for a more participatory role in the formulation of
policies and programmes towards this end.
27. I hope with this talk I have been able to present
Malaysian perception of the regional and world problems.
Thank you for giving me your attention.
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