Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : SANTIAGO, CHILE
Tarikh/Date : 29/09/97
Tajuk/Title : THE CHILEAN-MALAYSIAN
BUSINESS LUNCHEON
1. Firstly, let me thank you for your presence and your
keen interest in furthering your business relations with
Malaysian businessmen.
2. Trade today constitutes a vital element in global
economic growth. World merchandise trade reached
US$10,340 billion in 1996. Asia's share of that global
trade in 1996 was 25.3 percent, compared to Latin America
(4.7 percent), Africa (2.3 percent) and Central, Eastern
Europe and CIS (1.8 percent). Asia accounted for 26.6
percent of total world merchandise exports and 25 percent
of total global merchandise imports. This economic
dynamism of Asia is and will continue to be derived from
Asia's economic links to the rest of the world.
3. Malaysia, being part of Asia, and recorded as the
world's 18th trading nation, is no exception. According
to WTO International Trade Report 1996 Malaysia maintained
its position as the 19th largest exporter in the world,
with a 1.5 percent of share of global exports. In the
period 1990 - 1996, Malaysia emerged as the fastest
growing exporter in the world, with an export growth rate
of 18 percent compared to the world average of seven
percent for this period.
4. The situation is of course different at the moment.
We dared to disagree with those who dictate the finances
of the world. We are being punished for refusing to
acknowledge the fairness of the system which can
impoverish poor countries instantly.
5. Today globalisation is bringing people in every
continent closer together. Differences in culture,
values, religion and language is no longer a barrier to
expanding economic relations. While Chile and Malaysia
may have differences in cultural backgrounds, our
tradition of tolerance and understanding living in a
cosmopolitan society, will facilitate our efforts to forge
strategic alliances with each other. In fact, this
diversity in both our countries' cultures and practices
will enhance the potential for innovation and improvement.
6. Both Chile and Malaysia are individually linked to a
larger regional entity and consequently a larger regional
market for the other. Malaysia recognises the various
developments taking place in Latin America, a region that
Chile belongs to. We accept the fact that where there is
the lure of a larger regional market, bilateral
consideration would inevitably be subjected to regional
dictates. However, this need not be an impediment to our
efforts to increase greater economic linkages. Malaysia
has always been committed to fair and liberal multilateral
trading environment and believes in and practises the
policy of transparency and predictability.
7. Malaysia today is both a recipient of foreign direct
investment as well as an investor overseas. We are
therefore able to relate to the needs of both parties. As
an investor, we hope the host nations have transparent and
predictable policies that will ensure investment security
while as a recipient we certainly provide the same
assurances. To enhance trade and investment flow,
Malaysia has concluded seven agreements with Chile namely
the Economic, Scientific and Technical Cooperation
Agreement, Bilateral Payment Agreement, Trade Agreement,
Investment Guarantee Agreement, MOU for establishment of
Air links, MOU for cooperation in Trade Promotion between
MATRADE and DIRECON and MOU between the Malaysian Royal
Customs and Excise Department and the Department of
Customs of Chile.
8. In terms of bilateral trade, Malaysia's total trade
with Chile has increased significantly over the past five
years from RM146.92 million (US$58 million) in 1990 to
RM624.52 million (US$249 million) in 1996. For the first
half of 1997 total trade recorded was RM350.9 million
(US$140 million). There is considerable scope for
expansion in the value and volume of trade as the
economies of both countries are experiencing high growth
rates which will invariably require imports of capital,
intermediate and consumer goods. The large group of
Malaysian businessmen in my delegation is here to explore
greater cooperation in trade and investment. It is my
fervent hope that bilateral trade will continue to grow
strongly.
9. Malaysia's major imports from Chile have been copper,
iron ore, fish meal and fresh fruits. Copper constituted
over 75 percent of Malaysia's total imports from Chile in
1996. Chile's major imports from Malaysia include radio
broadcast receivers, sound recorders of reproducers,
automatic data processing machines and television
receivers and natural rubber. With regard to investments,
three Malaysian companies have substantial interest in
Chile in the area of commercial property, housing
development and fish canning and packaging. Malaysian
investments in Chile including proposed investments, is
estimated at US$70 million.
10. My visit to this region is part of Malaysia's
continuous effort to increase trade and investment with
the countries of the South. Distance is no longer a
barrier to economic relations, among South Countries, as
IT and efficient transportation links have removed these
impediments and has provided vast opportunities for
economic cooperation and integration. While the developed
countries are important to developing nations as a market
for their products, we should not forget the tremendous
benefit that could be derived from greater South-South
cooperation in trade and investment.
11. This kind of cooperation could extend beyond the
shores of our two countries to incorporate cooperation in
third countries. Chile can take the lead for such efforts
in this region given your strong linkages with NAFTA and
MERCOSUR, while Malaysian businessmen can do the reverse
for the regional and subregional markets in our area.
12. In this regard, Malaysia has regularly participated
in such activities as the Santiago International Fair
(FISA). I would like to invite the Chilean business
community to participate in International Trade Fairs held
in Malaysia to create greater awareness of Chilean
products in the Malaysian market and to spur greater
business interaction between the Chilean and Malaysian
private sector. Malaysia welcomes Chilean investments in
Malaysia. While there has been some past Chilean
investments in the footwear and shipping sector, there is
scope to increase this to include other sectors where
Chile has the expertise. An area that Chilean and
Malaysian businessmen may want to look into is the
establishment of regional warehousing and distribution
centres.
