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Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD Tempat/Venue : MANILA Tarikh/Date : 23/11/96 Tajuk/Title : THE CLOSING OF THE APEC BUSINESS FORUM 1. Let me first thank the APEC Foundation of the Philippines for giving me the opportunity to address this important gathering of top Chief Executive Officers (CEOs) from the Asia- Pacific economies. I am confident the discussions you have had over the past two days will yield positive business outcomes in the coming years. 2. On the eve of the APEC Leaders' Meeting in Subic, allow me to share with you some of my thoughts on APEC, and in particular the role of the private sector. 3. To begin with, let me say a few words about APEC so that we have a clear understanding of what it is and what it is not. There are some key points about APEC which must be borne in mind. APEC is:- * a voluntary process which depends on unilateral contributions of members; * it operates on the basis of consensus and with minimum institutional infrastructure; * it believes that liberalisation works most effectively when supported and facilitated by economic and technological cooperation; * it is the product of a unique style, where consultation and moral suasion count for more than legal contracts and litigation; * it is founded on open and complementary interaction within itself and with the rest of the world; and * it is an association of countries with great disparities in sizes and stages of development. 4. Over the past decades, the economies of the Asia Pacific, especially East Asia although different in terms of stages of development have registered growth rates higher than other regions. There are many reasons for this but all believe in economic development as of prime importance for giving meaning to their national identity and independence. 5. APEC members have, on the average, been growing at 7.6 per cent per annum; well above the world average. This average of course means that some are growing much faster. But since we did not have the same starting point, the growth in absolute terms cannot really be gauged from the figure I have mentioned. Economic performance can only be compared on a basis of Purchasing Power Parity for this reflects more accurately the true wealth of the nation and the people. This fact must always be borne in mind. 6. Trade within the region has expanded dramatically by about 87 percent in the last five years. The region produces 44 percent of the world's exports. Growth in investment has also been significant. The dynamic growth of Investment has been influenced by several factors such as the globalisation strategy of multinationals as well as the unilateral deregulation and reforms to facilitate capital flows by APEC countries. 7. Underlying these developments is the significant move towards liberalisation and market opening measures adopted by a majority of the member economies. Although varying in speed and intensity, there has been a broad move towards unilateral liberalisation across economies, which began sooner in the developing APEC economies, as well as in Australia and New Zealand, than in the rest of the world. Unilateral liberalisation has occurred up to and following the completion of the Uruguay Round and other sub-regional trading arrangements in the Asia Pacific region. In fact, dynamic interaction and synergy have been characteristic of liberalisation on the unilateral, regional and multilateral fronts. However, it would not be realistic to expect a standard rate of liberalisation by all member countries, regardless of the stages of their development. 8. I have noted that in recent years, APEC's work programmes have focused more on liberalisation and facilitation of trade and investment. The Seattle, Bogor and Osaka Declarations have all been crafted with the single purpose of liberalisation and facilitation in mind. I have no problems with trade liberalisation per se. Indeed in Malaysia, we are committed to liberalisation and deregulation, and are moving in this direction at a pace that is commensurate with our level of development. Also, we have always been a very open market giving access to goods from all countries including those which discriminate against us. My concern however is with the manner and pace at which the market liberalisation measures are being pursued in the APEC process. 9. APEC as I have pointed out comprises economies at different levels of economic development and income scale. It has some of the world's most developed members on one side and the very early developing members on the other, with very wide income gaps between them, not to mention the size of the economy due to population size. Under such circumstances, it would be unrealistic and grossly unfair to coerce particularly the less advanced member economies to undertake liberalisation measures at a pace and manner beyond their capacity. While we recognise the pursuit of liberalisation will be good for all of us, it should nevertheless be approached carefully so as not to cause dislocation or disruption to industries which are at different stages of development. An approach premised on progressive liberalisation and flexibility will help assure the sustained growth of these economies, thereby enabling them to positively contribute towards the liberalisation process. Further, programmes and projects to enhance the level of development and redress economic disparities of the less advanced economies in the region are also crucial. APEC must never result in poor member countries becoming more and more dependent on richer members. Indeed APEC must through joint efforts enrich the poor countries and enable them to contribute towards the wealth of the Group. 10. With this in mind, I am concerned that development cooperation which constitutes a very important pillar of cooperation in APEC has not been given the attention that it deserves. It has always taken a back seat to market liberalisation and facilitation of direct wholly-owned FDI. This is unhealthy and must be corrected. For one thing, liberalisation alone will not succeed if it is not accompanied by development cooperation, as the two are interdependent and mutually reinforcing. In order for the developing economies to be able to undertake liberalisation on a continuous basis, it is important for the developed partners to assist the less advanced members to enhance their economic capability and capacity; in other words to enable them to enrich themselves through their own independent efforts. 