Oleh/By : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : NEW YORK, USA
Tarikh/Date : 28/09/99
Tajuk/Title : THE LUNCHEON TALK AT THE COUNCIL
ON FOREIGN RELATION
"MALAYSIA'S POLITICAL AND ECONOMIC
PRIORITIES TODAY "
Malaysia's tenth general elections are said to be
only weeks or months away. It is no surprise,
therefore, that I have been asked to speak on
Malaysia's political priorities today. I have also
been asked to speak on Malaysia's economic priorities
in the wake of the great East Asian economic crisis
that has devastated the region -- especially the more
open and more liberalised dragon and tiger economies --
following the Thai Baht crisis of July 1997.
2. Before I do so, please let me first put my country
in context. Context is always critical. Unless you
understand our context, many things that we do may
appear completely puzzling. Very much in the way that
we would misunderstand America if we did not have an
appreciation of the American context.
3. Bereft of context, many might have agreed with the
famous Samuel Johnson near the end of the 18th century
when he said, perhaps only half jokingly of the
Americans that "they are a race of convicts, and ought
to be thankful for anything we allow them short of
hanging".
4. Bereft of context, many in Europe might at the
time have agreed with Robert Southey, who wrote in
1812:
"See what it is to have a nation to take its place
among civilized states before it has either gentlemen
or scholars. They (the Americans) have in the course
of twenty years acquired a distinct national character
for low, lying knavery."
5. In 1820, forty-four years after the foundation of
the United States of America, a passionate Scottish
observer of the United States by the name of Sydney
Smith wrote:
"In the four corners of the globe, who reads an
American book? Or goes to an American play? Or looks at
an American picture or statue? What does the world yet
owe to American physicians or surgeons? What new
substances have their chemists discovered? What old
ones have they analyzed? What new constellations have
been discovered by the telescopes of Americans? What
have they done in mathematics? Who drinks out of
American glasses? Or eats from American plates? Or
wears American coats or gowns? Or sleeps in American
blankets? Finally, under which of the old tyrannical
Governments of Europe is every sixth man a slave, whom
his fellow creatures may buy, and sell, and torture?"
6. What a difference a hundred years or two makes!
7. Malaysians were colonised by three different
Western powers for more than four hundred years. We
were then occupied by another imperial power, this time
Asian, a country called Japan. In exploiting us for
their own good, they also left us some good things. But
they robbed a whole nation and people of something
priceless -- their freedom and their dignity.
8. Many might have difficulty understanding the
importance of these seemingly abstract things: freedom
and dignity. I am sure that your Founding Fathers and
all those who fled to the shores of the United States
would have had little difficulty in understanding how
much they mean.
9. After four decades of independence, many might say
that it is time for Malaysians to forget the shame and
the trauma of colonialism. Perhaps. But it is a
little difficult for Americans of African origin to
forget slavery and the struggle for civil rights even
with the passage of substantial time. It is difficult,
even after more than half a century, for Jews
everywhere to forget Auschwitz.
10. When the colonial powers left us, they also left
us with a huge ethnic and religious problem. Whereas
before, Malaysia was mostly Malay and mostly Muslim, we
had become a multi-racial, divided society of many
religions and many tongues, uncertain loyalties and
conflicting identities. The indigenous Malays, who were
numerically in absolute majority and who made up the
preponderant majority of voters -- whom the British had
said that they had come to help and save -- also found
themselves the poorest and the most backward community.
The country was a tinderbox, held in the vice of
absolute poverty, poorer than even Haiti, caught in the
grips of ethnic prejudice and bigotry, thrown into the
violent cauldron of the Cold War between Communist and
Capitalist. To many, including many Malaysians, we
were clearly destined for the thrash can of history.
11. In our past, we had no experience with democracy.
We were just so many little indigenous kingdoms where
the rulers had absolute power and their subjects none.
Then for over four centuries, the new rulers continued
to have absolute power -- only, they were Portuguese,
Dutch, British, Japanese and British again. Yet when we
became independent we chose the democratic system. Our
Governments are elected by the people. We have had
nine free elections during 42 years of independence,
elections in which opposition candidates won and even
captured several states.
12. We made it work despite a deeply divided society,
despite a communist terrorist insurrection lasting 33
years, and despite more than four decades of struggle
between extremist Islamic deviates and fundamentalist
Islam -- which elsewhere has brought violent results.
13. After adding up all the pluses and minuses, anyone
with an objective mind will concede that we have been a
great success in a developing world of few successes.
14. Our only relapse was thankfully brief: an 18-month
interregnum- beginning in May1969, when the country
erupted with communal riots in the capital. I will
return to this event later, for it is indelibly marked
in the psyche of our nation. It is a turning point in
our short history.
