Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : MARRIOTT HOTEL, KUALA LUMPUR
Tarikh/Date : 20/05/98
Tajuk/Title : THE YOUNG ENTREPRENEURS
Delivered by Y.B. Dato' Mustapa Mohamed, Minister of
Entrepreneur Development
I am pleased to be here this morning to address this
important Young Entrepreneurs' Organisation's Second Asia
Pacific Conference. I would like to take this
opportunity to bid all our foreign guests "Selamat Datang"
or "Come in Safety" i.e. welcome to Malaysia. I hope that
your stay here will be both fruitful and enjoyable. As
all of you can see, life still goes on in Malaysia, people
are still smiling and business thriving almost as usual.
Not much change is visible despite the financial turmoil
that we are experiencing.
2. I would like to congratulate the Young Entrepreneurs'
Organisation Malaysia Chapter for their efforts in
organising this conference which brings together young
entrepreneurs in various fields from throughout the world.
I am happy to note that since its birth in 1987, the Young
Entrepreneur Organisation (Y.E.O.) has offered an
increasing number of programmes designed to keep members
informed on business, geopolitical and technological
issues. I do hope that Y.E.O. will continue to help its
members build up their enterprises through education and
networking among the 1,730 members in chapters located in
more than 70 cities, spanning 11 countries.
3. The theme of the conference 'Global Perspectives:
Asian Aspirations' is indeed timely and appropriate
considering the economic, political and management
challenges posed by globalisation particularly in the wake
of the economic downturn in East Asia.
4. Asia is wrestling with an economic problem
unprecedented in its history. Asia's positive
fundamentals -- historically high rates of growth
resulting from vibrant and expanding economies, high
savings and exports are recognised by the international
community. Indeed at the start of 1997, analysts were
saying that the 'miracle' economies of Southeast Asia
were destined to continue its growth unabated into the
next millennium. The region was praised for its sound
macro economic policies and management which few other
developing countries could emulate. Then suddenly the
words of praise stopped and was replaced by condemnation
of their mismanagement, corruption, nepotism, lack of
transparency and a host of other administrative
misdemeanours.
5. Together with this about turn came what was and is
described as a loss of confidence on the part of the so-
called market forces i.e. the foreign short-term
investors. Capital was pulled precipitately out of these
emerging markets and the currencies sold down. The result
was a massive loss of wealth.
6. Everyone knows what is meant by currency devaluation
but I would like to attach figures to the effect of
devaluing the Malaysian Ringgit by 50 percent against the
US Dollar. Malaysia's Per Capita Income before
devaluation was US$5,000. A 50 percent devaluation
reduces the per capita to US$2,500. In G.D.P. terms,
Malaysia with a population of 20 million has lost US$50
billion in purchasing power. We have been pushed back 20
- 25 years when our per capita was around US$2,500.
7. But the loss due to the fall in share prices when
investors sold off their shares and took out the money
from the country is even more. Malaysia had the biggest
stock market in Southeast Asia, capitalised at about 900
billion Ringgit. When the Ringgit was 2.50 to one US
Dollar the capitalisation was equal to US$360 billion. A
fall of 50 percent in share values means market
capitalisation is reduced to RM450. But today the US
Dollar is equal to RM3.80 and therefore market
capitalisation in US Dollar is 118 billion i.e only 30
percent of what it was before. We have lost US$242
billion.
8. If you add devaluation loss to market capitalisation
loss the total loss is about US$290 billion, taking round
figures.
9. This is a real loss of wealth, wealth accumulated
over 40 years of hard work, of development; wealth
belonging to the country and its people. It took us about
20 years to push per capita income from US$2,500 to
US$5,000. We lost it in less than six months.
10. We may have done something to cause a loss of
confidence but do we deserve to lose US$290 billion of
hard-earned money because of it? But our currency has so
far been devalued by approximately 50 percent. Other
Southeast Asian currencies have been devalued by 400
percent, resulting not just in huge losses of wealth but
bankruptcies of companies and banks, loss of employment
for some 20 million workers; political, social and
economic upheavals.
11. The Governments, their corruption, their lack of
transparency, their crony-capitalism are blamed and
repeatedly blamed for the misfortune which had befallen
their countries. They may be guilty as accused but it was
these same Governments which developed and prospered their
countries, created not just millionaires but also millions
of good-paying jobs for their people and gave
entrepreneurs tremendous opportunities to apply their
talents, ambitions and skills to make a good living for
themselves. What special thing did these Governments do
in May-June 1997 which caused such a costly loss of
confidence?
12. People who lose confidence will naturally try to save
whatever it is that they have. They must run for cover.
But the evidences are that they make very handsome
profits, running into billions of dollars as a result of
losing their confidence. And every now and then they lose
confidence, sold off the currencies and the shares and, we
believe, make more money. Of course we don't know who
they are or what profits they make or taxes they paid.
That is not important because they are fighting for
openness on the part of Governments, they are in fact
disciplining Governments for a better world. That they
leave behind a trail of economic disasters, of
bankruptcies, unemployed workers, poverty, economic
refugees is also irrelevant. What is important is that
they are fighting for the liberalisation of the world
economies, a better world for the pursuit of unlimited
wealth.
13. The reason why I am telling you all these is because
as entrepreneurs you must know the environment in which
you will be operating. I am quite sure out of this
turmoil there will emerge opportunities for
entrepreneurship. And entrepreneurs will only succeed if
they not only recognise the opportunities but they know
how to translate these opportunities into profitable
businesses.
14. We can no longer doubt that the world is undergoing
radical changes. It is not only the technology, in
particular the Information Technology which is changing
the world in which we do business, it is also the
philosophy which the shrinking world is spawning and
developing.