11. The `APEC community' that is envisioned will only come about if members could display willingness and readiness to enhance development cooperation. The diversity of the APEC region indicates the need for care and ingenuity to achieve substantial development cooperation. Opening up the market of the rich to the poor is meaningless, if the poor has nothing to sell. But on the other hand, opening up the market of the poor to the rich, small though the market may be, is economically more meaningful. Direct foreign investments which can help enrich a developing country should therefore precede market opening and the giving of national status to foreign companies. Only when the poorer economies have developed into exporters of services and goods and beneficiated raw materials can they be considered ready to liberalise their markets. 12. As with liberalisation where we have individual and collective action plans, in development cooperation too, we need to have a detailed blue print outlining concrete action plans. In this blue-print, we would need to spell out action plans for development cooperation encompassing small and medium enterprises, science and technology, financial flows and infrastructure, telecommunications, and Human Resources Development (HRD). If these action plans for development cooperation could be effected in the same manner and with the same zeal as the action plans for market and investment liberalisation, we could create in the not too distant future, an `APEC community' that is not only prosperous but where the distribution of wealth is more equitable. 13. The role of the business sector in sustaining the region's economic dynamism is long recognised. The APEC leaders, at their meeting in Osaka last November had established the APEC Business Advisory Council (ABAC) as a permanent and integral part of the APEC process. Its role is to advise the leaders and to provide inputs into the APEC process. 14. It is understandable that business executives from APEC economies are becoming impatient with the slow rate of progress in liberalisation, harmonisation, and cooperation, and want political leaders to share their sense of urgency. 15. Still business leaders must understand that political leaders must do what is best for their respective economies as a whole. While business and economics are vitally important, social and political realities must always be borne in mind by political leaders. Given the different levels of economic and political development in APEC member economies, it is not inconceivable that the pace of liberalisation and deregulation within each APEC member country, particularly in the developing members, will depend on these realities. Political leaders do understand, however, that domestic policies need to be reviewed to facilitate cross-border trade and investment. 16. As with Government, the business sector too has an important role to assume in redressing the economic disparities prevailing among the APEC members. It too has an important role to play in the creation of an `APEC community' that has been mentioned earlier. Members need to remember that they have not only to discharge their corporate responsibility, but also to consider their own long-term interest and well-being. And their own long term interest calls for their contribution towards the stability and growth of their host countries. 17. Under the aegis of development cooperation, the business sector in APEC can enter into strategic alliances among themselves to develop the region's vast potentials. For example, the least developed among the developing economies of APEC can be targeted and the resources of the public and private sector mobilised for infrastructural development and manpower utilisation. The objective is to speed up economic development for the least developed member countries of APEC. While this may be a new approach for APEC, it is not an alien thing altogether in other regional groupings. In ASEM for example, the governments of the EU and Asian countries have entered into a partnership to develop the Mekong Basin area in terms of infrastructure and industries. The mere investment by countries and business in the infrastructure will speed up the development of this basin and its peoples. 18. APEC provides the opportunity for APEC governments to work together with each other as well as with the private sector to provide the regional public goods needed to support private sector enterprise and vigour. Some of these public goods include: * joint initiatives to enhance the efficiency and compatibility of transport and communications infrastructure; * the mutual recognition of a wide range of product standards, regulations, and administrative procedures, including streamlining customs regulations and business travel requirements; * working towards facilitation and standardisation as well as reduction of border restrictions on goods and services compatible with the stage of development of the respective economy; and * cooperation in energy infrastructure, small and medium-sized enterprises, and technology transfer. 19. APEC has been fortunate in being able to draw on the experience of ASEAN. ASEAN has undergone a process of learning from each other's mistakes as well as successful strategies. ASEAN's experience provides confidence that APEC itself can continue to evolve rapidly without elaborate or legalistic structures. The experience of ASEAN shows that any successful cooperation in the Asia Pacific needs to be based on the guiding principles of openness, equality, and evolution. Any attempt to use current economic strength or political influence, or even the power of a majority to ride roughshod over genuine, justified reservations would spell doom for any serious effort to build a cohesive Asia Pacific open economic `community'. 20. Business leaders from the developed APEC economies must understand these reservations, and should not lobby their Governments to use their clout to remove actual or perceived barriers to the business operations of their firms in other countries, especially in the developing APEC economies. APEC is not an ideological grouping of nations. Its main concern is the economic well-being of its members. If there are social and political spin-offs from the APEC process, that should be regarded as bonus. I have no doubt that there will be. The greatest challenge facing APEC business leaders, and some Governments too, is to have enough patience to nurture the region's immense potential for cooperation and for development. 21. In conclusion, I would like to reiterate that the building of an Asia Pacific open community cannot be the responsibility of bureaucrats and Governments only. The business sector also has an important role to play; a role that is no less crucial than the meetings of heads of Government. 22. I am confident that by working together we can all benefit from this Pacific dynamism. Asia and Latin America must, through the APEC process be brought up to the level of Europe and North America, not just in terms of democratisation but also in terms of wealth and stature. And businessmen by their transnational activities can help do this. |