Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : SUNWAY LAGOON RESORT HOTEL,
PETALING JAYA, SELANGOR
Tarikh/Date : 02/03/98
Tajuk/Title : THE NATIONAL SMART
PARTNERSHIP DIALOGUE
"NATIONAL SMART PARTNERSHIP APPROACH
TO DEVELOPMENT"
1. I would like to thank the Malaysian Industry-
Government Group for High Technology or MIGHT for
inviting me to officiate the opening of this National
Dialogue today. The theme of this Dialogue, "Economic
Recovery Through Smart Partnership" is certainly
appropriate considering that Malaysia is currently
putting together a national recovery programme involving
all levels of society. What is required is that
everyone should form partnerships with the objective of
benefiting each other. This of course applies not only
to individuals but also to groups or categories of
people.
2. In Malaysia we have had a lot of experience in
sharing. The NEP is a good example of sharing in which
positive discrimination in favour of the weak and the
disadvantaged was used in order to achieve equitability.
The experience of human society has shown that equal
sharing does not necessarily result in equitability.
This is because some are more capable or better
positioned to exploit their share than others. On the
other hand when attempts are made to distribute wealth
equitably as tried by the Communists, the result was
disincentive and universal poverty. It is therefore
necessary to accept that there can be no absolute
equality but at the same time that every attempt be made
to reduce glaring disparities. Smart partnerships are
not intended to achieve absolute equality of benefits
but a much fairer distribution of results.
3. The disparity between the races in Malaysia could
have been corrected by simply taking the wealth from the
rich community and redistributing them so that in the
end everyone would have an equal share. But the NEP
rejected this Robin Hood approach. Instead the
redistribution was based on growing the economic cake
and then distributing the growth parts so that the have-
nots would have more to compensate for their smaller
existing share. Since the haves could still retain what
they already have and also get a portion of the new
growth, albeit a smaller portion, there was no sense of
deprivation. Indeed they were willing to work together
with new partners who have been apportioned a part of
their growth. Since they believe the redistribution
would help stabilise race relation, they cooperated
gladly and productively. The result is that the NEP
gave birth to many smart partnerships between business
as well as between the different ethnic groups. This
led to the success of the NEP. Had the NEP failed we
may be experiencing ethnic tension now.
4. Smart partnership was extended when Malaysia
officially adopted the concept of Malaysia Incorporated.
Here the public sector and the private sector worked as
partners in order to facilitate the economic development
of the country in which both have a stake. The old
confrontative attitude between public and private
sectors was discarded in favour of mutual help. The
public sector realises that the success of the private
sector actually contributes to the revenue of the
Government, which goes to pay for the salary bills of
Government employees as well as the provision of public
utilities etc. In helping the private sector the public
sector is therefore actually helping itself. Of course
the private sector benefits much by the positive
attitude towards them adopted by the public sector. They
in turn collaborate with the public sector in order to
ensure that the objectives of the Government are
achieved speedily and at minimum cost. Both sides
therefore benefit and the nation as a whole also
benefits. Altogether the Malaysia Incorporated
partnership between public and private sectors is a
manifestation of smart partnership in which not only do
the partners gain but the public as a whole also gains.
5. Governments are by tradition expected to provide
most of the utilities and infrastructure for the people
and for business. Unfortunately the capacity of the
Government is limited by the revenue and the loans it
can raise. At any time the demand for utilities and
infrastructure would exceed the capacity of the
Government financially and physically.
6. The solution to this inadequacy on the part of the
Government is provided by turning over the provision and
operation of these utilities to the private sector.
However if the private sector were to bear the full cost
of the construction, maintenance and operation of the
facilities they would have to charge the users very high
rates indeed. On the other hand the Government still
collects taxes and is therefore responsible for
providing at least that portion of the utilities it can
pay for. By apportioning a part of the investment and
revenue of the Government to the cost of the services,
it is possible for the rates charged to be lowered
without causing the private owners and operators to
sustain a loss. The privatised entities are in fact
jointly owned by the Government and the private
companies, although legally they belong to the private
companies for the duration of the concession. There is
therefore a partnership between the Government and the
private sector. Such a partnership must constitute a
smart partnership, for it serves not only the private
company but also the Government and in fact the public
as well.
