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Oleh/By : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : HOTEL SHANGRI-LA, KUALA LUMPUR
Tarikh/Date : 05/10/98
Tajuk/Title : MAJLIS PERASMIAN KONVENSYEN
PERSATUAN GEDUNG SERBANEKA JEPUN
Saya ucapkan terima kasih kepada Persatuan Gedung
Serbaneka Jepun atau The Japan Department Stores
Association kerana menjemput saya untuk merasmikan
Konvensyennya pada hari ini.
2. Malaysia is delighted that the Association had
chosen Kuala Lumpur as the venue for this annual event
after hosting their previous meetings in Los Angeles in
1997 and Taipei in 1996. This reflects the confidence of
the Association with the potential of Malaysia, despite
the current economic and financial turmoil in the region.
3. We are confident that the Malaysian economy will
recover and improve. We are still fundamentally strong
and we have put in place stabilising policies and
regulatory infrastructures so that our economy will not
be buffeted by the destabilising activities of currency
traders and stock market raiders. Today our economy is
the most stable in Asia and traders and investors can do
business with greater certainty.
4. In 1997, Malaysia's total trade with Japan amounted
to USD27.25 billion, an increase of two percent from
1996. In the first seven months of 1998, trade with
Japan totaled USD11.49 billion.
5. Malaysia's exports to Japan in 1997 amounted to
USD9.93 billion, an increase of 5.4 percent compared to
1996, while imports amounted to USD17.33 billion, an
increase of 0.2 percent from 1996 i.e. USD7.4 billion in
favour of Japan. For the first seven months of this
year, exports to Japan amounted to USD4.64 billion while
imports amounted to USD6.84 billion. The trade is still
in favour of Japan.
6. Malaysia's total trade with Japan in 1997 accounted
for 17.2 percent of Malaysia's global trade of USD158
billion (RM442.39 billion), making Japan Malaysia's
second largest trading partner, after the United States.
7. In 1997, Wholesale and Retail Trade, Hotels and
Restaurants as a group, represented 12.3 percent of
Malaysia's total GDP, a slight decline from 12.4 percent
share recorded a year before. Likewise, the sub-sector's
growth moderated to 7.5 percent in 1997 from 9.3 percent
recorded in 1996. However, for the first-half of 1998,
this sub-sector contracted by 1.5 percent, as compared to
a 7 percent growth recorded in the second-half of 1997.
Wholesale and retail trade was affected by the currency
turmoil, as well as the steep decline in stock prices.
Nevertheless, this sub-sector was able to retain its
dominance in the services sector with the largest share
of 12.3 percent of GDP at end-1997. I am confident that
in the long-term, this sub-sector will continue to
expand.
8. It has always been the policy of the Malaysian
Government to welcome foreign investments, particularly
long-term investment that will benefit both foreign
investors and locals. The policy of encouraging foreign
investment is reflected in the continuing keen interest
shown by investors in Malaysia. In 1997, 759 projects
with a total capital investment of USD7.4 billion (RM25.8
billion) were approved. The bulk of foreign investment
representing 44 percent or USD3.3 billion (RM11.5
billion) came mainly from the United States, Japan,
Germany, Taiwan and Singapore. Of the number of
applications received, 462 or 61 percent were for new
projects while 297 were applications from existing
investors who proposed to undertake expansion and
diversification of their existing operations in Malaysia.
9. I note that total overseas' investment undertaken by
the Japan Department Stores Association' members in 1997
around the world amounted to USD37 million, of which 24
percent or USD9 million was invested in Malaysia. This is
remarkable coming from the four stores located in
Malaysia, out of some 85 members'stores located all over
the world. These four stores generated USD105 million
sales revenue or 3.4 percent of overseas total sales
revenue of members of the Association around the world.
10. Malaysia is grateful that the giant Japanese
department stores operating in this country namely Jusco,
Isetan and Sogo as well as the specialty stores such as
Kinokuniya, Maruzen Nihonbashi and Mori-Toys, have set up
joint-venture businesses with us. We hope that the
Association will encourage its members to invest further
by setting up more businesses in Malaysia. The decision
taken by Isetan to open its store in KLCC Suria, the huge
new shopping centre located in the Petronas Towers,
taking-up five floors with business space of 250,000
square feet, is indeed commendable.
11. Like other foreign operations in this country,
Japanese department stores have contributed to upgrading
the quality of the retail business and the overall
modernisation of Malaysia. In addition to the job
opportunities for Malaysians, these department stores
also source their supplies from local Malaysian
companies. I would urge members of this Association to
increase local sourcing whenever possible since this can
reduce their costs. Malaysian-made products are known
for their high quality and competitive prices. In fact I
would urge the Association to source your supplies from
Malaysia for your stores worldwide. It would help you to
remain competitive always.
