Oleh/By : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : HOTEL EQUATORIAL,BANGI,
SELANGOR DARUL EHSAN
Tarikh/Date : 08/09/98
Tajuk/Title : THE COMMONWEALTH ASSOCIATION OF
PUBLIC ADMINISTRATION AND
MANAGEMENT (CAPAM)
BIENNIAL CONFERENCE
" STATE OF GOVERNANCE "
I am indeed honoured to be invited again to address
this distinguished Biennial Conference of the Commonwealth
Association for Public Administration and Management
(CAPAM). I would like to thank CAPAM for giving Malaysia
the privilege of hosting this conference this time. Since
this conference precedes the 16th Commonwealth Games also
hosted by Malaysia, let me take this opportunity to extend
a very warm welcome to those of you who will be staying on
to watch the 16th Commonwealth Games. It is a pleasant
coincidence that the inaugural conference of CAPAM in
Canada in 1994 was held at the same time Canada hosted the
15th Commonwealth Games.
2. Two years ago when I addressed this gathering of
distinguished public administrators in Malta, the theme
was 'The New Public Administration: Global Challenges --
Local Solutions'. This time it is 'The New Public
Administration: Moving Into the 21st Century', a theme
most relevant and timely as we approach the new century
and millennium.
3. The 21st Century will be a century characterised by
electronic communities in a globalised world. We in Asia
have already had a foretaste of what is to come and are
still reeling from the effects of sampling a globalised
international market in which massive amounts of funds can
and will be moved from country to country and from
continent to continent with such ease and speed that
reaction time is reduced to zero. Thinking is rendered
anachronistic and obviously planning for the future is
quite impossible. The gut has taken over from the brain.
4. Besides financial capital, the 21st Century will
witness similar cross-border movements of other economic
factors, such as workers and professionals. The use of
electronic communication technologies may allow workers to
reside in one country and work in another. But eventually
they will move from country to country in a borderless
world. There will be no single-ethnic country. All will
be multi-racial like Malaysia. The cosy insulated single-
ethnic nations must learn to adjust to rainbow coloured
polyglot populations.
5. Until we form that amalgam the weak and the
disadvantaged will be pitted against the strong and the
powerful. If developing countries are to survive at all
and they are to be given the fundamental right to develop
and aspire to attain developed status, new rules and codes
of conduct for all participants must be formulated and
duly enforced. The law of the jungle does not fit into
the framework of good governance. Therefore, the
architecture of governance will have to be re-examined so
that technological progress and the accompanying new value
systems will not result in the collapse of Governments and
governance.
6. When we talk about governance we speak of the
exercise of political, economic and administrative
authority to manage a nation's affairs. This definition
broadly includes the complex array of mechanisms,
processes, relationships and institutions through which
citizens manage affairs involving public life. However,
current conditions have shown that governance is no longer
the exclusive domain of the state.
7. Various bodies, almost all self-appointed now claim a
right to have a role in the governance of a country. Going
by the negative title of Non-Government Organisations
(NGOs), these bodies have become so established that at
many international conferences they provide an alternative
fora for debate and resolution on whatever issues focused
upon by the official conference.
8. Although there are national Non-Government
Organisations, these bodies tend to act in concert with
counterparts in other countries set up to deal with
roughly identical fields. Although there are serious NGOs
which aim at highlighting issues ignored by Governments,
many are protest or anti-establishment movements with a
tendency to take the law into their own hands.
9. The world professes to believe in democracy or the
voice of the majority. But NGOs are the antithesis of
democracy, for they represent the minority or even the
individual who seek to impose their views on the people
and the Government of the majority. Of course democracy
advocates consideration for the minority, but when a
minority, frequently a small minority, through disruptive
actions imposes its will on the majority, it is
questionable whether the cause of democracy is served. Be
that as it may the fact is the NGOs are here to stay and
their role in the governance of a country has to be
recognised and accepted. Perhaps they serve a useful
purpose for they force the Governments to look more
closely at what they may be doing and to be more
circumspect and meticulous.
10. Now a new claimant has come into the field of
governance. In a world that is more and more preoccupied
with economic wealth to the exclusion of political and
social well-being, "market forces" have laid claim to a
dominant role in governance. Unabashedly "market forces"
now claim a right to discipline Governments even. Not
unnaturally the concern of market forces is with the
maximisation of profits for themselves at the expense of
everything else.
11. Governments have always known the need to create and
maintain an environment that is conducive to doing
business. After all much of Governments' revenues comes
from the activities and the profits of business. But
Governments must also be concerned with and must respond
to the needs of society and political imperatives.
Businesses are not overly concerned with social and
politicals needs. For them the Governments are there to
keep society and politics at bay while they make money for
themselves.
12. Who are the market forces? Strictly speaking all
consumers and everyone involved in businesses, big and
small, should be considered a part of the forces of the
market. But of late market forces seems to mean only the
capitalists who invest in shares and trade in currencies.
They have become the definitive market forces simply
because they can exert tremendous influence over the
performance of the economies of countries.
