Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : NEW YORK
Tarikh/Date : 29/09/93
Tajuk/Title : THE CREDIT LYONNAIS/STOCK
EXCHANGE PRESENTATION
Distinguished Guests;
Ladies and Gentlemen,
I would like to thank Credit Lyonnais Securities
(Malaysia) Sdn. Bhd., the organiser of this function, for
inviting me to this gathering and to officiate this
'roadshow' which basically attempts to promote a better
understanding of the stock market in Kuala Lumpur. It is
indeed a pleasure for me to be among fund managers and
potential investors here in New York.
2. As you may have noticed, the concentration of interest
among investors today is in the Asia-Pacific region, and it
is not without justification. Economic performance in Asia
is expected to remain vibrant in 1993 and 1994, largely
driven by the major economies in the Pacific Basin. Asia's
growth will be maintained at 6.7 percent and 6.6 percent for
1993 and 1994 respectively.
3. While the world's economy, on the whole is estimated by
the International Monetary Fund (IMF) to grow by two to
three percent in 1994, the industrialised countries are
expected to grow at 1.7 percent for 1993. The United States
is expected to grow by 2.2 percent in 1993 and 3.4 percent
in 1994. Output for Japan is anticipated to increase by 3.5
percent in 1994, and a recovery is not seen in the European
Community countries until 1994. The OECD semi-annual report
expects the EC countries to contract by 0.4 percent in 1993
with a small rebound of 1.8 percent in 1994. The IMF, which
is slightly more optimistic, forecasts a growth rate of 0.1
percent in 1993 and 2.2 percent in 1994. That is the global
scenario in terms of economic growth and prospects in the
coming years.
Ladies and gentlemen,
4. For Malaysia, however, the year 1993 is set to
represent the seventh consecutive year of sustained rapid
growth. Since the recovery in real GDP growth to 5.4
percent in 1987, the economy has enjoyed an average growth
of 8.5 percent between 1988 to 1993.
5. Growth in 1993-1994 is expected to be maintained at a
creditable rate of around eight percent, in line with the
expectations for some recovery in the pressures arising from
the booming economy since 1987. There are indications that
price stability will be maintained over the medium term.
Still, growth constraints will remain the biggest threat
that could adversely affect growth potentials.
6. Latest indicators showed that the Malaysian economy
strengthened significantly in the second quarter of 1993.
Growth in real GDP terms accelerated to an annual rate of
10.4 percent, compared with 7.6 percent in the first quarter
and 9.6 percent in the corresponding quarter of 1992.
7. The stronger-than-expected growth for the second
quarter could be attributed to a revival in agricultural
production, as well as a surge in the manufacturing sector.
At the same time, activity in the construction as well as
services, particularly financial services sector, has also
picked up significantly.
8. On the demand side, various indicators on private
consumption and investment pointed to some improvement in
private sector demand during the quarter under review. Bank
lending for personal consumption, for example, increased to
9.6 percent during the second quarter, compared with 7.6
percent in the previous quarter. At the same time, imports
of consumption goods rose significantly by 7.4 percent in
April and May. It was a negative 0.5 percent in the
previous quarter.
9. On the investment front, although latest Malaysian
Industrial Development Authority or MIDA figures showed that
investment applications and approvals remained moderate,
other private investment indicators suggest promising signs
of improvement in investor sentiment. Bank lending for the
broad property sector grew by 15.4 percent during the second
quarter, compared with 12 percent in the previous quarter.
10. Malaysia's rate of inflation for the first half-year
was down to 3.9 percent, as against 4.7 percent in 1992.
11. Growth in 1993 and to a lesser degree in 1994, will be
dependent on the external sector. Our macro-economic
policies will continue to be geared towards the
industrialisation and modernisation of the economy, and the
effective implementation of a market-oriented and
outward-looking economic system.
12. Although growth constraints will continue to pose a
challenge to Malaysia's policy-making in the years ahead,
indications are that the economy is heading for a period of
consolidation and continued growth.
