Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : BUENOS AIRES, ARGENTINA
Tarikh/Date : 03/10/97
Tajuk/Title : THE JOINT LAUNCHING OF THE
ARGENTINE EXPORTERS CONFERENCE
ON ASEAN COUNTRIES
1. First of all, I would like to thank the organisers of
this Conference for giving me this opportunity to jointly
launch `The Argentine Exporters Conference on ASEAN
Countries' together with His Excellency President Menem.
2. This Conference is timely as Argentine businessmen
are now placing an increased focus and importance to trade
with Asia, particularly the Association of South East
Asian Nations or ASEAN, considering the vast opportunities
that are generated as the liberalisation process on both
multilateral and regional levels is being undertaken.
3. Argentina's continued presence in ASEAN is felt as
trade has exceeded US$800 million, accounting for 14.0
percent of ASEAN's global trade with Latin America in
1996. Argentina was also ASEAN's fourth largest trading
partner in Latin America after Brazil, Mexico and Chile.
4. The recent entry of Myanmar and Laos into ASEAN has
turned this regional grouping into a large entity with a
population of 480 million and a combined GDP of US$711
billion. With this, the ASEAN market is set for dynamic
growth and investors are therefore assured of attractive
returns. Malaysia will serve as an ideal base for
Argentine businessmen to locate their operations to tap
the full potential of an expanding ASEAN market.
5. ASEAN is also moving towards establishing the ASEAN
Free Trade Area (AFTA) by the year 2003. In realising the
AFTA, 93 percent of our tariff lines is presently included
in the list for AFTA concessions. Notably, only 1.4
percent out of the total ASEAN tariff lines would be
excluded from tariff reduction for security, health and
religious reasons. Currently, 85 percent of the Intra-
ASEAN trade is already subject to a tariff of between zero
to five percent under the Common Effective Preferential
Tariff (CEPT) Scheme.
6. ASEAN is also moving towards establishing an ASEAN
Investment Area which would further promote the flow of
investments into the region. ASEAN has also signed the
ASEAN Framework Agreement on Services which would lead to
freer flow of services in the seven priority sectors such
as tourism, construction, telecommunications, finance, air
and maritime transport. With the establishment of the
ASEAN Investment Area, tariff reductions and the
liberalisation of services sector, investors would have
greater scope and opportunities.
7. I would like to encourage Argentine entrepreneurs and
investors to increase their business presence in this
region by using Malaysia as a springboard for production
and distribution of their products into the ASEAN region.
Argentine companies can also enter into partnerships with
Malaysian companies to venture into projects in third
countries.
8. We in ASEAN, acknowledge the dynamism and the
aspiration of MERCOSUR to become a Free Trade Area by the
year 2000. We are also aware that MERCOSUR has recently
been expanded to include Chile and Bolivia as its
associate members thus enlarging the market to 201 million
and a GDP of over US$1 trillion as well as a per capita
income of US$5,425.
9. We are confident that the realisation of plans in
MERCOSUR will further stimulate the economic growth of
member countries of the region and that this grouping will
adopt an open approach to trade with countries outside the
region. By adopting an open-regionalism approach,
regional groupings such as MERCOSUR and ASEAN will also
benefit countries outside their respective regions, as a
result of increased economic activity within the region.
This will invariably create greater opportunity and demand
for goods and services from outside the region.
10. It is encouraging to note that Argentina's global
trade in the last five years have expanded and recorded an
average annual growth of 10.4 percent. Argentina's global
trade in 1996 was US$47.6 billion, representing 9.8
percent of Latin America=s external trade. MERCOSUR, the
European Union, USA and East Asia remained her principal
trading partners which in total account for 72.9 percent
of her global trade.
11. In respect of trade with East Asia, the volume of
trade between Argentina and East Asia had increased by
30.4 percent to US$6.0 billion in 1996 from US$4.6 billion
in 1995. The primary trading partners were the People's
Republic of China, Japan and ASEAN which together
accounted for 52.4 percent of Argentina's total trade with
East Asia.
12. ASEAN economies have registered high growth rates
over the last 10 years. The Malaysian economy has been
growing at an average of eight percent over the last
decade and the growth is expected to remain robust with
GDP growth projected between 7.8 percent to 8.2 percent
this year. The per capita income of Malaysia in 1996 was
US$4,259, an increase of 9.2 percent over 1995. The
average import tariff in Malaysia is low at nine percent
nominal and less than seven percent trade weighted.
Malaysia also has a low inflation rate, currently running
at below four percent per annum.
13. Malaysia is now the 19th largest exporter and the
17th largest importer in the world and hope to become the
15th largest trading nation at the turn of the century.
In 1996, Malaysia's global trade totalled US$157.6 billion
and her major trading partners were Japan, Singapore, USA,
Hong Kong, Thailand, Germany and United Kingdom which
collectively account for 76.0 percent of our total
external trade.
14. At the same time, Malaysia has also undertaken
efforts to forge greater trade and investment links with
the countries in the South. In the last five years, the
external trade generated between Malaysia and countries in
the South has increased by 136.4 percent to US$13.9
billion in 1996 from US$5.9 billion in 1992. In efforts
to enhance relations with South-South countries and to
provide a conducive framework for the private sector to
establish business links, Malaysia has concluded bilateral
Trade Agreements, Investment Guarantee Agreements and
Bilateral Payments Agreements with several countries in
the South. I am convinced that the exchange of visits of
business delegation and business contacts of this nature
will help to strengthen bilateral trade and business
relations between our two countries.