13. This has been made possible by instant communication
and the mobility of funds across borders. Market forces
have advocated and won support for the free flow of
unlimited capital across borders so that they can invest
without restriction and maximise their profits. They
insist that this is the essence of free trade. Without
the free flow of capital across borders there is no free
trade.
14. The prospect of large capital inflows contributing to
the rapid growth of a country's economy spurred the
acceptance of the so-called free-market by developing
countries. Poor countries can grow and become rich in a
short space of time by allowing foreign capital to come in
and invest in stocks and shares, apart from setting up
production facilities which could benefit from the
competitive advantage of cheap labour and low living
standards. To enhance their attractiveness as investment
centres these countries embraced the free convertibility
of their currencies, i.e. the exposure to an exchange rate
mechanism that is no longer controlled by Governments.
15. For a time these strategies worked miracles.
Suddenly poor countries began to grow at unprecedented
rates. Share prices appreciated to such high levels as to
have no relation whatsoever with the assets or the
performances of the businesses. The currencies
strengthened along with the booming economies.
International banks besieged Governments and businesses
with offers of huge attractive loans to finance just about
everything.
16. Then suddenly the market forces "lost confidence" in
the Governments and the people of these countries. They
accuse the Governments of poor governance, of lack of
transparency, of corruption, nepotism and crony-
capitalism. Declaring that they need to discipline these
Governments and change the ways of doing business, they
pulled out the capital they had invested and began to sell
the currencies of these countries in order to devalue
them.
17. The result of the massive outflow of capital and the
devaluation is to impoverish these once-prosperous
countries. Millions were thrown out of jobs, social and
political unrests plague the countries and Governments
were threatened and overthrown.
18. Market forces now wish to impose a system of
governance and economic management which would enable
them, the market forces to maximise their profits without
restriction and regardless of the cost to other segments
of society. Their stress is on minimal Government role in
the management of the economy, meaning finance and
business activities. But Governments must regulate and
restrict other activities.
19. Thus when huge Asian conglomerates practise life-time
employment freeing the Government from providing safety
nets for job uncertainties, "market forces" want the
Government to put in place instead safety nets so
employers can sack workers freely. If the Government
refuses to do this, then the market forces, meaning the
currency traders and the share speculators, would attack
the economy, devaluing the currency further and depressing
share prices. This is intended to discipline the
Government so that it would use force to ensure employees
accept being sacked.
20. In Asia much of the capital comes from high savings
rates. This enables a higher loans to capital ratio in
business. Expansion and growth become more rapid
especially when foreign loans are resorted to. These
loans can be repaid provided the exchange rate is stable.
However should the local currency depreciate against the
foreign currencies, the cost of repayment in local
currency terms would be higher.
21. Knowing this the currency traders deliberately
devalue the local currency under the pretext of losing
confidence in the economy because of the high foreign
debts. The effect of the devaluation of the currency is
of course to render loans which were repayable before, not
repayable now. With this businesses and Governments which
had borrowed foreign currencies become unable to service
and repay loans. The currency traders then claim that
they were right in losing confidence in the economy of
these countries. That it is their action in devaluing the
currencies which made loan repayment difficult did not
bother them. They had already made their profits from the
process. They did not plan this of course or so they
claim. But whether they plan or they don't their action
leaves a trail of disaster which even if the reforms are
efficacious will take decades to overcome.
22. The NGOs and market forces are now a part of a
country's governance. The administrative machinery must
adjust to this. Basically it means having to make do with
less authority to govern. This must affect the
effectiveness of the present system of Governments. The
question is can present-day Governments adjust to this new
environment, to less Government and more public self-
administration?
23. Self-regulation is an attractive idea. It would be a
wonderful society indeed if every member restrains himself
from doing what is wrong. Unfortunately this is expecting
too much of mere mortals. Besides, it is not possible for
everyone to determine what is right and what is wrong.
What may appear to be right to one may appear to be wrong
to another or a whole lot of others. Indeed the exercise
of one's right can often impinge upon and negate the
rights of others. Without someone to decide, to arbitrate
and to enforce, a self-regulating society must result in
perpetual conflict and turmoil if not anarchy.
24. Society must therefore be regulated by a regulatory
institution possessing the required authority. Current
wisdom insists that only an institution chosen by a
majority can govern fairly. To ensure that the authority
is not misused, checks and balances must be put in place.
In a typical democracy this is provided by the separation
of the roles between the legislative, the executive and
the judicial branches. If we believe in the voice of the
people or at least the majority of the people, then the
elected institution should, when there is disagreement,
have the final say. But, depending on how strong or how
weak is the elected institution, the final say may rest
with any of the other two.
