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.
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