Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : PETALING JAYA, SELANGOR DARUL EHSAN
Tarikh/Date : 13/12/97
Tajuk/Title : THE PRIVATE SECTOR SALUTE TO
ASEAN CONFERENCE
1. I am delighted to have the opportunity to address
such a distinguished audience at a conference
commemorating ASEAN's 30th Anniversary. The conference
is indeed timely. I wish to congratulate the organisers
-- The Asian Strategy and Leadership Institute (ASLI)
and the Brooker Group, Thailand with the support of the
ASEAN Secretariat as well as the ASEAN Chamber of
Commerce and Industry -- for holding this Private Sector
Salute to ASEAN.
2. The Association of South East Asian Nations (ASEAN)
has undergone tremendous changes and development for the
past three decades. Our achievements are the result of
hard work of both the government and private sectors.
Without the latter economic development of the region
would not have been as high as it is. Therefore, it is
appropriate that today we gather for a meeting called 'A
Private Sector Salute to ASEAN'. Let us utilise this
conference to take stock of our achievements and
setbacks as well as plan for greater success in the
years to come. Let me acknowledge at the outset, that
the success which we hope to achieve will only
materialise if we -- the government and private sector -
- continue to work closely together in harmony and
single-mindedly for the betterment of the region.
3. ASEAN has come a long way since its founding in
1967. We started off with just five countries -
Malaysia, Singapore, Thailand, Indonesia and the
Philippines. In 1967, no one gave us much of a chance
to succeed. South East Asia had by then undertaken two
short-lived attempts at regional cooperation, first in
1959 with the formation of the Association of South East
Asia (ASA) and then in 1966, MAPHILINDO, which grouped
Malaysia, the Philippines and Indonesia. Politically,
South East Asia was divided according to whose colony we
once were. Thailand was of course never colonised. The
Indo-China countries were either at war or faced various
insurrections after decolonisation. Differences in
ideology kept us apart and at times resulted in
confrontations. There was a great deal of suspicion of
each other made worse by conflicting territorial claims.
We tended to align ourselves with one or the other of
the two blocs in the bipolar world and their Cold War
strategies. The outlook then was indeed bleak.
4. Today, the situation is very different. In thirty
years, ASEAN has evolved into the pivotal organisation
in the Asia-Pacific region and is also the most
successful regional organisation in the developing
world. Although there still exist certain differences,
challenges and conflicting claims, the region
nonetheless enjoys unprecedented peace and stability as
well as tremendous economic development. With a market
of almost 500 million consumers, ASEAN is often
considered as the gateway to the broader East Asian
market. Although all of us are facing economic turmoil
which has undermined our growth, our potential is still
there. It is reasonable to expect us to recover and to
forge ahead. We still have a not unreasonable hope to
catch up with the developed West. The skills and the
willingness are still there. The system and the game
rule of a globalised world may not favour us now but we
will learn to handle them in time and we will bounce
back, possibly stronger than before. What we need to do
now is to build up our internal strength, our
organisation and our unity and then we will overcome.
5. Today we have almost made a reality of the
aspiration of ASEAN's founding fathers by admitting Laos
and Myanmar. We had hoped that Cambodia would have
joined us by now and so complete the ASEAN dream. But
that is not to be yet. We hope that it would not be too
long before the whole of South East Asia belong to one
group.
6. Many question the wisdom of our admitting countries
which are so different in terms of ideology and economic
system. I would like to point out that in 1967 when
ASEAN was formed, the differences between the five
founding members were more marked. Indeed they were
almost at each other's throats. Suspicions between them
were deeper. There were serious unsettled conflicts
between them.
7. But they came together anyway and persisted in
their attempts to find common grounds for cooperation.
There is no reason to assume that the differences that
the new ASEAN members present to the grouping cannot be
handled by people who had already exhibited their skill
at compromise and diplomacy. They will succeed, and
they will succeed more quickly if they are left alone
and their efforts are not subverted by outsiders.
8. The members of ASEAN have shown a distinct tendency
to be flexible. They are not dogmatic and they are ever
ready to learn and adopt strategies which had brought
success to other members. It is no accident that all
the ASEAN countries appear to progress uniformly towards
economic success. It is reasonable therefore to expect
the new members to do the same and build a regional
grouping of developing countries which will be second to
none.