15. We were -- and are -- a very small country with
very limited resources. There are now only 22 million
of us. Although in purchasing power parity terms our
standard of living is one fourth yours, our gross
domestic product in 1997 was just one and a quarter
percent of your GDP.
16. You can but we cannot withstand the onslaughts of
currency traders and hedge fund manipulators. They
command resources out of all proportion to ours. They
are Goliath and we are not even David on a pebble-less
beach. We are merely the scurrying crabs awaiting the
trod of giant feet.
17. If I can bring you back to your own history,
please do not forget that whilst you are no longer so,
we are still very young. We are only 42 years old.
18. Perhaps you will appreciate my point better if you
place yourself in the year 1818, 42 years after you so
gallantly won your independence against the same
colonial power, more than four decades before you tore
yourself apart in one of the most bloody civil wars in
history. We are now where you were in 1818, close to
the time when Samuel Johnson thought that Americans
should be thankful for not being hanged, when Smith
thought that America was good for nothing, and when
Southey believed that America and Americans were a
disgrace to civilised society. Many outsiders today
have a view of Malaysia very close to these people's
views of America then.
19. Despite what anyone thought of you, you managed
to stumble through the obstacles and overcome them! The
world today is much more complicated than ever before.
Malaysia at 42 cannot afford too many assaults and
cannot fumble through.
20. Let me turn now to what I consider to be some of
the political priorities for my country today. For
reasons of length, I will touch on only three: First,
transforming a population divided by ethnicity,
language, religion and culture into a united nation of
Malaysians; Second, ensuring that Malaysia remains
progressive and liberal, in its outlook and in all its
policies at home and abroad; Third, ensuring that
Malaysians are able to enjoy peace, harmony, stability
and prosperity at all times.
21. Until the Malays, the Chinese, the Indians, the
Kadazans, the Ibans and all the others see themselves
and each other as Malaysians first and as members of
their ethnic grouping second, our primary challenge
will remain. Until all our communities live in fair and
full partnership with one another, with no feeling of
subordination, marginalisation or alienation, our task
is not over.
22. I believe that the balanced, just and equitable
policies that we have adopted in every sphere --
politics, education, poverty eradication, economic
development and so on -- policies which have their
onerous costs as well as their profound benefits, have
helped Malaysia to achieve significant progress in
building a united nation since the racial riots of May
1969. The affirmative action programmes we have adopted
to remedy inequities in the economy and the extension
of political participation among the races have served
us well and will continue until racial origins no
longer influence our thinking excessively.
23. The progress we have achieved so far has led many
to hold us up to the world as an example of a
successful multi-ethnic polity. Maybe we are. But I
have no illusions regarding the continuing challenges
that confront us. Our fault lines are still our ethnic
and religious cleavages. Religious dogma and racial
sentiment are still powerful forces in my country, and
if we allow ourselves to be misled into lending our
support to the wrong cause, we may yet witness the
utter unraveling of the Malaysia that we know. We have
no wish to be another Kosovo or Bosnia-Herzegovina.
24. This brings me to the second political priority
confronting my country. We need to ensure that Malaysia
remains progressive, tolerant and liberal in its
outlook. We need to see to it that our moderate,
tolerant and accommodative policies remain in place. I
believe that we need to ensure the continuity of this
outlook and the accompanying policies because
Malaysia's very survival depends upon this.
25. Malaysia will soon go to the polls. The people --
and their supporters and sympathisers outside -- have
two choices: support the stable, very broad-based 14-
party Barisan Nasional or opt for a loose alternative
coalition of parties whose most powerful core member is
the supposedly Islamic party, PAS. The other parties in
this alternative coalition are not expected to do
particularly well. The main beneficiary from the
fallout of the Anwar affair is not the party of his
wife: the Keadilan party. The main beneficiary will be
Keadilan's coalition partner, PAS.
26. PAS is the party which has most skillfully
exploited the situation and gained the greatest
strength. It is a party noted for its misusing and
misinterpreting Islam to its political advantage. It
is sometimes regarded as an Islamic fundamentalist
party. But this it is not. If the fundamentals of
Islam are adhered to, love of peace and tolerance
towards others would be the result. My party, the
United Malay Nationalist Organisation believes in peace
and tolerance which is the true teaching of Islam. We
claim we are fundamentalists in the true sense. The
main promise that PAS makes is that when it governs it
will chop off hands, legs and heads, something that
the Quran prescribes only under very special
circumstances. Certainly the Quran does not prescribe
it in a multiracial society where non-Muslims are
subjected to English Common law and Muslims to Islamic
law because it will result in injustice. And believe
it or not true Islam abhors injustice.
27. PAS is obsessed with keeping women, especially
pretty women out of sight. They should not only be
covered up but should not work outside their homes.
PAS has no recognisable economic policy other than to
say it should be Islamic. What it means by being
Islamic is not clear.
