Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : PARIS, FRANCE
Tarikh/Date : 07/07/94
Tajuk/Title : THE JOINT MALAYSIA - FRANCE
BUSINESSMEN MEETING
I am honoured to be present here today to address such
a distinguished audience of leading French industrialists
and businessmen together with members of the Malaysian
delegation. I would like to take this opportunity to thank
the CNPF (Conseil National Du Patronat Francais) for the
initiative in organising this function today.
2. Bilateral relationship between our countries continues
to be cordial, resulting in the strengthening of economic
ties. Bilateral trade between Malaysia and France has been
expanding steadily at an average rate of about 18 per cent
per annum over the past five years. Total trade between our
countries has grown from US$680 million (RM1.7 billion) in
1989 to US$1.3 billion (RM3.4 billion) in 1993. Currently
manufactured goods constituted more than 70 per cent of the
exports. Bilateral trade is equally balanced between
imports and exports. It accounts for about 1.4 per cent of
Malaysia's external trade.
3. France is the fifth largest investor in Malaysia with
a total investment of US$1.9 billion (RM4.8 billion) for the
period 1980 - 1993. This accounts for about 5.9 percent of
total foreign investments made in Malaysia for that period.
4. To facilitate bilateral cooperation, the two countries
have concluded the following framework arrangements:
- Air Services Agreement;
- Cultural and Technical Cooperation Agreement;
- Investment Guarantee Agreement; and
- Double Taxation Agreement.
5. The business communities of both countries have also
established COFRAMA (France-Malaysia Economic Cooperation
Committee) and MAFRETA (Malaysia-France Economic and Trade
Association) to intensify further economic cooperation.
6. Although the progress made in bilateral ties is
encouraging, I am confident that there are potentials to
further enhance our cooperation in existing and new sectors
taking into account developments in France, Malaysia and the
respective regions in which both our countries are located.
The purpose of my visit here with a large delegation of
leading entrepreneurs and businessmen is to meet with French
business leaders and to identify areas of common interests
for our cooperation.
7. Malaysia has an expanding economy. The average rate of
GDP growth over the past six years is 8 per cent plus per
annum. The economy continues to be strong and is expected
to achieve a growth rate of 8.5 per cent this year.
8. The rapidly expanding manufacturing sector contributes
significantly to the strong growth in the economy.
Industrial output grew by 13 per cent in 1993. The
expansion of the Malaysian economy has contributed to an
expansion in trade. Total trade expanded by 16 per cent
from US$79 billion (RM205.1 billion) in 1992 to US$92
billion (RM238.6 billion) in 1993. Malaysia is today the
19th largest trading nation in the world. To support
Malaysia's expanding economy, much importance is given to
upgrade and expand infrastructure and support services such
as energy and water supply, transport, telecommunications,
skills development, housing, etc.
9. Malaysia welcomes foreign companies to participate in
the development of the country's economy through trade,
investment and supply of services. In this regard,
Malaysia's expanding economy creates significant new
opportunities for those companies involved in these sectors.
10. Malaysia continues to be an attractive place for
foreign investments. According to the World Competitiveness
Report 1993 published by the World Economic Forum in Geneva,
Malaysia ranks fourth in terms of international
competitiveness among the emerging economies, that is, after
Singapore, Taiwan and Hong Kong. Its strong points are its
domestic economic strength, financial facilities,
international trade policies, stable government and
management development and a government that is openly
pro-business.
11. As a major trading nation with a well developed
manufacturing sector, France is certainly in a favourable
position to increase its participation in the Malaysian
economy.
12. France is a leading industrial nation and has
technology in diverse industrial sectors. Malaysia can draw
considerably upon the French experience in such industries
to strengthen and diversify further the Malaysian industrial
base particularly in the development of export-oriented,
high value-added and high- technology industries. Although
France is the leading European investor in Malaysia, there
are opportunities to further intensify cooperation in the
industrial sector.
13. I wish to take this opportunity to express my
appreciation to the French Government for the support it has
given to its companies to invest overseas. It has initiated
the establishment of SOFINASIA (Societe Pour Le Financement
des Investisements en ASIA), a foreign investment
institution, to assist French companies with venture capital
for their investments. In addition, it was also responsible
for the decision taken to station a French investment
adviser in MIDA, Malaysian Indusrial Development Authority,
to assist French companies proposing to invest in Malaysia.
Both these initiatives have certainly been useful to support
Malaysia's effort to increase French investments in
Malaysia.
14. Given the priorities of Malaysia's industrialisation
drive and the technological capabilities of France, areas
which offer opportunities for French investment are:-
- Aeronautical components;
- Chemicals;
- Pharmaceuticals;
- Machinery and equipment;
- Technical rubber and plastic products;
- Agro-based industries; and
- Resource-based industries.