13. The Chilean business community must not only look at
the opportunities in Malaysia, but must consider Malaysia
as a strategic location in the ASEAN region as a whole.
ASEAN has now become a nine member regional market of 480
million people, bigger than EU and NAFTA. ASEAN has
established linkages with MERCOSUR to promote trade and
investment links. Being two of the fastest growing
regions, there are opportunities for the private sectors
of the two regions to cooperate. While Malaysia can be a
launching pad to ASEAN and the markets around the region,
Chile, similarly could be used as a gateway to the Latin
American market by Malaysia. Chile is widely recognised
as having one of the most open, stable and liberalised
economy in Latin America, with a market based economic
system in which the private sector is the engine of growth
and the public sector assuming a guiding and supportive
role. This is similar to Malaysia.
14. Let me update those present today on Malaysia's
industrial policy for the next ten years. Malaysia has
successfully shifted from an agro-based economy to an
export oriented manufacturing economy. Currently Malaysia
faces a tight labour situation and does not encourage
labour intensive industries. The focus now is to move
manufacturing operations beyond just mere production to
include R&D, design capability, development of integrated
supporting industries, packaging, distribution and
marketing activities. We are gearing ourselves to produce
high value added products and services for the global
market.
15. We forecast that the manufacturing sector's share of
the GDP will increase from 33.1 percent in 1995 to 37.5
percent in the year 2000. By the end of our Second
Industrial Master Plan in the year 2005, the manufacturing
sector would probably achieve a share of 38.4 percent of
GDP. In our shift to capital intensive and high
technology industries, the Government offers an attractive
package of fiscal and non tax incentives including tax
relief up to ten years, Investment Tax Allowance,
Reinvestment Allowance and employment of expatriates.
Sectors being promoted include aerospace, advance
electronic, software engineering, bio technology and
advance materials.
16. A significant development in Malaysia is the
Multimedia Super Corridor (MSC), a 15 km x 50 km zone
extending south from Malaysia's present capital Kuala
Lumpur. Companies wanting to use the MSC as a test bed to
create, distribute and employ multimedia products and
services can locate their operations here. Malaysia
offers the MSC as a global bridge to the information age.
Let me very quickly summarise what the MSC has to offer.
17. First, on the physical side, we will offer you the
world's best physical infrastructure. We are building the
Kuala Lumpur City Centre, a massive intelligent building
complex. We are building a new hub airport. We would
also be having rapid train and highway links between Kuala
Lumpur and the airport, passing through two new
intelligent garden cities, Putrajaya and Cyberjaya.
18. When the first phase is operational in January 1998,
the new Kuala Lumpur International Airport will have 80
gates with two parallel runways. It will also become an
integrated logistic hub with the latest technology and
equipment to facilitate movements of people and goods.
Cyberjaya is a city which will provide the physical and
psychological environment for the pursuit of information
age technologies and business. This city of intelligent
buildings, multimedia enterprise estates, multimedia
university, commercial and residential housing and
recreation facilities will be able to support a living
population of 100,000 people and a working population of
150,000 people. Putrajaya will be the new administrative
centre of the Government.
19. Secondly, we will have in place the world's best soft
infrastructure of cyber laws, policies and practices. We
have formulated a comprehensive framework of cyberlaws on
intellectual property, digital signature, computer crimes,
distance learning, telemedicine and electronic government.
Companies with MSC status will enjoy a five year tax
exemption, renewable up to ten years or 100 percent
Investment Tax Allowance and duty free importation of
multimedia equipment. Other incentives include
unrestricted employment of local and foreign knowledge
workers, freedom of ownership, freedom to source capital
globally for MSC infrastructure and the right to borrow
funds globally.
20. Thirdly, we will install a high-capacity global
telecommunications and logistics infrastructure built on
the MSC's 2.5-gigabit to 10-gigabit digital optical fibre
backbone and using the latest ATM switches to provide
fibre to the building. This network will have a 5-gigabit
international gateway with direct links to the U.S.,
Europe and Japan, as well as the other nations in South
East Asia.
21. Fourth, we have set up a Multimedia Development
Corporation or in short the MDC, a one-stop agency, to
manage and market the MSC.
22. However, I cannot but reemphasise that no matter how
meticulous the plan for economic development by a
government, it will never materialise without the active
participation of the private sector. We have managed to
attract the attention and gain the interest and support of
some of the world's biggest multimedia corporation.
Nippon Telephone and Telegraph (NTT), which has been
cooperating with us in this project from the outset, will
be one of the first companies to have operations in the
MSC by setting up its research and development facilities.
We hope and welcome Chilean corporations especially those
in the information technology field and related areas to
locate their plants, research and development facilities,
and operations in the MSC.
23. With the vision that we have set for Malaysia and the
various development projects that we have put in place
opportunities both in trade and investment abound for
foreign business enterprises. Some countries may have
cheaper land prices, lower rentals, and lower wages than
Malaysia, but we continue to offer a stable, strong and
business friendly government, consistent policies, a safe
and healthy environment, and forward-looking, dynamic and
innovative economic regime to help investors succeed
without undue constraints.
24. I would, therefore, like to take this opportunity to
invite all Chilean businessmen to take a keener interest
in Malaysia and seek out trading and investment
opportunities both in Malaysia and, jointly with Malaysian
businessmen, in third countries. The future of stronger
Chile-Malaysia economic partnership lies with you.
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