Oleh/By : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : THE OKURA HOTEL, TOKYO, JAPAN
Tarikh/Date : 03/06/99
Tajuk/Title : THE 5TH INTERNATIONAL CONFERENCE
ON THE FUTURE OF ASIA
ORGANISED BY NIHON KEIZAI SHIMBUN
There are times in the lives of men, as in the
lives of nations, when so many things happen, so many
experiences experienced, so much so that the future can
never be quite the same again. Most of Asia has lived
through such a time recently, and indeed even now.
2. A large number of Asians will not forget for as
long as they live the sufferings, the trials and the
tribulations -- that they, their families and their
peoples went through in the last two years.
3. It will be difficult to forget those who have
shown compassion, who have commiserated with us, who
have shared our misery and our pain -- just as it is
difficult to forget those who have laughed in our face.
It will also be difficult to forget those who seemed to
have almost relished, to have found sublimal comfort,
in our discomfiture.
4. It is difficult to forget those who have been
completely insensitive to our anguish and who have read
to us over and over and over again -- the sacred
liturgies of liberalisation, sometimes so loudly that
they even drown the din of distress rising from the
streets.
5. It is difficult to forget those who over and over
and over again -- hit us over the head with the sacred
tablets on which are inscribed the holy mantras of
market opening.
6. It is difficult to forget those who insisted to us
over and over again _that the road to our recovery and
salvation lay simply in selling off the modest family
valuables it has taken all our lives to earn; those who
have insisted that we must sell, at 'fire sale prices',
our homes, our factories, our banks, yes, most
especially our banks. It is incredible how often
ordinarily intelligent people have expected us to
believe that all would be well if only we agree to sell
our banks at fire-sale prices. Many of us have noticed
that many of them unashamedly urge us to sell even
though they were part of the throng that started and
stoked the fire.
7. It is difficult for many of us in Asia to forget
those who gleefully insisted that they wanted to see
blood spilt as we bludgeoned our banks and companies
into submission before they would believe that we were
serious about reforms in the management of our economy.
8. It is difficult to forget those who stuck to their
sacred incantations promising the economic nirvana if
we humbly obeyed and threatening immediate and divine
retribution if we failed to heed the judgement of the
dieties of money and of markets, the gods who must
stand above all else. Forget the human right of
employment, of food for empty tables, of children going
to school, of medicine for the sick or the simple, the
basic human need for security in the streets, for peace
in the neighbourhood and for personal freedom from
violence and tumult. The only rights which must be
upheld at all cost are the right of the free market,
the right of capital flows and the right to profiteer
through devaluing the currencies.
9. It is certainly vitally important that Asia does
not forget the mistakes that we have made in recent
years. We have all been guilty of many things. Not
one of us is completely innocent. All of us have made
grave mistakes, some following upon the specific advice
of well-known and powerful international agencies.
10. We must make sure that we never again become
victims of the 'irrational exuberance' that so easily
lifts our feet off the ground and that makes the
wisest and most modest of us forget our bearings and
our common sense. Incidently only we in East Asia
suffer from this malady. The exuberance and
irrationality that drive the Index in Wall Street are
different of course. However it is worth remembering
the ancient Greeks who believed that those whom the
gods wish to destroy they first make them mad. In
modern times, perhaps those whom God wishes to destroy
He first makes madly euphoric believing that what goes
up will never come down.
11. When we in Asia look back on the turbulent crisis
we have been through, it is also vitally important that
we do not forget the friends who have stood by us in
our time of need.
12. In this regard, I would like to place on record my
personal appreciation and the gratitude of the
Malaysian people for the helping hand that Japan
extended through the Miyazawa Plan and many other
steps. Japan has not been a fine-weather friend.
Japan has been an invaluable friend. Japan has been a
friend in time of grievous need. Many of us will never
forget this for as long as we live.
13. I would like also to thank China which refused to
devalue its currency even though it rendered China's
products less competitive than Southeast Asian
products. China's growth was affected and unemployment
increased. But China was steadfast in not making
matters worse for Southeast Asia.
14. It is now clear that for almost all of us, the
worst is over. For almost all of us, the road to
recovery has been taken and is now being firmly
traveled. At the same time, it is blatantly obvious
that we all still have a long way to go to ensure a
resumption of the fastest growth run in human history.