12. We now have a "Buy Malaysian" campaign. This is due
to our need to conserve foreign currency. As you know we
have a huge deficit in our trade with Japan. Reducing
imports of non-essentials from Japan and of course
exporting more to Japan would reduce this imbalance.
This is very important for our economic recovery.
13. Japanese department stores are an attraction to the
tourists. We have done away with import duties on most
of the goods retailed in the department stores. Their
prices are now lower than in other countries including in
Japan. Japanese products, particularly electronics are
very cheap in Malaysia by comparison with the same
products elsewhere. Your investments in Malaysia is
really on investment for business among tourists to
Malaysia. They recognise Malaysia as a shopping haven.
14. We have now internalised the Malaysian Ringgit in
order to prevent the exchange rate from fluctuating
wildly. As you know a steady exchange rate makes it
easier to plan and budget, and therefore to achieve good
profits. The Ringgit is now fixed at RM3.80 to USD1.00.
The rate against the Yen is dependent on its rate with
the USD. Since the Malaysian Ringgit cannot be used
outside Malaysia you will have to pay trade bills in
foreign currency such as the Yen or the dollar. Since we
have a big trade surplus, there is more than adequate
foreign exchange within the country to pay for imports
and foreign debts. There will be no restriction on such
foreign currency movements. You will also be able to
repatriate your profits in foreign currency.
15. Since the enforcement of exchange controls business
has picked up noticeably. The lower interest rates and
better hire-purchase term has stimulated retail business.
The other business activities have also picked up.
Cheaper cost of money will help restore the purchasing
power of the people and this is bound to help retail
trade to recover.
16. You may notice that although the Government is now
in full control of the exchange rate we have not
strengthened the ringgit too much. Originally the
exchange rate was RM2.50 to USD1.00. Now it is fixed at
RM3.80 to USD1.00. This is because we have to remain
competitive against our neighbours whose currencies have
also been devalued. We believe at RM3.80 to USD1.00 we
can remain competitive even if our neighbours' currencies
are devalued further or are revalued. We will not change
the exchange rate until the exchange rates of competing
currencies are really too big and affects our
competitiveness to a great extent. So you can rest
assured that your budgetting and price fixing in
Malaysian Ringgit will not be upset by sudden and extreme
fluctuations in the Ringgit exchange rate against other
currencies.
17. The Malaysian Government is business friendly. We
want to do everything to promote business. Our racist
detractors will say that this is a part of Asian cronyism
but the truth is that the Government derives much of its
revenue from corporate taxes. In Malaysia the corporate
tax rate is 28 percent. Obviously the profits that you
make is of great interest to us, for 28 percent of the
profits will accrue to us through corporate taxes. When
you lose we of course get nothing. This is a good
incentive for us to help you, to help the private sector
make as much profit as is legally allowed.
18. We encourage capital inflows. However we make a
distinction between foreign short-term investment in the
stock market and investments in productive capacities
such as manufacturing. Stock market investments are
mainly for capital gains and capital gains is not taxed.
Besides they can easily destroy our economy by pulling
out and taking their money and profits with them. This
is what has happened during the present currency turmoil.
About RM600 billion or approximately USD150 billion in
market capitalisation was lost. For Malaysia this is a
tremendous diminution of its wealth and economy. We can
do without the dubious benefit of FDI in the stock
market.
19. But we welcome long-term foreign direct investments
in manufacturing etc. They help our industrialisation
programme. However we are now short of workers and we
would like more technology and capital-intensive
industries. We can assure foreign investors that they
will gain much by investing in Malaysia.
20. Through foreign investments we have now become a
more affluent society with high purchasing power. This
has resulted in our becoming a good market for foreign
goods. If you look around Kuala Lumpur or any Malaysian
city you will find a large number of new shopping
complexes where all kinds of foreign goods are displayed
for sale. Although we are now forced to promote made-in-
Malaysia products the popularity of foreign goods is
still very high especially among foreign visitors. We
have promoted Malaysia as a shopping destination for
foreign tourists. For this we have removed most of the
taxes on imported goods. The prices are therefore very
attractive. Japanese department stores in Malaysia have
done very well and I am quite sure you will benefit from
an earlier economic recovery for Malaysia.
21. I would like to say that I appreciate the confidence
that the Japan Department Stores Association has shown in
the potential and economic recovery of Malaysia, as
reflected by this convention in Kuala Lumpur.
22. Finally, I wish the very best to the Japan
Department Stores Association. I understand that you
are celebrating your 50th anniversary this year. I
congratulate you. With 137 companies under your wing, I
believe that the Association and its members will
continue to be more prosperous and successful in the
years to come.
23. Dengan ini, saya dengan sukacitanya merasmikan
Konvensyen Persatuan Gedung Serbaneka Jepun.
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