9. Today the ASEAN countries, in particular the more
successful members are faced with economic turmoil. It
would be wrong to say that their governments and their
people, in particular their businessmen are completely
blameless. There had been many abuses and
malpractices, including of course large foreign
borrowings and deficits in the balance of payment. These
abuses on their own would have resulted in slowing down
growth or even reversing it. But the devaluation of
their currencies had precipitated matters, magnified
the scale of their economic reversals, and caused
financial turmoil. It had exposed and bankrupted not
only the bad companies but it had rendered good
companies non-viable. It had put banks and other
financial institutions in danger and forced their
closure. Indeed it had forced countries to borrow
heavily from international agencies and obviously
increase their debt burden.
10. It will be very many years before the economies of
South East Asia regain some semblance of their past
performance. Some say it will be a matter of months.
Can it be so quick when we see that despite the loans
they have taken, despite the stringent and prudent
actions they have been forced to take, despite the
dismissals and unemployment, the economy is not only not
recovering but it is actually sliding further backwards?
It is flattering to be told that we will recover quickly
but proud independent countries would not surrender
their economic and political freedom if recovery could
be so easily managed. In any case can recovery be real
if there is no sovereignty?
11. We in South East Asia should accept that we are
poor now and the road to recovery is going to be long
and hazardous. If we are going to make it, if we are
going to shorten the time, we need to stay closely
together. We have a need to develop an ASEAN - wide
strategy for recovery. It is not going to be easy
especially as we are no longer free agents. But there
is still much that we can do together.
12. In the first place the good understanding and
cooperation that the ASEAN private sector had developed
with the Governments of ASEAN countries must be
continued and enhanced. Whatever we may have to do to
overcome our problems we will have to do together. We
will of course not go against our undertakings to
whatever international agencies we have committed
ourselves to. But those undertakings will not paralyse
us completely.
13. Since all our currencies have been devalued to
almost the same extent, the exchange rates between us
have not changed much. We can therefore continue our
trade with each other almost as we did before. Indeed
we can expand our trade greatly, if our regional
sources retain this competitiveness. It is up to us to
do so.
14. AFTA can be reexamined in order to expedite and
expand it. If AFTA is considered good during times of
prosperity, cannot it be good or even better during
times of stress? Much will depend on our ingenuity and
our ASEAN spirit of unity and belief in mutual help. I
feel quite sure that the devaluation of our currencies
can facilitate trade between us. There are many things
which we could not buy from each other before which
should be competitive now if we keep our new exchange
rates and the price of goods according to the domestic
markets. We have discovered in Malaysia that palm oil,
for example, is priced in US Dollars even for the local
market and yet our costs are in devalued Ringgit. While
we do not grudge the windfall profit our exporters get
due to the devaluation of the Ringgit, we think that the
domestic market should not be burdened by the extra
profit which palm oil producers would get by selling in
the domestic market at export prices.
15. I realise of course that palm oil is not something
that we buy from each other. But supposing we adopt an
AFTA pricing system it would be cheaper than edible oil
imported from outside AFTA. And there are many products
with the same marketing mechanism as palm oil.
16. Many economists assume that devaluation of a
currency automatically result in increased
competitiveness and windfall profits. This is not
necessarily so. A lot of the exports of South East
Asian countries have contents imported from countries
with currencies which have appreciated against us, the
United States for example. The imported contents reduce
the cost advantage from devaluation. Freight and
insurance also do the same, both inbound and outbound. A
40 percent depreciation would not give a 40 percent
advantage.
17. If the product with imported contents is sold
locally there will be a price increase. This increases
the cost of living. There will be demands for wage
increases which will increase local cost further. In
the end the benefit from devaluation will be totally
lost.
18. If we want to make AFTA worthwhile we have to guard
against the inflationary effect of devaluation. It is
not impossible to do this. It requires a great deal of
discipline among our people. But the result of the
increase in trade between the countries of ASEAN will
help cushion off the effects of devaluation and shorten
our recovery period.