7. Malaysia was formerly dependent on the production
and export of two commodities, rubber and tin. Wide
fluctuations in the prices of these commodities meant
uneven growth for the country. Besides the two
industries could not create enough jobs for Malaysia's
growing population. Even after oil palms and cocoa were
introduced the prospect for economic growth and higher
income for Malaysians was poor.
8. A decision was made to industrialise by
manufacturing goods for local consumption and for
exports.
9. But Malaysia had neither the expertise nor the
capital needed in order to set up industrial plants. It
was decided to invite foreign investors to come in with
their knowhow and capital. Incentives were provided.
The strategy proved very successful in creating jobs and
generally developing the country.
10. The foreign investors of course benefited from
their investments but Malaysia and Malaysians also
benefited. They not only got jobs but by servicing and
supporting the need of the foreign-owned industries they
earned better incomes. They then became good consumers
of the products exported by the countries of the
investors.
11. Obviously by inviting foreign investors Malaysia
was in fact entering into a smart partnership in which
both sides gained.
12. From the foregoing it may seem that all
partnerships are smart partnerships which bring benefit
to both partners. But this is not always so. In the
colonial days the colonies and their peoples were
exploited without regard for sharing. If the peoples in
the colonies were not cooperative then immigrant workers
and traders were brought in in order to facilitate the
extraction of the wealth of the colonies to the maximum.
That the importation of foreign workers and others
caused political and social problems for the indigenous
people was ignored. In the case of Malaysia the
indigenous people not only lost their exclusive rights
but were actually made poorer even as their country was
being exploited to enrich others. Clearly there was no
smart partnership during the colonial days.
13. There are many more instances of partnerships which
are not smart but Malaysians have been able to practise
smart partnerships since independence and so build a
prosperous country in which everyone has a fair share.
It looked like they were going to go on developing until
they achieve their target of becoming a developed
country by 2020. The smart partnership they had
developed between the different ethnic groups, between
the public and the private sectors and between the
workers and management looked set to boost the country's
growth.
14. But what they had not expected was the emergence of
the antithesis of smart partnership. The world economic
culture has been changing so that the old ethics of
mutual help and mutual gains were being replaced by
aggressive attacks and hostile acquisitions which have
no regard for mutual benefits. Instead of smart
partnerships, dominance and a winner takes all creed
have gained acceptance. The old ideas about morality,
ethics, honour and equitable sharing and caring have now
been replaced by ideas that openness and transparency in
business dealings are sufficient to ensure that
unacceptable practices such as corruption and cronyism
be eliminated.
15. It is assumed that if there is no corruption and
cronyism then business would be facilitated and fairness
would result. Discriminative protection even for the
weak would result in distortions and would be bad for
business.
16. Since the Governments of many developing countries
especially in the East are believed to be corrupt and
practise crony capitalism then their rapid growth and
development must have been achieved through this. It is
also assumed that only a chosen few had benefited from
the sterling performance of these countries. The fact
that clearly all the people seem to have benefited is
dismissed as an illusion. Whatever may be the apparent
result, the elimination of corruption and cronyism would
make these Governments and their countries better.
17. Since on their own these Governments are not likely
to give up their evil ways then they must be forced to
do so. The force used was the drastic impoverishment of
these countries and their people through currency
devaluation. And so in June 1997 the tiger economies of
South East Asia had their wealth reduced drastically
through devaluation of their currencies and the shares
on their stock exchange. They were told that the
devaluation is the result of a lack of confidence in the
economic management of their countries, specifically
their corruption and cronyism.
18. The economic turmoil caused by the devaluation of
the currencies of these countries reduced the tigers to
whimpering kittens and forced them to seek help from
international agencies. The conditions for this help
are more than just the elimination of corruption and
cronyism. The countries have also to increase interest
rates, reduce credit, raise taxes and open up their
countries to full access to their companies by foreign
companies i.e. foreign companies must be allowed to
establish 100 percent foreign-owned companies and banks
and to buy majority shares in the businesses and banks
of the distressed countries. The effect of currency
devaluation coupled with the conditions exacted by the
international agencies is to make it almost impossible
for these countries to recover economically. Any idea
that they may have to catch up with the developed
countries has to be jettisoned.
