Oleh/By		:	DATO' SERI DR. MAHATHIR BIN MOHAMAD 
Tempat/Venue 	: 	SUNWAY LAGOON RESORT HOTEPETALING 
			JAYA, SELANGOR 
Tarikh/Date 	:	16/10/97 
Tajuk/Title  	: 	THE 29TH ASEAN ECONOMIC MINISTERS 



   1.     At  the  outset,  I would like to  congratulate  the
  ASEAN  Economic  Ministers on the commendable  achievements
  in  the  Association's economic cooperation over  the  last
  ten  years.   These achievements, coupled   with  sustained
  economic  progress  of  individual  member  countries  have
  placed  ASEAN  as  an  important  player  in  international
  economic relations.
  
  2.    I recall addressing the First ASEAN Economic Congress
  ten   years  ago  here  in  Kuala  Lumpur  and  posing  the
  challenge  then  for  ASEAN  to establish  a  closer,  more
  constructive and complementary relationship in the area  of
  economic  cooperation.   Today,  we  are  proud  that   our
  collective  resolve  has brought us the  first  harvest  of
  tangible results.  Ten years ago, the idea of a free  trade
  area  in ASEAN was not acceptable.  It was seen as  a  move
  that  would  slowly erode national sovereignty.   Today  we
  are  into the fifth year of the implementation of the ASEAN
  Free  Trade  Area  (AFTA) an initiative that  has  achieved
  much  greater  success than the previous PTA  (Preferential
  Trading   Arrangement).   Intra-ASEAN   trade   last   year
  amounted  to  US$155.2  billion, a ten-fold  increase  over
  that in 1987 when it amounted to US$14.7 billion.  Over  95
  percent  of  that  trade is covered by  tariff  concessions
  under  the  Common  Effective  Preferential  Tariff  (CEPT)
  which will lead towards the realisation of AFTA.
  
  3.    When  we embarked on AFTA, we were not addressing  it
  solely   to   increase  intra-regional  trade  within   the
  Association.  The larger markets for our goods lie  outside
  ASEAN  and  that the prospect for expansion  and  realising
  regional  growth  lies with the international  market.   We
  need   AFTA   to  increase  competition  and  upgrade   the
  efficiency  of  our industries in order  that  they  become
  more  competitive in the world market.  This would in  turn
  make   ASEAN   an   attractive  area  for  long-term   non-
  speculative  foreign direct investments (FDI)  and  attract
  more  world  class producers to locate their operations  in
  the  region.   I  would like to remind ourselves  that  the
  bigger  the intra-ASEAN trade, the more attractive will  we
  be to the serious FDI.
  
  4.    Our  thrust  forward require us to go  beyond  tariff
  reduction.    ASEAN's   own   involvement   in   industrial
  production  needs  to be nurtured along  with  the  foreign
  direct  investments to deepen and to share in the  benefits
  of  growth.   We  in  ASEAN agreed  to  upgrade  industrial
  cooperation    by   introducing   the   ASEAN    Industrial
  Cooperation  Scheme.  We also realised  that  the  services
  sector   will   be  the  key  sector  to  develop   greater
  competitiveness  and widen the base of economic  growth  of
  ASEAN.    To  achieve  this,  we  concluded  the  Framework
  Agreement   on   Cooperation  in  Services   and   launched
  negotiations  in  market access beyond our  commitments  to
  the  General  Agreement on Trade in Services.  We  reviewed
  action   plans   in   the   sectors   of   transport    and
  communications, energy and minerals while at the same  time
  we  provided greater focus in our plans for cooperation  in
  the food industry, agriculture, forestry, and tourism.   We
  also  concluded  a  Framework Agreement on  Cooperation  in
  Intellectual  Property  to  ensure  that  our  region  will
  provide  effective  protection for  intellectual  property,
  both  foreign and domestic.  Protection for the former will
  further  raise  the confidence of foreign  investors  while
  protection  for  the  latter  is  essential  as   our   own
  entrepreneurs  now  have  the capability  and  capacity  to
  produce  works,  systems  and  inventions.   We  are   also
  formulating guiding principles towards the formation of  an
  ASEAN  Investment  Area  which  foresee  a  freer  flow  of
  capital  as  well as effect transparency and predictability
  of  policies and practices in investment, with  a  view  to
  making the ASEAN region a haven for investors.
  