15. To ensure the return of history and the resumption
of this sustained growth, it is essential to accomplish
three imperatives. First, we must build on our
strengths. Second, we must continue to reform,
transform and re-invent our societies. Third, we must
set aside our presumptions and preferences and be
utterly pragmatic. We must set aside our sacred cows
and ensure the firmest commitment to the colourless
cat, to doing what works.
16. Let me briefly outline what I mean.
17. There is a big move today to homogenise, to
standardise, to uniformise, to conform and to blend
with the rest.
18. In economic terms, there is a huge movement --
deliberate and non-deliberate, concerted and non-
concerted -- to turn all Asian economies, all economies
in fact, into Anglo-Saxon, laissez faire market
economies or what is imagined to be Anglo-Saxon laissez
faire market economies.
19. In political terms, there is a huge movement
deliberate and non-deliberate, concerted and non-
concerted to turn all Asian political systems, indeed
all political systems everywhere, into Anglo-Saxon
liberal democracies or what is imagined to be Anglo-
Saxon liberal democracies.
20. I do not want to be detained by these issues
because I believe that to a large extent it is simply a
function of mega power and the rigid power structure at
this time and space in world history. The world's
first recorded historian, the ancient Greek Thucydides,
wrote more than two thousand years ago that in the
affairs of nations the strong will demand what they
will and the weak must yield what they must. Perhaps
one day, we including the Anglo Saxon world might all
have to try to be very Swedish or Chinese or Nigerian
or Brazilian. Perhaps one day we might all have to
conform to the economic and political systems and
preferences of the Swedes or the Chinese or the
Nigerians or the Brazilians or even the Japanese
because they have become the strong.
21. I do not want to be detained by this issue either
because I believe that in essence the Anglo Saxons and
their machines are right or nearly so. It seems clear
enough to me that:
* with all its faults;
* with all the dangers arising from market failure;
* with all the difficulties of running market systems,
the development of which takes time and all too often
goes through the Charles Dickens market economy phase,
with all its flaws, the market system guided by the
social conscience is without doubt the most fair and
productive system so far devised by mankind for the
production of economic goods and services.
It seems very clear to me that democracy:
* with all its faults;
* with all the dangers arising from democratic failure;
* with all the difficulties involved; and
* despite the fact that good democracies invariably take
time to evolve, with all these flaws, democracy is
without doubt the most fair, productive and civilised
system so far devised by humanity for the governance of
man at least at the level of societies and nations. I
notice that no-one has recently proposed that all CEOs
of companies should be elected by the workers in the
enterprise and almost everywhere in the liberal
democratic market systems it is assumed that a small
group of people or organisations called 'shareholders'
or 'the majority shareholders' who normally have little
to do with the daily workings of the company should
rightly determine who runs the corporation; these ideas
are not at all democratic, as far as I can fathom. I
will not mention the United Nations where five is
bigger that 180.
22. In the final analysis, if we are sensible and
enlightened, we must make sure that we are all
democracies practising the market system.
23. Having said all this, it is essential to state
that I cannot imagine that Japan would be as
comprehensively prosperous in the future and as
achieving as in the past if the Japanese decide to
establish within Japan's shores the market system that
is found in the United States or Australia or Great
Britain. I cannot imagine Singapore being as great a
success in the future as it has been in the past if
Singapore were to adopt -- lock, stock and barrel --
the economic and political systems of the United States
or the United Kingdom or Australia, admirable though
they may be for the British, the Americans and the
Australians.
24. We must surely adopt their best practices,
especially those things that will do us enormous good.
There are assuredly many, many things that we are and
that we do that are incredibly inferior, incredibly
unproductive, incredibly counter-productive. These
must be rooted out. At the same time, we in Asia must
retain what is good and productive.
25. I am not suggesting that our present and future
competitors are deliberately trying to make us just
like them in order to weaken us and to make it easier
for them to compete against us as economies and as a
societies. But I am asserting as strongly as I know
how that we would be insane to get rid of those
strengths of the past which will continue to be our
great strengths in the future. It would be a mistake
of historical proportions to be flabby, weak, to depart
from our family values, to be undisciplined, to give up
our fixation to harmony and consensus, to abandon our
commitment to high savings and deferred gratification,
to hard work, to depart from our almost pathological
fixation on education, to abandon our belief in
personal sacrifice in itself and personal sacrifice for
the good of family, community and nation.
