Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : THE ISTANA HOTEL, KUALA LUMPUR
Tarikh/Date : 05/08/96
Tajuk/Title : THE NATIONAL CONVENTION ON THE
SEVENTH MALAYSIA PLAN, 1996-2000
1. I would like to thank the Malaysian Economic
Association for inviting me here this morning to
officiate the opening of the National Convention on
the Seventh Malaysia Plan.
2. Malaysia is neither a Communist nor a Socialist
country. It has always been a market economy. Yet
Malaysia believes in economic planning, something
which the Communists espoused and practised
religiously, if one can say such a thing about
Communists. We know now that despite their five-
year plans, the Communists failed and had to abandon
Marxist economic theory in favour of the market
economy.
3. I think you will agree with me that Malaysia
has not failed. Indeed Malaysia's five-year plans,
long term perspective plans and sectoral plans have
all contributed towards Malaysia's high economic
growth rates. They have even contributed towards
solving social and political problems. What we may
well ask is the difference between Malaysia's plans
and those of many others, Communist and non-
Communists.
4. The simple answer is that Malaysia has the
political will and has acquired certain skills in
implementing complex plans which theorists and
planners draw up. Apart from having a powerful
Economic Planning Unit located in the Prime
Minister's Department, we also have an
Implementation Coordination Unit, likewise located
in the Prime Minister's Department.
5. Even with these departments there is no
certainty the plans can be carried out. But they
are fully supported by a committed Government which
believes in hands-on involvement. Admittedly the
Government has a vested interest to see that the
plans are carried out. Their electorates can throw
them out if they fail. Also the competing demands
of the parties of the Barisan Nasional ensure that
no one allows anyone else to steal a show over him.
If any Minister fails, his own party will throw him
out. And so the Government has to be committed
always.
6. Another important factor is the strength of the
Government. All projects are controversial. There
will always be people who are against, who will be
vociferous, while people who are for a proposed
project usually remain quiet. Fear of losing the
support of the vocal few often results in
procrastination and sometimes abandonment of
projects. When the Government is weak the fear is
greater. And so plans often fail to be carried out.
7. In Malaysia, Governments have always been
strong and plans are carried out despite opposition
by the professional detractors. If we had succumbed
to their loud protest today we would not have the
Penang Bridge, the National Car, Privatisation, Toll
Roads and many others. And if we had delayed these
projects because of the professional objectors, the
costs would be many times more and we probably would
not be able to afford them. But we never learn.
Many are still urging us not to do this or that, to
listen to the voices of dissent and to heed them.
We do listen but we must be able to distinguish true
protests from those artificial ones instigated by
people with other interests, usually political,
locally and economic from abroad.
8. Malaysia's plan has worked. Not 100 percent of
course but substantially. The five year plans
worked. Even the affirmative action New Economic
Policy worked despite the prophets of doom who
insisted that it may be possible to have growth
without equity or equity without growth. In the end
we not only had growth with equity but we had high
growth with low inflation.
9. As the targets of each plan are achieved, it
becomes necessary to change targets or objectives in
order to make the plans relevant. Planning is not
planning if it only repeats what had been done
before. Planning involves taking cognisance of the
changes brought about by the successful
implementation of previous plans and determining new
targets and inventing new strategies and methods.
10. The Seventh Malaysia Plan is, more than any
previous plans, a strategy and objective changing
plan. The changes brought by previous plans have
been so radical that practically everything about
the Seventh Malaysia Plan must be different and
novel.
11. We had changed course before, of course. When
the objective of import substitution manufacturing
was achieved, we decided to go into exports. When
in 1985 foreign investments were not coming in we
ignored local participation and went for job
creation instead.
12. Today we have full employment. Obviously we
don't want labour intensive industries any more.
Yet we have to grow economically. We can do so by
importing labour. But the income of our people will
not increase despite eight percent growth yearly.
We want to grow economically while the incomes of
our workers also grow.