19. When Malaysia promoted a buy-Malaysia campaign we
were accused of economic nationalism. It is not
nationalism at all. When our currency is devalued
effectively it makes imported goods dearer by the same
percentage of the devaluation. To continue buying we
will have to find more Ringgits to convert to the
currency we have to pay for the imported goods. The
Ringgit has depreciated by 45 percent. How do we find
45 percent more Ringgit to pay for the imports? Indeed
in our present economic condition we cannot even find
the amount of Ringgit we used to use to pay for the
imported goods. We actually have less Ringgit now
because business is bad and wealth is not being
generated. So how can we buy the old amount of imported
goods? What we can buy is much less than the percentage
of depreciation of our currency. We are not being
economically nationalistic. We are just unable to find
the money to buy. You cannot impoverish us and then
tell us to continue buying what you sell.
20. What is true of Malaysia is also true of all the
other ASEAN countries who have suffered devaluation. But
since relative to each other's currency the devaluation
has not been so high, it follows that goods from ASEAN
countries would be cheaper for ASEAN countries. Of
course we would prefer to sell outside of ASEAN in hard
currency and earn more foreign exchange. But where we
can be competitive in each other's market we should buy
ASEAN.
21. I am not advocating ASEAN economic regionalism.
But the fact is that we have less money now and we
should buy from the cheapest source. There should be no
restriction to others entering our markets with their
products but if their prices are higher we should not
buy from them. As a last resort we could barter in
order to increase our trade since we don't know when the
pressure on our currencies will be lifted.
22. What I am suggesting does not negate market forces.
Market forces demand that we buy the cheapest and the
best. By taking advantage of the simultaneous
devaluation of our currencies, the ASEAN countries can
actually increase their trade with each other without
keeping out other countries. That way we will help each
other's economy to recover and hopefully to grow. When
we are rich again and able to afford the imported goods
and luxuries from outside ASEAN, we should do so.
Indeed we will be helping to restore world trade by
working hard to recover quickly.
23. I would like to suggest that the private sector in
all the ASEAN countries seriously examine this idea.
Perhaps Governments too should examine it. We may
reject it as a harebrained idea in the end but there is
no harm in examining every possibility of restoring the
health of our economy. We must always be prudent and
correct but in business and in finance there have always
been new ways of making money. We have lost our wealth
largely because we have not understood what is going on
in the big wide world outside. For 30 years we had
developed our countries the old-fashioned way. We
believed in hard work, in sweat, toil and tears. We
believed that one good turn deserves another. We
believe in cooperation between countries, within regions
and between regions.
24. But during the 30 years concepts and ways of doing
business have changed. With liberalisation,
globalisation and market forces came herd instincts. We
were caught unawares. And so we have to pay a price, a
heavy price. But for the price that we paid we should
at least get a few tips on how to manage if not a full
lesson.
25. We know we have to accept what we cannot reject.
We are doing our best now. What is not viable must be
killed outright so the survivors can be free to
consolidate their positions. People unnecessarily
employed should be retired.
26. As a doctor who once practised surgery I appreciate
the need to amputate gangrenous legs to save the rest of
the body. What we have to do is surgical. And we will
do it. We must reassure the world that we will carry
out what we have undertaken to do, at whatever cost. We
hope that in the end we will restore confidence and the
wealth will flow back.
27. In the meantime we must nurse our Association, the
ASEAN. On this 30th Anniversary we must renew our
pledges and our commitment towards building a region of
Peace and Freedom, and hopefully, Prosperity. We must
stand together linking arms and bolstering each other's
strength.
28. And our private sector must work closely with our
public sector, in each country and in the region as the
ASEAN entity. We had achieved so much in the past
through our cooperation, through our constant
consultation and through our strong support for each
other. Now more than ever we need to continue that
cooperation, consultation and support. What had stood
us in good stead in good times must now be made to stand
in good stead in bad times. Some have accused us of the
denial syndrome. The denial would be greater if we
don't admit that we are facing a serious problem which
can return us to our colonial past. The journey back
will not take months as our admiring detractors
smilingly assure us. It is going to take years and
years of hard work and new cunning. But God-willing, we
will return, battered, bruised but we will return.
29. The private sector has many reasons to salute
ASEAN. Having saluted let us now put our heads
together and work out the return to our past
achivements.
|
|