  5.    Given  the  mutually reinforcing initiatives  put  in
  place  by  AEM, I have no doubts that as we move  into  the
  first  five  years of the next millennium,  ASEAN  economic
  cooperation  would  be brought to the "higher  plane"  that
  was  envisaged by the Fourth ASEAN Summit in  Singapore  in
  1992.   However to remain on this higher plane, we need  to
  set  our sights higher.  To make ASEAN relevant in the next
  millennium we need to have a longer term vision of what  we
  want  to  be  as  an Association.  Twenty five  years  from
  today  do  we  foresee ASEAN becoming a common market  like
  the  former EEC?  Are we setting our sights to be a  single
  market  or  an economic union ala the EU?  What is  certain
  is  that  we  need  to make the bold move  towards  greater
  economic  integration, as we will have to face an uncertain
  environment.    Our   recent   experience   with   currency
  manipulation  should  be a big lesson  for  us.   While  we
  should  always  avoid  abusing  the  system,  we  must   be
  perpetually   alert   to   the  possibilities   of   others
  exploiting  our weaknesses in order to weaken  us  further.
  We  have  a  duty  to bring order within  and  between  our
  countries,  and indeed contribute to a more  orderly  world
  environment.
  
  6.    What is clear to us now is that the challenges  which
  we will have to face will be enormous.
  
  First,  while we are closer to achieving the vision of  our
  founding  fathers for ASEAN to embrace all 10 countries  of
  Southeast  Asia  with the membership of  Lao  PDR  and  the
  union  of  Myanmar and the eventual membership of Cambodia,
  we  need  to  remind  ourselves that  the  development  gap
  between the old and new members require special attention.
  
  We  need  to step up the pace of our collective development
  efforts  in  order  to stay ahead of change.   We  have  to
  encourage  the  new  members to face  change  with  greater
  determination  if we are to benefit from such  changes.   I
  see  the Mekong Basin development initiative serving as the
  primary  vehicle  for  us  to  collectively  spur  economic
  development  of the new members.  Through this  initiative,
  we  can  work  together  in  developing  much  needed  hard
  infrastructure  such as roads, bridges, railways,  airports
  and  ports, industrial estates, schools, hospitals and  the
  like  as well as soft infrastructure such as education  and
  training,  trade and investment facilitation,  improvements
  in   administration  and  management  of  projects.    This
  regional effort will not only benefit the riparian  states,
  but  also the region as a whole.  Our resolve to assist the
  development  of  the  riparian states must  be  matched  by
  deeds  and  financial  commitments on  mutually  beneficial
  terms.
  
  Second,  we need to liberalise without ignoring the dangers
  posed  by  those  who  see only the opportunities  afforded
  them  by  their strength and experience and the  weaknesses
  which  their victims may have.  We must not just  think  of
  level playing fields but also the relative strength of  the
  contestants.  While standing together to face problems  may
  not  amount  to  much, but it is much safer than  isolating
  ourselves in the hope that we may not be noticed  and  thus
  left alone.
  
  Some  postulate  that  the future  of  the  world  will  be
  characterised  by herd behaviour and herd  instincts.   The
  different  herds  will wheel to the left or  the  right  or
  will  charge ahead, trampling upon whatever may be  in  the
  way.   This  does  not  speak well of  the  progress  human
  civilisation  has  made.  But then, the  history  of  human
  civilisation  is full of the exploitation of  the  weak  by
  the strong and the powerful.
  
  Third,  we  need  to  ensure that the multilateral  trading
  system  remains fair and open.  We were able to  contribute
  positively  to  the  conclusion of  the  Uruguay  Round  by
  exerting  a positive influence on the debate on issues  and
  by   our   actions   in  effecting  orderly  liberalisation
  measures.   We  have  continued to exert ASEAN's  influence
  during  the  WTO  Ministerial Conference last  December  to
  ensure that extraneous issues and non-trade issues are  not
  brought  within WTO disciplines.  It is important that  the
  WTO  becomes  the sole organisation for the  settlement  of
  disputes.   Actions  taken outside the WTO  should  not  be
  allowed and should not be respected.  An organisation  must
  have  rules in order to exist and be relevant.  Such  rules
  must  have  the force of law, international laws which  are
  properly   and  democratically  enacted.   An  organisation
  without  rules and regulation will not result  in  equality
  of  benefits for the members.  Liberalisation is not  about
  doing  away  with rules and laws altogether.  It  is  about
  everyone  submitting to the same set of rules,  regulations
  and laws on a world scale rather than national scale.
  
  Fourth,  we  have to embrace the positive  aspects  of  the
  development  of  capital  markets.   Developments  in   our
  capital  markets  over the last five  months  revealed  how
  vulnerable  we  are  to various abuses.   We  must  make  a
  distinction  between  speculative  short  term  hot   money
  operations    and   serious   investments   in   productive
  activities.   We should continue to welcome real  long-term
  investments  but must be wary of operations  which  do  not
  create  any  real wealth for us.  We need to  cooperate  in
  macro   economic   policy   formulation   to   ensure   the
  achievement of stable, sustainable economic growth for  the
  region.
  