25. Obviously the checks and balance in a democracy are
not perfect. There is however a degree of legitimacy and
order in this system. But when other forces such as the
NGOs and the market forces are also admitted into the
process of governance, and these act almost entirely in
their own narrow interests and according to their own
perceptions, then society will be threatened even more
with anarchy and injustice. Certainly when the so-called
"market forces" decided to discipline the Governments of
the East Asian countries by impoverishing them and their
millions of people, the cause of justice, of human rights
is not served. Yet the advocates of the free market
insist that somehow the punishment of these Governments
through their people is justified because in the end there
would be a free market and absolute freedom for the
capitalists to make as much money as they can for
themselves. The pendulum has indeed swung far to the
other extreme. Where before workers could do no wrong,
now the capitalists can do no wrong. Industrial actions
have been replaced by withdrawals of capital as economic
bludgeons. As always people, innocent people have to pay
the price.
26. This is the scenario that we are witnessing. Others
will describe this scenario differently. They may even
glorify the role of the market forces in disciplining the
Governments. But the fact remains that the foray into
governance by market forces has caused untold misery for
millions of people and innumerable countries.
27. Whatever may be the new ideas about governance, we
cannot yet assume that Governments and administration are
things of the past. Adjustments may have to be made by
the administrative bodies but they will still have a role
to play. Societies must achieve sustainable growth in the
interest of its well-being. It is impossible to do this
without some methods and order in doing things. Even
protests must be dealt with in an orderly way. This is
expected by the protesters. And so there must be an
administrative machinery to deal with the new forces in
human society. In a disorderly world where everyone can
participate in the governance of a nation, the machinery
of administration must still be maintained in workable
condition and must be able to deal with every eventuality.
28. When CAPAM chose Malaysia as the venue for your 3rd
Conference we were a politically stable, harmonious,
multiracial nation with a reasonably efficient
administrative machinery. High and sustained economic
growth was almost taken for granted here. There may have
been something you could learn from our way of doing
things and our modest achievements then.
29. But today as you hold your conference, Malaysia is
experiencing its worst economic downturn -- a contraction
of almost seven percent in the 2nd quarter of 1998. We
are still politically stable and our multiracial
population still get along well. Despite refusing to call
in the IMF to take over, we are still better off than the
other countries under attack by currency traders and stock-
market raiders. We are trying to handle the financial and
economic turmoil ourselves -- an exercise that involves
not just the elected Government but also the
administration and the public.
30. Our detractors are obviously bent on frustrating
every move we make to resuscitate the economy. Thus when
we decided to rehabilitate our banks and our businesses
through recapitalisation and removing the Non-Performing
Loans, foreign rating agencies promptly downgraded our
credit ratings in order to prevent us from borrowing the
funds needed.
31. We have lost more than 60 billion dollars in GDP
terms due to devaluation and almost 500 billion dollars
from the stock market. Our companies and banks are in
distress. Government revenue will be much reduced.
32. This is the scenario in Malaysia today. We are
trying to manage a country in deep crisis. Whether we
fail or we pull through, we will definitely be providing
lessons in governance for everyone. We hope that you as
administrators will benefit from our experience. What has
happened to us can happen to any country. If we can in
some way provide you with the insight into the
exploitation of the poor by the rich capitalist market
forces and how we succeed or fail to counter them, there
will be at least some return from the so-called "creative
destruction" of our economy.
33. What is the "State of Governance" today? It is in a
word "chaotic". Governments have now been forced to give
up quite a lot of their power and role in the governance
of nations. New players have eroded the power and
authority of Governments. The Non-Government
Organisations and the "markets forces" now play a
prominent but not always constructive roles.
34. But even as we are forced to share governance, we
have to face the challenge of the electronics. Information
Technology should make Governments better informed and
effective. Alas, it is now all too clear that information
can mislead as much as help the Governments make informed
decisions. Recently in Kuala Lumpur someone put into the
Internet a report that there would be riots by armed
foreign workers. The whole city went into a state of
panic with people emptying shelves in the supermarkets and
business almost grounding to a halt. Millions of dollars
were lost before the Government succeeded in calming the
people and exposing the malicious intent of the Internet
message.
35. Of course all kinds of false information about
individuals, leaders, Governments and stock markets are
now freely spread to everyone with access to the Internet.
And with this, perceptions and decisions by everyone
become distorted. More and faster information is not
necessarily good.
36. We want to use the Internet for communication between
officers and departments of the Government. We have to
base our decisions on the huge amount of information that
is now available. Very often these information are
contradictory. Reading them, sifting through them and
making decisions becomes not easier, but more difficult
apart from consuming a lot of time. At the same time the
speed of communication and everything else require that we
decide quickly. And when we work under such pressure we
are likely to make mistakes, more mistakes.
37. We may revel in the speed and the access to
information that we now have but it will take a lot of
time before we learn to handle information technology in
the interest of good governance.
38. Governance is not going to be better anytime soon. It
will become worse before it gets any better. And
administrators must exchange views and experiences if you
are to avoid repeating mistakes and creating chaos as we
approach the next century and millennium. It is going to
be tough for administrators to handle the simultaneous
political, economic, social and technological changes.
But unless you want to be irrelevant, you have not only to
adjust but to learn as much as possible about the changes
so as to contribute towards a better society through
better governance.
39. Systems of Governments are not an end in themselves.
They are means to an end. When systems fail they must go.
But the interest of people and their Government must
always remain paramount.
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