26. I am not one who believes that self-sacrifice is a
'mug's game'. I do not believe that patriotism is a
dirty word.
27. Having argued like a good conservative, let me now
argue like a good radical.
28. Building on our strengths does not mean resting on
our laurels or holding on to the fond features of our
past or even the strengths of the past which are no
longer utterly productive for our journey into the
future, the new century and the new millennium.
29. In the days ahead, we must continue -- let me
stress continue -- with the needed reformation and re-
invention of our economies and every critical aspect of
our societies. This is what we have done for over a
generation.
30. It is something we must do over the coming hundred
years.
31. Lest anyone forget, Asia today is not the Asia of
10 years ago. The Asia of today is radically different
from the Asia of twenty years ago. The Asia of today
is unrecognizably different from the Asia of 50 years
ago. You in Japan know that you can say this of
Japan. Let me assure you that you can say this not
only of Japan but of all of Asia.
32. It is because we have reformed and reinvented
ourselves over and over again that we have come to
where we are. Quite obviously, we now have to make the
next great leap, a task made the easier because of the
crisis that we have gone through.
33. Because of what we have gone through, it is clear
that governments cannot stand aloof and let markets run
riot. There is a great deal of magic in the market
place. There is a great deal of magic in the invisible
hand. But very often that 'invisible hand' works best
when it is given the assistance of the 'helping hand'
of enlightened governance, whether this comes from
central banks, regulatory agencies or elected
governments _ or all of the above.
34. There are now many who believe that the severe
economic crisis that have hit the tiger and dragon
economies in the last two years are entirely or largely
the result of the grave weaknesses of each of these
tiger and dragon economies. This simple explanation is
very neat and very convenient, except that it is simply
not credible.
35. It is incredible how many, especially those
outside Asia, say that everything is the function of
'fundamentals'. The fact is that so much that has
happened is not the result of 'fundamentals' but
rather, the result of 'funnymentals', the result of
funny things knocking about in the head of intelligent
humans behaving like silly animals in a herd.
36. If the reason for our concerted collapses is that
we were all rotten to the core, it is surprising that
no-one really noticed that this was so until the
currency attacks started to destroy our currencies.
The hard-nosed bankers and market savvy equity
investors were certainly pouring money in. The IMF,
from top to bottom, was still handing out bouquets and
embarrassingly wholesome praise, almost up to the time
disaster struck.
37. If the causes of the mayhem were internal to the
tiger and dragon economies, how was it that we all got
rotten at exactly the same time? The currency attacks
and collapses can be documented day by day, hour by
hour. What perfect timing we in East Asia had! So
perfectly synchronised, like the high-kicking chorus
girls.
38. If the causes of the mayhem are our fundamentals,
how is it that economies even now widely recognised as
still having some of the best economic fundamentals in
the world were grievously hit and the hundred other
economies with clearly much worse fundamentals repose
in pristine tranquillity.
39. The fact, ladies and gentlemen, is that only
superman on a kryptonite-free planet would have been
able to retain his strength in the face of the calamity
of _97 and _98.
40. Most of you in the audience own or run companies.
Let me ask you how you would be today if all of a
sudden the worth of what you sell is cut in half
because currencies have plummetted in value, if the
weight of your foreign debt burden doubles, if because
interest rates are two to three times higher, if the
value of your shares goes down by up to 90 per cent, if
regardless of the orders on your book, no banker is
prepared to lend to you even one Yen for your
production needs.
41. Our weakness lay in the fact that while we were
very strong, we were not superman in a kryptonite-free
world.
42. We in Asia must work for fundamental reform of the
international monetary system, reform going beyond nice
words and pious articulations about global
architecture. It is interesting to note how many
latter-day Neros preferred to fiddle even as East Asia
was burning.
43. In the face of the world's failure to achieve
this, each nation must fend for itself as best it can.
And we have no choice but to re-engineer, re-form and
re-invent ourselves: strengthening our strengths and
weakening our weaknesses.
44. Like all nations, we all have so many weaknesses.
Our people are inadequately creative, poorly trained
and empowered. We must fight and destroy cronyism. We
must fight and eradicate corruption. We must improve
the governance of our states, even as we must improve
the governance of our corporations. We must be more
transparent and truthful not only to the foreign
portfolio investors and foreign bankers who want us to
make our world to suit their needs and desires but also
to our own governments, to our own investors and
bankers and to our own people. The agenda for progress
and change is a very long one.
