Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : HILTON HOTEL, KUALA LUMPUR
Tarikh/Date : 16/08/93
Tajuk/Title : FIRST NATIONAL
COMPETITIVENESS FORUM
This International Competitiveness Forum, held at this
point in time, certainly serves to highlight the growing
realisation among Malaysians of the importance of
maintaining a strong and competitive economy. The goal for
establishing a prosperous society with an economy that is
fully competitive, dynamic, robust and resilient has in
fact been included as one of the nine critical challenges
of Vision 2020. Issues and questions on how to achieve and
maintain competitiveness should thus be a major concern
for all Malaysians.
2. Competitiveness is particularly critical in this era
where economic prowess, and not military power, measures the
strength and standing of nations. As a result, trade and
industrial issues, export performance and trade balances
have now become the major preoccupations of governments.
Unfortunately this often results in calls for protective and
restrictive policies to safeguard domestic producers from
the full force of foreign competition.
3. Thus at the same time that markets and production
processes are becoming increasingly more global, and
economic liberalisation and private sector-led growth
are the by-words of macro-economic management, we get
conflicting demands for both liberalisation and protection,
often by the same country, depending upon the competitive
strength of their different industries.
4. As a small player in the global arena, our best hope
lies simply in being more competitive, so that we are able
to export our products even when faced with protectionist
barriers.
5. Malaysia's success in attaining and sustaining the
competitiveness of its exports have resulted in Malaysia
being regarded as one of the industrialising countries
deserving coverage in the World Competitiveness Report Our
current high ranking in that group, behind Singapore, Hong
Kong and Taiwan and better than some of other dynamic
countries of the East Asian region, no doubt is a source
of pride to Malaysians. It is also a big challenge for we
attract the attention not only of those who wish to take
advantage of our competitiveness but also those who wish
to reduce our competitiveness.
6. The great interest in this forum as shown by the high
level of attendance by government decision makers, leading
corporate personalities, leading businessmen, academicians
and thinkers should convince even the casual observer that
its past success has not made Malaysia complacent. In fact,
we take the issue of competitiveness very seriously. The
presence of foreign participants, including those from
renowned companies and institutions serves to highlight the
fact that issues about Malaysian competitiveness are also of
interest to our foreign trading and investment partners.
7. We hope to make being competitive a thoroughly
Malaysian characteristic, embraced by all segments of
society. With this goal in view we must also accept the
need for openness, liberalism and free competition that
goes along with being competitive.
8. Ever since attaining our independence, the Malaysian
economy has sustained a high rate of economic growth.
During the first Outline Perspective Plan period, our GDP
grew at an average rate of 6.7 percent per annum, in real
terms. As a result, our per capita income has increased
steadily from US$350 in 1970 to an estimated US$3,000 by
1993. In purchasing power parity terms, it is even higher,
being equivalent to around US$7,110. Such growth has been
fed by a steady increase in our rates of investments, so
that, currently, our investment to GDP ratio, at around 35
per cent per annum, is among the highest in the world. In
addition, our exports have grown steadily at an average
rate of 18.5 per cent per annum.
9. In the process, we have also succeeded in transforming
our economic production profile from one which is based on
mining and agriculture to a more diversified base. In 1992
manufactured exports accounted for 69 per cent of total
exports, compared to only 11.9 per cent in 1970. Our
export markets have also been significantly diversified so
that Malaysian goods now have a bigger range and are sold
all over the world. Such significant export achievement
obviously reflects a degree of competitiveness of our export
items in the world market.
10. Our capacity to sustain a high rate of productive
investment and to achieve steady export growth are in fact
the two key strengths of our economy. The other contributing
strengths are our stable socio-political and macro-economic
environment.
11. Lest I be misunderstood, let me emphasise here that the
raison d'etre for economic growth is simply to increase the
welfare and standards of living of our citizens. High
savings and competitiveness are just the means to sustain
growth so as to contribute towards the well-being of our
people.
12. Growth per se, will therefore be useless if it does not
mean higher real incomes and standards of living and better
quality of life for our people.
13. Herein lies a small dilemma, for increases in incomes
will need to be realised by, among others, increases in
wages and salaries. And increases in wages can result in
higher cost of production and even inflation.
14. The answer to this dilemma is however quite straight
forward. Increases in wages must be matched with higher
productivity, either quantitatively or qualitatively or
through moving into the higher value-added economic sectors
and activities; and to continue to be competitive there.
Only then can we support our ever increasing per capita
income, higher wages and standards of living.
15. Clearly in order to remain competitive, continuous
effort is required. Competitiveness is a dynamic process
which has to be upgraded all the time. As the saying goes
competitiveness involves running merely to remain in the
same position. Any slowing down will result in losing
competitiveness. To enhance competitiveness requires more
than average speeds or forward progress.
16. Developments of the so-called international product
life cycle is in fact simply a reflection of the dynamic
realities affecting the competitiveness of nations. Thus
countries in Western Europe, which used to be world leaders
in iron and steel, ship-building and textiles are finding
that they can no longer maintain their leadership position.