15. You will remember that there was once a rebellion
against the excesses of capitalism. Socialism and
Communism were direct responses to the unlimited greed of
capitalists. It took over one hundred years for the world
to realise that Socialism and Capitalism were not
alternatives to Capitalism. But in that period Capitalism
itself underwent change, becoming less excessive, less
dominated by pure greed. The concept of free markets
which evolved is not quite capitalism. It is gentler and
more concerned for the principles of equity and fairness.
It holds great promise for entrepreneurs and
entrepreneurship. There would be freedom and
opportunities for everyone to set up all kinds of
businesses big and small anytime anywhere. Nations such
as Malaysia can hope to go into business activities which
are within their means. They could switch from
agriculture to appropriate industry and create more
prosperity for the country and the people.
16. The free market is the gentler face of capitalism,
the face that it presents in order to win adherents and
encourage defection from the centrally planned economies.
But after the collapse of the Communist and the Socialist
the need to show the gentle face of capitalism is no
longer there. Now naked capitalism has made a comeback.
The market is not going to be free for everyone anymore.
It is going to be the arena for "a winner takes all"
competition. The biggest and the most efficient will push
out not just the corrupt but also those who are smaller
and less well equipped.
17. We see this in the banking industry. Mergers and
acquisitions are intended to create banking giants which
can dominate the industry. There is no place for the
small anywhere. Globalisation and liberalisation are
translated into absolute freedom to dominate worldwide.
Competition will only be between the few giants. Oligopoly
is the order of the day.
18. The argument is that the clients will have the
services of the most efficient and the best endowed. So
they should be well-served indeed and they should welcome
oligopoly by giants. But giants very often fail to see
the Lilliputians whom they are supposed to serve. When
giants move, as when they change policies or practices,
the Lilliputians get crushed under, too tiny to run out of
range. The Lilliputians cannot expect personal attention
and service from giants. But not to worry. The clients
too will be swept up in mergers and acquisitions. They
will become big too. The small will disappear, never to
reappear again. And entrepreneurs must by definition
almost all be small. There will be no more of them.
Instead everything will be giant sized, spread throughout
the world. We will all eat at world-sized restaurant
chains, stay at identical hotels, wear mass-produced
clothing, drive in three makes of cars etc. Even the
boutiques will be limited to a few world-brands. We will
all work for a small number of giant employers operating
worldwide.
19. These things may not happen of course. But we must
recognise that the advances in Information Technology make
all these things possible even now. Giant companies are
already forming and operating worldwide. Through mergers
and acquisitions they are becoming bigger and more
powerful. The spate of legal action against a software
company is caused by the fear of a monopoly. We can
regard these attempts to stave off a monopoly of the
software industry as a rear-guard action. It will delay
the process but in the end the protagonist of "big is
beautiful" will win.
20. Entrepreneurs must look for a niche for themselves in
this new economic order. It will not be easy. The old
small enterprises may no longer be available for you to
move into. But the smart among you will surely find
something in the world of electronic commerce which will
lend itself to exploitation by the enterprising. One
thing that is sure is that new ideas for new enterprises
will not be as durable as before. The shelf-life of
products and services is getting shorter and shorter. So
will new enterprises. No sooner is a new enterprise
developed when someone else will develop a new and better
enterprise to compete with it. Those wanting to remain in
business must be truly enterprising. They must always be
thinking of new ideas of doing business and new ways of
presenting them.
21. I am aware that the picture I have painted of the
emerging age is none too encouraging. But I am also sure
that as entrepreneurs you are not easily discouraged.
Entrepreneurs do not exist in a vacuum. Your enterprise
is really the result of the opportunities presented by
what is around you. Knowing what is or will be around you
is very important in deciding what enterprise to undertake
and how you will ensure the success of the enterprise.
22. As for Malaysia we have decided to take the
Information Age seriously. We have accordingly launched
what we call the Multimedia Super Corridor, an area
measuring 15x50 Km, where business in Multimedia will be
provided. While the big players and established
multimedia companies will be able to make use of the
facilities we are providing, there is ample room for the
small entrepreneurs to make use of the numerous
opportunities for software, contents and supporting
products to be developed making use of the same facilities
available. I hope you will examine the MSC and the
Cybercity we are building in order to get ideas about the
niches that will suit you.
23. Last, but not least, I wish to promote the 1998
'Women Leaders Network Meeting' to be held in Kuala Lumpur
in September 1 - 2, 1998. Women entrepreneurs are
cordially invited to attend this meeting which will focus
on dynamic partnerships and cooperation towards capacity
building for sustainable economic growth. This meeting
will facilitate the initiation of joint enterprises and
partnerships between women entrepreneurs in the various
economic sectors, vis-a-vis in attaining better access to
markets, information, technology application and in
product standardisation and globalisation strategies. In
addition, the meeting will review and assess the impact of
the current currency crisis on APEC economies, in
particular its impact on women-owned businesses, and to
recommend cooperative efforts to counter its adverse
effects on women in APEC economies.
24. Certainly, this conference will contribute in no
small way towards generating continuing interest amongst
young entrepreneurs to learn from your peers, and to
generate new ideas and opportunities. Despite everything
opportunities abound in the Asia Pacific region
particularly in this country. I do hope that although
your conference schedule is tight, you will be able to
take time off to explore Malaysia and bring back with you,
fond, enjoyable and pleasant memories.
25. On this note, I now have great pleasure in officially
opening the Young Entrepreneurs' Organisation's Second
Asia Pacific Conference.
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