45. Let me say a few words about the third imperative:
the need to be utterly pragmatic, to do what works and
to abandon quickly what does not, to commit ourselves
to the colourless cat. As one of the great leaders of
this century said: it does not matter whether the cat
is black or white, so long as it catches the mice.
46. In the face of the economic crisis which hit East
Asia from July 2, 1997, we in Malaysia tried almost
everything.
47. Our companies were bleeding to death. In that
phase when some of us were greatly influenced by the
IMF formula, we adopted the traditional remedy of
bleeding the patient. Our companies were gasping for
air. So we sucked the oxygen out. We raised interest
rates to levels which left them in a vacuum. They were
dying of thirst. So we took the water away. When
expenditures and investments and consumption was
falling through the floor, and despite many years of
budgetary surpluses, we cut down government expenditure
by more than 20 per cent.
48. The central reason why we adopted all the wrong
policies was because we were told they were wrong, they
weren't the right thing to do. We were too well
educated in the sacred doctrines of ensuring the freest
possible capital flows. We were captives of our own
economic orthodoxy, the orthodoxy that had resulted in
Malaysia having one of the freest currency regimes in
the world, more free even than that of the United
States on August 31, 1998.
49. On September 1, 1998, we put rationality and
pragmatism back in command. We jettisoned the sacred
texts and our own stern economic orthodoxy. We de-
internationalised our currency, placing it out of reach
of the currency traders. We fixed our Ringgit at 3.80
to the dollar. And we made it illegal for foreigners
to export the proceeds from their equity investment
before September 1, 1999. As you know, this third
provision has now been lifted.
50. For months after September 1, 1997, we were of
course roundly condemned by all the custodians of
economic correctness. On the front pages of famous
news magazines, we were said to have turned our back on
the world, to have cut ourselves off from the rest of
the world. We were said to be closing down the free
market system, when all we did was close down the
speculative and wildly volatile market in the Malaysian
Ringgit.
51. The closing down of the speculative market in
Malaysian ringgit allowed us to do all the things that
needed to be done, that were not possible before. It
allowed us to drastically cut interest rates. The
banks were strongly encouraged to resume lending. We
opted for an expansionary fiscal policy.
52. So far, the utter pragmatism of September 1, 1998
has yielded dramatic results. In August last year,
there was a doom and despair mood amongst the business
community. There is now every hope and great
expectations.
53. The Malaysian Government has held to its forecast
of one percent growth for this year. Salomon Smith
Barney says that it will be more than one per cent.
Morgan Stanley Dean Witter, Merill Lynch and Goldman
Sachs say growth will go to two per cent. SG
Securities says it will be 2.5 per cent. Credit Suisse
First Boston and the IIF says Malaysia will grow by
three per cent in 1999.
54. I do not wish to argue that selective currency
controls such as those introduced by Malaysia in
September last year is for all economies, or that it is
good for normal times. There are conditions under
which success is more likely, and conditions under
which currency controls even as selective as those of
Malaysia could be disastrous. Some World Bank experts
have informed us that we are the first case they have
come across of a country which is trying merely to
stabilise the currency and is prepared to sustain an
undervalued currency even in a situation of massive
trade surpluses and current account surpluses. Most
currency control regimes are attempts to sustain an
unsustainable over-valued currency. Malaysia's
decision to stabilise a clearly undervalued currency
ensures capital flight does not take place, ensures
that there is no black market in Malaysian currency
anywhere in the world. Far from seeing a massive
outflow -- there has been substantial capital inflow.
55. I do not want to recommend selective currency
control to anyone. But I do indeed wish to stress the
necessity for cold blooded pragmatism for everyone, in
all parts of the world, under any circumstance.
56. I have spoken a great deal about the present. Let
me say a few words about the future and the new
millennium.
57. As you know, one thousand years ago, as mankind
moved towards the second millennium, the then so-called
'known' and 'civilised world'_i.e. Europe was
apparently in the grips of despair. The then
custodians of the correct, the then champions of
orthodoxy, the then keeper of the truths; the learned
Christian clerics -- and therefore, the people of
Europe, were convinced that exactly one thousand years
after the birth of Jesus Christ the world would come to
an end.
58. Doomsday was at hand; commerce and industry
therefore had almost come to a halt. Human enterprise
and endeavour wound down. Many lived in abject fear of
the days to come.