  Fifth,  we  need  to harness benefits from developments  in
  Information  Technology very early before the enormity  and
  speed of these developments render it impossible for us  to
  catch  up.   The conduct of trade and commerce  itself  has
  not  been  spared from the development of  IT.   Electronic
  Commerce  is the buzz word that we need to embrace.   Early
  discussions   have  begun  on  the  need  to  formulate   a
  framework   for  electronic  commerce.   Whether   we   are
  conscious  of it or not, all of us in ASEAN have  conducted
  part  of  our  business transactions using modalities  that
  form  part  of  electronic commerce.   We  need  to  engage
  ourselves  in the discussions to formulate a framework  for
  electronic  commerce to ensure that the guiding  principles
  within  that framework do not put us at a disadvantage  but
  in  fact  places  us  all  in a position  to  reap  maximum
  benefits.  We cannot ignore that we need revenue  in  order
  to  govern  ourselves and much of this revenue  comes  from
  commercial activities.
  
  Sixth,  we  need  to  upgrade, strengthen  and  expand  our
  services   sector  to  complement  our  strength   in   the
  manufacturing  and  industrial sector.  The  latter  cannot
  remain as the only engine of growth as its contribution  to
  GDP  has  almost  reached the optimum  while  the  lack  of
  strength  in  the former has been highlighted  as  a  major
  contributor  to  the  current account deficit  in  most  of
  ASEAN economies.
  
  Seventh,   we  must  continue  efforts  at  upgrading   the
  knowledge  and skills of our people with greater vigour  if
  we  are  to  keep pace and move ahead of change.   We  must
  also  continue to emphasise raising productivity levels  in
  all activities.
  
  7.    In moving towards greater economic integration, ASEAN
  may  need  to  look  at  the way we cooperate  with  a  new
  perspective.    Our  targets  must  be  that   of   gaining
  advantage  from our strengths rather than merely protecting
  our   weaknesses.    We   had  struggled   hard   to   gain
  independence  and we cannot afford to lose our  sovereignty
  in   the  name  of  free,  unrestricted  breaching  of  our
  economic  and  other borders.  At least we  must  ascertain
  that  such  breachings  will  be  subjected  to  eventually
  beneficial rules.
  
  8.    We  have also to acknowledge that as we move  towards
  greater  economic integration, we are more exposed  to  the
  occurrence   of   disputes   among   ourselves    in    the
  implementation of the economic initiatives that we may  put
  in  place.  We have to resolve such disputes  swiftly   and
  effectively.  The  Agreement  on  Dispute
  Settlement in Economic Initiatives concluded in April  this
  year provides the much needed reference.
  
  9.     While   we  implement  initiatives  toward   greater
  economic  integration in ASEAN, we must  not  overlook  the
  critical element of reducing transaction costs or the  cost
  of  doing  business in ASEAN.  We need to review regulatory
  and  administrative  procedures at the national  and  ASEAN
  levels  with  a  view  to  making  them  more  simple   and
  transparent  and  ensure that new measures introduced  have
  the  effect  of  facilitating decisions and approvals.   We
  have to combat corrupt practices squarely.
  
  10.   Towards reducing the cost of doing business  we  will
  have  to  review the efficiency of our utilities  industry.
  The  cost of electricity, gas, water and telecommunications
  will  be less of a burden to business if we liberalise  the
  more restrictive regulation.  In the same vein, we need  to
  make  our  ports and airports more efficient,  our  haulage
  and freight forwarding services more responsive.
  
  11.   At the same time, we have to adopt processes that are
  sustainable, clean and environment-friendly to avoid  costs
  associated  with  environmental degradation.   We  have  to
  educate and encourage our rural population to do away  with
  antiquated  practices  in their daily  economic  activities
  which  can pollute the environment.  The proximity  of  our
  borders  requires that we address the problem of  pollution
  from  both the national and regional perspectives.  Failure
  to  do so will most certainly cost us a lot and will retard
  our progress.
  
  12.   ASEAN economic cooperation has come a long  way  from
  the  time when we embarked on our first collective economic
  initiative 20 years ago.   The journey ahead is longer  and
  more  demanding.  We can make the journey less  onerous  if
  we  prepare ourselves well for it, if we remain focused  in
  addressing  issues  that  confront  us  and  if  we  remain
  committed to achieve our regional goals.
  
  13.   I thank the ASEAN Economic Ministers for inviting  me
  to  officiate  at  the 29th Meeting of AEM.   I  wish  them
  success in their deliberations.