13. Conscious of the need to counter inflationary trends,
which usually accompany high growth rates, the Malaysian
Government has set out to limit the rate of inflation to
acceptable levels. Various measures have been taken and
there appears to be tangible results. Although in 1992
inflation rose from four percent to 4.7 percent, it has now
come down to 3.9 percent. As you can appreciate, price
stability will not only help costing but will also reduce
uncertainties in the market. I believe Malaysian companies
are benefiting from it.
Ladies and gentlemen,
14. The breakdown of the Eastern bloc has resulted in the
retreat of command economies. Everywhere market economy is
being espoused. In Asia we see Communist countries like
Vietnam and China switching to the market economy and
opening up for foreign investments. The Eastern European
countries are also attracting foreign capital. In North
America the formation of NAFTA has made Mexico particularly
attractive to American investors. Clearly Malaysia faces
much more competition in attracting foreign capital than
before the end of the Cold War.
15. As a small player in the global arena, Malaysia will
continue to make itself more competitive so as to be able to
withstand protectionist barriers set up by our competitors.
16. Along with making competitiveness a way of life for
Malaysians, we now accept the need for openness,
liberalisation and free competition. We have, I think,
adjusted quite well. As a result we have been able to make
the switch from being the world's biggest producer of tin
and rubber to being the world's biggest producer of room
air-conditioners and microchips. Today 69 percent of our
exports is made up of manufactured goods. We are, despite
having a population of only 18 million, the 16th biggest
trading nation in the world.
17. Initially much of Malaysia's growth is due to foreign
investments. In the manufacturing sector especially, there
was not much Malaysian participation.
18. This picture has change quite a lot of late.
More and more large Malaysian companies are making an impact
on the economy and contributing towards growth. Some have
gone into sophisticated manufacturing and are exporting
their products.
19. As a result of a well-planned privatisation programme,
many new and very big utility companies have appeared.
These privatised companies have been almost uniformly
successful and profitable. The privatisation of the
Telecoms Department, for example, has resulted not only in a
very big telecommunication company emerging but very
noticeable improvement in telecommunication efficiency.
From 800,000 lines in the first year of privatisation,
Malaysia now has well over 2,000,000 lines. All the latest
in telecommunication facilities are available.
20. In addition, there are now a number of new Malaysian
companies participating either in servicing or manufacturing
of telecommunication equipments.
21. Privatised companies now include private power
generation, airports, ports, railways, aircraft servicing,
airlines, shipping and a host of others.
22. Most of these companies are listed on the Kuala Lumpur
Stock Exchange (KLSE). They, along with other Malaysian
companies, are doing rather well. They are profitable and
are expanding and diversifying rapidly.
23. As a result we have one of the biggest and most active
stock markets in South East Asia. The volume traded can be
actually bigger than in New York. The KLSE people will be
able to tell you more about their performance.
24. The scope of industrialisation in Malaysia is not yet
exhausted. To insulate the country from deterioration in
the world markets, the Government has refocused on growth of
the domestic market. True, the small population does not
present a big enough market to balance possible shrinkage in
the world market. But as the per capita income is still
low, the room for growth is available. It would therefore
be possible to reduce some of the dependence on foreign
investments and trade. Already Malaysian companies are
growing in size and in numbers, and their balance sheets are
very attractive. The Government will continue to help
facilitate their growth with judicious support.
25. The greatest assets of Malaysia are its political
stability and consistency of Government policies. These are
commodities most valued by the business community. A
climate of uncertainty is never good for business. Even
when conditions are not too favourable, provided they are
consistent, businessmen can always see their way through.
But in Malaysia we are not just consistent but we go out of
our way to create a favourable climate as well.
26. If we think that Malaysia will continue to grow and
that Malaysian companies will continue to prosper, I don't
think we are being too optimistic. We have good grounds and
past records and we hope you will come and share our
optimism and our prosperity.
Ladies and Gentlemen,
27. I now have pleasure in officiating this roadshow, a
stock exchange programme aimed at promoting the stock market
in Kuala Lumpur.
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