59. What was the point of working, or planning, or
even plotting for the future if the world was coming to
an end? As the second millennium approached, all that
was to be done was to prepare for the apocalypse.
60. Today, as we approach the third millennium, many
people have written Asia off. For many years now, so
many have characterised Japan as being not quite dead
but not quite alive. Only very recently, the rest of
us have been consigned to the dustbin of history.
61. As my remarks suggest, if many people in Asia have
feared for their future, they have been no less than
wise. If we now continue to have doubts, this is a
welcome source of strength. But now is the time for
hope. And for heroic effort.
62. We must hope for a better and even more prosperous
Asia. We must hope for a better and more prosperous
world. Instead of preparing ourselves for doomsday; we
must prepare ourselves fully for the making of a global
boomsday.
63. In the new millennium, we must hope and work
diligently and with determination for a new beginning
not just for Asia but for the world. This must be a
task not only for Asia but also for Europe, for the
Americas and for Africa; it is a job for all the
colours and creeds of mankind, from every core and
corner of mankind. We must together build, for the
first time in world history, a single global
commonwealth of common wealth and co-prosperity, where
the full dignity of all the children of Adam will be
catered for and nourished, where all will enjoy the
fruits of justice and the bounty of our bounteous
planet.
64. I have mentioned the children of Adam. Let me be
more literal. Let me end my remarks with a few words
on the young on whose shoulders will lie the duty of
ensuring a new beginning for mankind in the new
century.
65. I hope that the young of Asia will be able to
throw off the excess and heavy baggage of history which
will only be a drag on their journey. The youths of
the 21st century must think of themselves as true
citizens of the world.
66. They must forget colour and creed; notions of
superiority and inferiority. They must think of
equality not in terms of material wealth alone but also
in terms of mutual respect and mutual regard.
67. The borderless world in which they will live must
not be borderless only in terms of information and
capital flows and in terms of the physical world. I
believe that it must also be borderless in the true
sense -- in terms of the frontiers we erect in our
mind.
68. Individuals must be judged fully and completely
judged -- in terms of the size of their contribution
and the content of their character rather than in terms
of the shape of their eyes, the colour of their skin,
the width of their wallet or the cudgel in their hands.
69. Let me also implore the youth of today who must
build the future of tomorrow to make sure that there
will be no clash of civilisations; let me implore them
to be wedded to the ideal of ensuring not a clash of
civilisations but a celebration of civilisations, where
all of mankind shall be invited to sup at the sumptuous
table -- the incredible smogarsbord -- of human
diversity; where all will be allowed to feast as they
choose and to selectively imbibe what they think best
and what best suits their palate.
70. The youths of the 21st century must fully
understand that the world is round. No country is
truly East or West -- except only in relation to each
other. They must regard the whole planet as their
earth, a single country, the object of their ultimate
loyalty.
71. National traditions and cultures they must retain.
But all traditions and cultures are of equal
importance, of equal worth, worthy of being respected
by all in the common, single community of mankind.
72. As you will have noticed, I am no longer young. I
suspect that most in this conference are similarly no
longer young however young at heart we think we are.
Let me invite all of you to reflect on what we have
seen within our own lifetimes. What wondrous things
have happened.
73. I grew up in a world where so many of the young
from Asia learned about liberty and freedom and
democracy in the citadels of civilisation: in London
and Paris and Amsterdam; only to return home to lands
which remained subjugated and colonialised. We heard
about liberte. We heard about egalite. We heard about
fraternite. But we knew mostly about colonial
imperialism; authoritarian dictatorship and total
subjugation. Therefore we yearned for freedom, for
most of us were figuratively in chains.
74. So many things were 'impossible'. Impossible
certainly for those of us who were clearly 'inferior',
'inadequate', 'uncivilised'. The world I grew up in
was a world of very, very limited possibilities. I was
fortunate in being inadequately schooled as to what I
must not aspire to for my self and for my people. I
was fortunate in being inadequately aware of the limits
of my ability, of my capability.
75. Not knowing just how short was my arm, I was not
aware of the places I could not reach.
76. The young of today, the builders of tomorrow, must
not be corrupted by the corruption of powerlessness.
Be fully empowered. Go forth. Build. Create a new
and better world than we of the older generation have
been able to build.
77. The twenty-first century and a new millennium
awaits you.
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