They have to up-grade to more sophisticated industries, or
go up market into specific high value-added niches in these
industries. Currently countries like Japan and Korea which
had displaced the Europeans are finding themselves
increasingly less competitive in these areas and have to
move on to newer pastures. We, who in the 1960s and 1970s
were world leaders in rubber and tin, have had to give up
these industries and move into manufacturing. No doubt if
we had remained with tin and rubber, we would be a basket
case today. Moving into manufacturing saved us. But now we
have to be on the move again, to find niches which are
suitable for us and to achieve competitiveness in these
niches. And so the process goes on. Individuals can stop
to rest and to glory in their achievement. Nations cannot.
Even the great economies of the world cannot. Relax, and
the tortoise behind will suddenly be ahead.
17. The challenge being posed is clear. To face this
challenge Malaysia will have to continuously upgrade its
industrial capabilities so as to be competitive in
increasingly more sophisticated activities and industries.
18. The root cause of the current problems faced by many
developed countries, such as deteriorating exports, excess
capacity, unemployment, low productivity and problems in
their trade and current account, lies in their inability or
unwillingness to accept the dynamic facts about the
competitiveness of nations. As a result, instead of
adjusting their industrial structure in line with their
ever increasing wages and other costs, they prefer to
isolate and protect. From champions of free trade
they have now descended to being the proponents of
'managed trade'.
19. Even the least observant among us must notice that
competitiveness needs the ability to manage and manage well
certain prerequisites. These include, among others, the
maintenance of a stable, political and social environment
and the management of a macro-economic system which is
conducive to economic growth. Additionally, there must be
adequate and frequently upgraded institutions and physical
and administrative infrastructures.
20. If these are in place, then the economic players, the
entrepreneurs and investors and their supporting casts will
feel assured enough to plan their enterprises for the
longterm outlook needed for steady growth. They will be
willing to invest in skills development and the kind of
durable infrastructures needed for future expansions.
Without these, quick gains and speculative and even illegal
activities become more attractive. And this can only lead
to regression in the long term and near-permanent incapacity
to recover.
21. Continuous upgrading of institutional, physical and
social infrastructures is important because these are
factors which serve to facilitate business transactions,
ensure predictability and create a familiar and comfortable
environment for the conduct of business at acceptable costs.
22. At the risk of engendering complacence, I would like to
point out that we have been strong in both areas, and merely
need to sustain this achievement. The infrastructural
bottlenecks suffered in early 1993, particularly with regard
to power generation, should remind us of the need to
relentlessly maintain our efforts even in those areas in
which we can claim current strength.
23. Other factors such as the stability and competitiveness
of our exchange rates, the rate of interests and inflation,
financial policies and management and government/private
sector relations are all contributory factors which are
linked to our success so far.
24. When we talk of national competitiveness we must also
talk about the efficiency of labour and capital.
25. Enhancement of the quality of our labour force via
education, training and other forms of human resource
development has been recognised as a critical factor in the
Second Outline Perspective Plan. Improved quality of labour
must result in greater productivity and capacity to upgrade
industries and diversify them so as to facilitate entry into
more advanced areas. This upgrading is needed because we
want to improve the earnings and purchasing power of our
workers and also because, as I have stated earlier, we want
to continuously upgrade our manufacturing into higher
value added and higher skilled activities without losing
competitiveness.
26. How such upgrading can be achieved is a major problem
facing us. The Government believes that this is a process
which requires the efforts of both the public and private
sectors in a true spirit of Malaysia Incorporated. The
seeds of such cooperative efforts have already been sown,
but much still needs to be done. One thing that is certain
is that skills come with exposure and practice. If we do
anything repeatedly we are bound to master the process, no
matter how complex or sophisticated. We have already
demonstrated our ability to acquire increasingly complex
skills. This forum can deliberate on how effectively this
natural law can be applied in order that we can move on
into the most up-to-date technology.
27. Closely related to the issue of human resource
development is that of the upgrading of our technological
capabilities. In this regard, science and technology
development and the enhancement of our research and
development capabilities are critical factors. Likewise,
firms need to be vigilant on the business and technological
changes that emerge at the national, regional and
international levels. This business and technology vigilance
is embedded in the process of continuous search and
consultation for new business opportunities through the
strategic exploitation of technology.
28. Currently, with the exception of a few narrow sectors
such as research in certain agricultural cash crops like
rubber and palm oil, Malaysia is lamentably weak in research
and the application of new technology. In this regard,
although the broad aspirations are clear, Malaysia has still
to decide on areas of focus as well as on implementation
strategies. My view is that we should focus more on
development and application than on original research. The
returns on these are faster and better than from basic
research. Additionally, the skills of basic or original
research tend to develop naturally as the skills in
application of existing technology advance. However this is
just my view.
29. I would like to congratulate the Malaysian Business
Council and the Ministry of International Trade and
Industry, with the collaboration of ISIS Malaysia, for
embarking on this timely initiative. I am sure this forum
will come up with concrete ideas and suggestions.
30. With these remarks, I officially declare this forum
open.
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