13. It would be suicidal to increase wages without
increasing output or value added. If we do not want
to commit economic suicide then our workers will
have to work harder or they will have to acquire
more skills so as to increase productivity. What
applies to workers, applies also to the executives.
If they want more pay then they have to work harder
to improve their skills, whatever these may be.
14. And so the Seventh Malaysia Plan puts a premium
on education and skills training. The Education Act
has been amended and new approaches worked out.
Private universities and twinning of universities
with foreign institutions are now allowed. Major
utility corporations have been asked to upgrade
their training facilities to university status. More
institutions for skills training will be set up by
both the Government and the private sector. Less
students will be sent abroad in order to make funds
available for more students to study locally and to
conserve foreign exchange. All these and many more
facilities will help increase the level of skills
and qualifications, particularly in science and
technology among our workforce.
15. But what about working hard? All the knowledge
and skills would come to nothing or to very little
if they are not thoroughly applied. In the course
of formulating the education policy, attention had
been drawn to the need to develop the right work
ethics and the attitude towards work. Hard work
remains the sine qua non of success in every field
of human endeavour. The successful people and
nations of the world have all been known for their
dedication to hard work. If the Seventh Malaysia
Plan is to succeed, Malaysians must become
workaholics. There is nothing wrong about working
hard. Working for pay is more honourable than
begging. Working very hard for more pay is even
more honourable. Malaysians must avoid and regard
with distaste the attitude that the world or the
community owes us a living. They owe us nothing.
We owe it to ourselves to earn an honest living.
16. Our full employment has made us dependent on
imported labour. To switch to technology intensive
industry does not only require skills but investment
in high-tech industries as well. These are usually
capital-intensive. There is no choice. We will
have not only to discourage investment in labour
intensive industries but we have actually to
relocate them to other countries.
17. This will be painful not just to the existing
industries but to the workers as well. It is easier
of course to demand to be paid more for doing the
same work. But sooner or later we will become
uncompetitive. Our workers may actually lose their
jobs. Rather than wait, both owners and investors
as well as workers must accept change now. While
the workers have to be retrained in order to do not
only mechanical repetitive work, but also work that
requires intelligence and decision making, the
industrialists must upgrade their machinery,
automate and robotise or start entirely new non-
labour intensive industries.
18. We had moved from import substitution to
industries which created employment. Now we must
not only automate but we want more and more
industries to be Malaysian-owned and to produce
sophisticated products for exports. The present
industries, owned largely by foreigners, tend to be
value-added operations. Partly processed components
are imported and processed for export, some in the
form of semi-finished parts while others into the
final products. This means imports have to grow as
exports increases. While it helps when exports
grow, the margin is not enough to help reduce the
balance of payment.
19. We need to produce every part of the component
or the final product in the country. That way,
increases in exports need not result in similar
increases in imports. There will still be imports
but these will be largely low-value raw materials.
20. Foreign companies can do this. But if we have
more local companies manufacturing for exports, not
only will export earnings stay in the country but
leakages would be minimal. The balance of payment
will be reduced more or will be actually reversed.
21. Since the Seventh Malaysia Plan has been
launched during a period when there is a large
deficit in the balance of payment, the Plan is also
designed to overcome this problem. Some say that
the way to reduce the balance of payment is to
reduce growth. This is only true if the growth is
due to massive spending on projects which need
foreign inputs in materials, equipment,
consultancies and experts. But mere reduction in
growth will only reduce the balance but not reverse
it. Deficits of the past would remain.
22. The worse thing to do is to try and stifle
growth by increasing interest rates. It would
certainly reduce spending but new investments even
in manufacturing for export will be reduced and
foreign money might flow in to take advantage of
high interests. It is far better to raise import
duty if this can be done.
23. The balance of payment deficit by definition is
the result of excess of imports over exports,
whether products or services. The simple answer to
it must surely be to reduce imports and increase
exports.