19. There is absolutely no consideration given to the
sufferings and miseries of the suddenly impoverished
people and their countries. Going beyond the economic
field, the threat of losing confidence was extended into
the social and political fields. Failure to conform
socially or politically results in economic pressure
being applied through further devaluations of the
currencies. In one instance the currency of the country
was devalued by 600 percent i.e. foreign goods and
services cost six times more than before. Of course
loans in foreign currencies require six times more of
the local currency to pay. Since the economic recession
makes it impossible to earn even the old level of
profits, the countries so attacked find themselves
totally unable to import essential goods and services to
pay their debts. Technically these countries have been
bankrupted.
20. It is said that in time these countries will
recover. But what is there to stop repeated attacks on
their currencies and continued turmoil. Even if the
attacks stops, the massive damage to their economies
would take decades to be restored. Certainly their
ambition to catch up with the developed countries would
not be achieved in the time projected. In fact they may
never make it at all.
21. In smart partnerships, the partners all benefit.
Openness and transparency may be able to eliminate
corruption and cronyism and other undesirable practices,
although this is far from certain. But from what we
have seen openness and transparency have not benefited
the country under attack. In fact the new creed does
not recognise any partner at all. They were merely
objects for attacks which will give the attacker
considerable gain in a very short space of time while
leaving the victim impoverished, incapacitated and
burdened with insoluble economic, social and political
problems. By no stretch of the imagination can we
regard the action of the attacker as smart. True they
have gained financially but what their victims lost is
far more than the gains attackers made. In smart
partnership, there is not only a fair apportionment of
the gains but there is also an increase in the original
wealth. But in the new commercial ethics there is
actually a diminution in the original wealth. This
cannot be regarded as smart.
22. The advocates and practitioners of smart
partnerships must be cautious about accepting the new
ethics of the commercial community. Openness and
transparency is not enough if there is no accompanying
morality, honesty, honour and caring for others.
23. We are now engaged in trying to bring about
economic recovery following upon the devaluation of our
Ringgit and the shares of our companies. To succeed we
must cling to our high values, to morality, honour,
honesty and caring for each other. We must not be
selfish and act only in our own interest. Thus we must
not take out our money from our Malaysian banks because
someone has suggested that our banks are weak and may go
under despite Government guarantee. We must not put our
money in other countries or in foreign banks because we
would effectively be depriving our fellow businessmen of
credit.
24. We should not join in the sale of shares and profit
taking the moment share prices appreciate.
25. Instead we should support our businesses in
everyway. We should support the Buy Malaysian campaign.
We should reduce foreign travel, bring back our money,
etc-etc.
26. The partnerships that we have developed between the
races when implementing the NEP and the NDP, the
partnerships between the Government, the private sector
and the workers and their unions, and the partnerships
inherent in the methods of privatisation we have
developed must not only be continued but must be
intensified. The basis of our prosperity was economic
growth at a high level. We may not need to grow at the
old rate in order to achieve recovery but we must ensure
that reasonable and sustainable growth is achieved. By
the kind of smart partnerships that we have developed
good growth can be sustained.
27. Smart partnerships also demand that we make some
sacrifices now in order that recovery would be hastened.
The Government has formulated many approaches and
policies which may seem to impose restrictions in our
quest for personal or even company interest. But in the
long run we will benefit through the minor sacrifices
that we are called upon to make. We all, members of the
Government, the business community, workers and others
must accept these sacrifices. They will benefit all of
us in the end.
28. In everything that we do we must consider ourselves
as partners to everyone else. By caring for the
interest of our partners, by helping them, we will be
hastening economic recovery. And when we recover we all
will reap benefits. Clearly by helping others we will
be helping ourselves.
29. Smart partnership is the way towards economic
recovery. Anything that stands in the way of Smart
partnership must be eschewed, rejected. That way we
will recover sooner and we will all benefit.
30. I wish you a successful dialogue.
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