15. Malaysia has consistently recognised the importance
of long term Foreign Direct Investments (FDI) for her
economic growth and development. FDI has contributed
significantly to our economic development, particularly in
maintaining the momentum of growth in the manufacturing
sector. It is for this reason that we are committed
towards creating an environment that will provide, both
foreign and local, investors with the opportunities for
increased investment, growth and profit. Malaysia's
efforts in promoting foreign direct investment into the
manufacturing sector have been successful over the years.
From 1992 until July 1997, a total of 4,526 manufacturing
projects was approved involving capital investment of
US$53.3 billion. Of this amount, US$27.2 billion or 50.6
percent was foreign direct investment, reflecting the
attractiveness of the Malaysian investment environment.
16. The Malaysian Government in promoting the thrust into
hi-tech industrialisation, has identified several hi-tech
products and activities in the area of new and emerging
technologies. These include the areas of advanced
electronics, equipment/instrumentation, bio-technology,
automation and flexible manufacturing systems, electro-
optics and non-linear optics/advanced materials,
optoelectronics, software engineering, alternative energy
sources and aerospace. Interested Argentine companies are
particularly welcomed to invest in these hi-tech sectors.
An attractive package of incentives are available to
encourage investment in these hi-tech areas and research
and development activities.
17. As Information Technology (IT) is a critical
component for the future growth of the manufacturing
sector and the Malaysian economy, emphasis is laid on IT
industries in order to ensure the sustenance of her
competitive edge in the emerging digital economy as well
as to attract investments in this sector. Under the
Seventh Malaysian Plan (1996-2000), the Government has
allocated a sum of US$578.0 million (RM1,444.9 million)
for computerisation of public sector projects.
18. As you are also aware, Malaysia is developing the
Multimedia Super Corridor (MSC) as the perfect environment
for world class companies wanting to create, distribute
and employ multimedia products and services. The MSC is
being developed as a 15 x 50 km corridor with the best
possible physical infrastructure, special cyberlaws,
policies and practices, world-class physical
infrastructure and next generation 2.5-10 gigabytes
multimedia network.
19. The Malaysian Government has targeted seven
multimedia applications for initial development. These
flagship applications are electronic Government,
telemedicine, smart schools, national multipurpose card,
R&D clusters, world-wide manufacturing webs and borderless
marketing centres. The Government is seeking assistance
from leading local and international companies to develop
and implement these applications in the MSC to catalyse
the development of a highly competitive cluster of
multimedia or IT companies that will become world class
over time.
20. Malaysia has always adopted a pro-business approach
in its development policies. We have a clear and
transparent set of guidelines to facilitate investments.
They range from liberal equity conditions, flexible
expatriate employment policies, liberal exchange control
regulations and tax reliefs and concessions. Foreign
investors are allowed to own 100 percent equity if the
projects are for 80 percent export and above. In addition
to the liberal investment policies, Malaysia offers
attractive tax incentives which provides full or partial
tax reliefs from corporate tax, now at 30 percent. Tax
incentives are also provided for reinvestments by existing
companies in the form of a 60 percent allowance on
qualifying capital expenditure. The package of fiscal and
non-fiscal incentives provided has been an attractive
inducement to FDI.
21. In the last five years, trade between Malaysia and
Argentina continued to increase annually on an average of
28.3 percent to US$351 million in 1996 from US$101 million
in 1991. The balance of trade have been in Argentina's
favour. This is not a matter that both our countries
should be concerned with. Both countries especially the
businessmen must work towards increasing the quantum of
trade to a much higher level.
22. Currently, the exports of natural rubber and latex
constitute 28 percent of Malaysia's total exports to
Argentina, and manufactured products such as
telecommunications equipment, air-conditioner components,
articles of apparel and clothings and office machines are
beginning to feature prominently as they collectively
amounted to 47.7 percent of our exports in 1996. As a
matter of fact, a number of Malaysia's manufactured
exports are already of world class quality. Today,
Malaysia is the world leading exporter of room air-
conditioner as well as a leading global producer of
semiconductors, latex examination gloves, catheters,
rubber threads and audio-visual equipment.
23. I am also happy to note that the Malaysian national
car, Proton, has gained entry into the Argentine market.
Malaysia has been producing its own national cars for the
past 13 years for both the domestic and international
markets. Currently, Proton is exported to 46 countries
and the leading markets are United Kingdom, Singapore,
Germany, Australia and Belgium. The automotive industry
has subsequently developed Malaysia's supporting
automotive components sector, particularly rubber-based
components, which in recent years have experienced
significant increases in export performance.
24. Certainly, there is a considerable scope for
expansion of bilateral trade and investment between
Argentina and Malaysia. Given the numerous opportunities
for trade and investment in our two countries, I believe
the time has come for us to foster strategic linkages in
order to create partnerships in economic development not
only at bilateral but also at regional and global levels.
25. Further, existing Malaysian port facilities were
upgraded and new port facilities were developed to meet
the accelerated increase in demand by trade and industry.
Focus was also placed on improvements in efficiency and
productivity of port operations through rationalisation of
processes and procedures for cargo clearance. The new
Kuala Lumpur International Airport (KLIA) which will begin
operation in the first quarter of 1998, will have the
capacity to handle one million tonnes of cargo and 25
million passengers. Hence, with the upgrading and the
increasing efficiency of Malaysian ports and the upcoming
Malaysian new international airport, I believe, Malaysia
would be able to serve its best facilities to Argentina
for doing business with not only Malaysia but also with
the ASEAN region.
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