24. Imports should be reduced through close
Government monitoring and voluntary restraint. If
this is not possible, restrictions on the import of
certain non-essential goods will be imposed through
quotas and import permits. On the other hand,
exports would have to be positively encouraged,
especially locally-owned manufactured exports. The
government will look into this and ensure that loans
for such businesses remain cheap.
25. To increase local content and to enable local
companies to manufacture our own branded goods, the
Government will actively support Research and
Development. The budget for this will be increased
in the Seventh Malaysia Plan. But local research
and development will receive favourable treatment by
the Government. We must be more interested in
applied research at this point in time.
26. Recruitment of Malaysians working abroad in R &
D and employment of foreign researchers will be
facilitated. The Government Technology Park is now
almost fully-booked. The private sector should go
into such parks even as they went into the
development of industrial parks which were also
initiated by the Government. The results of
researches and pioneer industries in the Technology
Park have been very encouraging. Truly new
technological firsts have been achieved particularly
in micro-electronics. Patent rights will now be of
concern to Malaysians in a way that it had not been
before.
27. The Seventh Malaysia Plan has been launched
when the world is undergoing a transition from the
Industrial Age to the Information Age. This is much
talked about but how the information can be utilised
for the economic development and well-being of the
people is not too clear to many of us. But there
can be no doubt that the Information Age will have
an impact on us. Whether it is to our good or not
will be determined largely by us.
28. Information is not just news, the subject that
is the responsibility of the Ministry of
Information. News is still information that can be
relevant to industry and economic activities. For
example availability of news about floods and
disasters worldwide will be useful for determining
availability or demands for certain products and so
for increasing or decreasing production of these
items. Since the news can be in real time, quick
reaction and response can mean business and profits.
29. But information on all kinds of scientific and
technological data are now available to everyone
through the Internet for example. And these data
can reduce the lead which some countries or
companies have on the production of certain items.
Information on the behaviour of material and the
latest experimental results can also help put us at
par with others who have been ahead of us. In
manufacturing, information on the state of the
production line, supplies for raw material or
components, their quality, the results of tests on
them, the comparative advantages they have as
compared to other materials or components, the
quality of the products and components of
competitors, the prices, wholesale and retail, the
overhead borne by competitors and a host of other
information will determine the performance of the
entity making use of the mass of information and
analysing them.
30. Recently I visited the Kyrgyz Republic and
Kazakhstan and found these seemingly remote
countries quite different from what I had expected.
These countries are truly beautiful, with resources
of precious and base metals, minerals, oil and gas
and chemicals, granite and marble which truly make
them treasure houses of the world. It is amazing
that countries which are so rich should remain quite
unknown. Obviously what is lacking is information.
Now that we have information we can see tremendous
potential for investment and trade with these
countries. Some of the information have already
been put in the Internet and will no doubt be used
by business people.
31. The Information Age does not mean there will be
no industry producing goods. We cannot eat, wear or
ride on information. But information will determine
the performance of industries of the future;
information that is abundant and very rich.
Information will be available to everyone in many
cases at no cost. The skills we need to develop is
how to sieve through, analyse and apply this massive
amount of information.
32. The Information Age will spawn new information
industries with ever more sophisticated systems and
hardware. The microchip will come into its own,
with powers that defy the imagination. The
production of these and many other building blocks
of the information disseminating hardware will
constitute truly new industries of the Information
Age.
33. These are exciting times. The information-rich
society will break the political and economic
barriers erected by nations. The `Borderless World'
will become a reality. Protecting industries and
the economic environment will no longer be easy.
Even if the World Trade Organisation fails to break
down national barriers, Information Technology will.
34. With the Seventh Malaysia Plan we move into the
Information Age and the Borderless World. We have
taken the first tentative step by launching the
Multimedia Super Corridor. New laws tentatively
called `cyber laws' and new attitudes toward the
movement of knowledge workers into the country will
have to be adopted. We really have no choice.
Either we go with the changes in the way business is
done or we will be left behind.