15. Malaysia is also actively strengthening the base for
the provision of support service for the high technology
industries. I would urge French companies, especially the
large multinationals, to consider relocating their Research
and Development (R&D) activities to Malaysia to take
advantage of the country's rapid economic growth. To
facilitate this, technology parks have been set up to
provide the infrastructure for R&D activities to support the
operations of high technology industries.
16. Malaysia is a favourable location for foreign
investments as it is situated in the dynamic East Asian
Region. This is further enhanced by the plan to establish
an ASEAN Free Trade Area (AFTA). The AFTA will be achieved
through the implementation of a Common Effective
Preferential Tariff (CEPT) scheme which requires member
countries to reduce their import duty to a range of zero to
five per cent over a stipulated period. Initially the AFTA
is envisaged to be realised by the year 2008. However,
there is now a shared feeling among member countries on the
need to accelerate the establishment of the AFTA by
shortening its timeframe, to 10 years, while maintaining its
commencement year of 1993.
17. The ASEAN economy is nowhere near as large as that of
the European Union. However, I am convinced that ASEAN has
a great potential to develop into an integrated economy to
exploit the comparative advantages in the region. ASEAN is
among the fastest growing economies in the world. As you
know it is when economies are actively growing that
opportunities abound.
18. Besides ASEAN, the East Asian region is also an area of
substantial opportunities with its equally rapid pace of
economic development. Malaysian companies are already
participating in diverse sectors in the economies of the
emerging countries of the region. These companies have
accumulated useful contacts and knowledge on the market and
they are prepared to create strategic partnerships with
relevant French companies which have the necessary
technology and expertise to cooperate and undertake jointly
new ventures in these markets.
19. The recent conclusion of the Uruguay Round of
Multilateral Trade Negotiations in Marrakesh augurs well for
the expansion in trade and investment flows. However, the
full benefits of the Uruguay Round can only be realised if
all countries can translate their political commitment into
action in carrying out all their obligations and
implementing all the concessions agreed upon. In this
respect, the major trading countries should demonstrate the
leadership required in taking the necessary steps to ratify
the Agreement establishing the World Trade Organisation
(WTO) so that the WTO can come into force on 1 January 1995
as targetted.
20. Malaysia is ready to undertake all its commitments and
will take the necessary steps to modify its policies and
take measures to ring them into conformity with the Uruguay
Round Agreement. Some of the adjustments that have to be
made would certainly not be easy. They involve some
sacrifices on market liberalisation measures which are
required to be made as agreed. However, this is a difficult
action that every contracting party has to take if major
benefits are to be derived from an expanding international
trade.
21. Malaysia is ready to ratify the WTO Agreement. We are
optimistic that the effective implementation of the
Agreement by all countries would provide a stronger and
clearer legal framework for the conduct of international
trade and a more effective dispute settlement mechanism
under the WTO.
22. In the context of the work programme of the WTO,
Malaysia is concerned over the effort made by some countries
to establish linkages between labour standards or social
clause with international trade.
23. Developing countries, including Malaysia, are strongly
opposed to the move to link international trade with labour
standards as lower cost of labour is often the sole
comparative advantage that they have. This lower labour
cost is not due to exploitation of the workers. The cost of
living, and very often, the rate of inflation in the more
competitive of the developing countries are very low. Their
wages buy much more than their dollar equivalent would seem
to indicate. On the other hand the developed countries have
a host of comparative advantages which include capital,
technology management skills, marketing know-how and
extensive networks built up over many decades. If the sole
comparative advantage of the developing countries is
nullified, they will get no investment and their massive
workforce will be unemployed. By no stretch of imagination
can we regard this as social justice.
24. The European Union (EU) is an important market
for Malaysia's exports. Exports to the EU amounted to
US$6.7 billion (RM17.5 billion) in 1993. This represented
about 14.4 per cent of Malaysia's total external trade.
With the proposed expansion of the EU to include Austria,
Finland, Norway and Sweden by 1st January 1995, the EU will
become an even more important market for Malaysia's exports.
The enlarged EU will certainly create new business
opportunities.
25. In view of the importance of the EU as a contributor to
international trade and as a market for exports from the
developing countries, it is important for France as an
important component member to ensure that the enlarged EU
continues to be liberal in its trade policies and contribute
to the strengthening of the multilateral trading system and
promote the growth of international trade and investment
flows.
26. The visit of my delegation here today is aimed at
enhancing bilateral ties. With the support given by the
government of both countries, I am confident that our
businessmen will succeed in forging new business ties that
would intensify the existing bilateral cooperation for our
mutual benefit.
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