35. In the meantime we cannot neglect the basic
needs of the people and the country. We may have to
adopt new methods and technology but we cannot
abandon the agricultural sector for example. We
will still need food. But the peasant economy we
had nurtured will have to give way to industrial
agriculture. We have to adopt this because the
workforce in the countryside is depleting even
faster than in the urban areas. Land holdings must
be amalgamated and operated as large farms run by
trained managers very much like the large rubber
estates. If we can do this with rubber and oil
palm, I do not see why we cannot with rice,
vegetable, fish farming and cattle rearing.
36. The tourist industry is a growth industry. It
has not yet matured. We have not yet developed all
the tourist potential and products that we have.
Our air, rail, sea and land transport is still very
primitive. Of course we cannot do all in the
Seventh Malaysia Plan. But the beginning must be
made. We have to upgrade our airports, cruise
passenger terminals at our ports, modernise the
train system and build more expressways. The
private sector must be more active and optimistic.
The tourists, both Malaysian and foreign, expect
quality facilities. Low quality accommodation or
recreational facilities will not draw clients.
Besides, when we have very attractive locations it
would be foolish to reduce earnings through poor
facilities. On the other hand, we must always cater
to locals who have a right to enjoy the beauty of
our country whatever may be their income.
37. Touristic and other developments must never
ignore the environment. It has been shown that
preservation of the environment actually enhances
the value and the potential earnings from the
projects. Trees in particular must not be cut unless
absolutely necessary. It may be necessary to
require people who cut trees, whether from necessity
or not, to plant at least two trees or more
elsewhere.
38. The Seventh Malaysia Plan is of course a part
of the process to achieve the status of a developed
country by 2020. A developed country implies not
just higher per capita income and living standard.
To be truly developed, the culture must also be
developed. While we want to preserve our culture,
there are aspects of our culture which we would like
to demolish. Among these is the habit of throwing
rubbish all around us.
39. While we like to go to a place that is clean,
as for example a picnic site in the park or forest,
we leave rubbish strewn all around without caring
for the feelings of other people who, like
ourselves, would like to go to a clean place. We
think that someone should be around to clean up
after us. There can never be enough workers to
clean up if the whole population scatter rubbish all
over the country. The workers can only work at
specified hours. If we dirty the place after they
have just cleaned, others will have to suffer until
the next day.
40. Malaysians are not developed where throwing
rubbish around is concerned. If we become a
developed country in 2020, we cannot have any pride
of achievement if we have not discarded the habit of
destroying our surroundings. We have to stop this
habit, not gradually but right now, or we forfeit
the right to be the so-called model for other
developing countries.
41. Economic planning has become a part of our
national life. We take planning as a matter of
course, to be drawn up and to be implemented with
varying degrees of success. But we must remind
ourselves of the complexities of planning and the
even more complex process of implementation.
42. The Seventh Malaysia Plan which you will be
discussing is a relatively clear cut description of
what we plan to carry out from 1996 to year 2000.
Practically all the areas which need attention and
which we plan to allocate funds and carry out
developments have been dealt with. And in due time
they will be implemented.
43. But economic plans do not get implemented in a
vacuum. They need a certain set of attitudes and
environmental situation. Although the planners
assume that everyone should know this and how it
interacts with the plan and its implementation, it
is worthwhile to repeat and to explain the
circumstances and the environment, both physical and
mental, which must be in place. Indeed the meaning
of this environment, in particular the changes and
the new situations emerging have to be understood,
not just by the planners and the implementors, but
by the whole nation. If the nation, i.e. the people
who are going to have a plan foisted on them expect
to benefit from the Plan, they need to understand
what it means and how it will affect them.
44. This little explanation which I have tried
should go a little way to explain the environment of
the plan to you and to the public at large.
Hopefully it will help you in your discussions.
45. On this note, I have great pleasure in
declaring The National Convention on the Seventh
Malaysia Plan open.
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