28. Please understand that whilst in Malaysia there
are corporations that can take on the world, whilst
there are hordes of Malaysians who are eager to be in
the vanguard of the IT and multimedia age, there are
also quite a number who believe that television sets
should be thrown into the river because they are an
instrument of Satan.
29. In the run-up to Malaysia's tenth free general
elections we see a level of foreign intervention not
witnessed since the 1964 general elections when
Indonesia and the Communists sought to abort the birth
of Malaysia. Foreigners, including many in the United
States, who now seek to promote and support the
opposition should have a clear understanding of the
strategic options: either the modernist, progressive,
tolerant, liberal, tried and tested UMNO - led Barisan
Nasional stable coalition with a spectacular track
record or a loose coalition of parties dominated by a
deviationist Islamic PAS, whose record of performance
as a Government is there for all to see in the state
of Kelantan, a political party with a clearly and
openly stated agenda for the establishment of its
particular version of an Islamic state.
30. I can only hope that when support is given the
opposition parties, the foreign supporters know what
they are doing. The governing National Front party
does not solicit foreign support but it can do without
the continuous distorted reports about it.
31. I have said that our third political priority is
to ensure that Malaysians are able to enjoy peace,
harmony and stability at all times. In Malaysia we
attach an especially passionate value to them, because
we learned their worth the hard way. For many years
beginning in 1948, Malaysia was threatened by armed
communist insurgents. We were forced to live under
guerilla attacks for 32 long years. We defeated the
communist insurgents only after enormous misery and at
great cost. In addition, for three years from 1963 to
1965 we endured confrontation or konfrantasi from
Indonesia.
32. But our greatest peace and stability lesson was
drawn from the incidents of May 13, 1969, when for
several days buildings were razed, dwellings were
gutted and there was blood on the streets of Kuala
Lumpur. Parliamentary democracy was suspended for 18
months and rule by decree was imposed.
33. We learned then, and learned well, what a great
president of yours, Abraham Lincoln, learned 131 years
ago when he said, and I quote, "There is no grievance
that is a fit object for redress by mob law." He was
speaking to a gathering of young people then. His words
are as meaningful as ever, particularly to the young
people of Malaysia today. All of them were born after
May 13, 1969, more than 30 years ago. The under-30s
have been the great beneficiaries of the post-1969
transformations. They have no personal or deep
recollection of the nightmare that their elders went
through.
34. The vast majority of Malaysians today are in
agreement with Abraham Lincoln. There is no grievance,
imagined or real, that cannot be addressed through the
relevant processes in a democracy. Dissent my
Government not only tolerates; dissent it welcomes, for
the right to dissent is at the heart of democracy. But
street agitation, intimidation, violence and disorder
we will not countenance. Dissenters have rights but the
Government is also responsible for keeping the peace
for the majority.
35. We know that the flames of racial violence, once
ignited, are difficult to douse. We in Malaysia have
seen the tragic events among our brothers in
neighbouring Indonesia. Malaysia makes no apology to
anyone, for being firm in maintaining law and order.
36. Allow me now to turn to Malaysia's economic
priorities namely domestic structural reforms; Ringgit
stability; and international currency reform.
37. Even before we imposed selective capital controls
on September 1, 1998, we had launched a most
comprehensive and far-reaching "National Economic
Recovery Plan". This NERP set out over 200 specific
measures and dozens of structural reforms. We will
passionately pursue these to ensure a speedy, sound and
sustained economic recovery.
38. In the light of the dozens of structural reforms
and the actual steps we have taken, it is a little
puzzling that we continue to be hammered every day for
a lack of commitment to structural reform.
39. Malaysia is excessively dependent on external
demand and exports as a source of economic growth.
Domestic demand in the immediate, short and medium
term -- is too under-developed. Our exports are also
too dependent on manufactured goods, which account for
more than 82 per cent of all our exports. This is
excessively high.
40. With the lowest prices in the world for Big Macs -
according to the MacDonald Index - with the cheapest,
highest quality hotels in the world, we will proceed to
make Malaysia a tourist haven and a shopper's paradise.
We must vigorously expand and make more productive our
services sector, even as we deepen and enhance the
value-added quality of our industries. We must achieve
much higher levels of local content. All these things
require the most fundamental and difficult structural
reform.
41. Yet we hear practically not a word on these
critical areas for structural reform. Instead, each
and every day, we are bombarded by unceasing advice and
great intellectual discourse on the need to sell our
banks to foreigners - to ensure their adequate
capitalisation, to ensure the benefits in efficiency
that come from having foreign banks which would
introduce the state of the art in banking, which can
ensure productivity-enhancing competition, etc.
42. Do these great foreign intellectuals, these great
foreign economists, these great foreign capitalists,
these great foreign journalists not know that Malaysia
has a problem of excess capital and liquidity? Do they
not know that the banks have been fully re-capitalised?
Do they not know that for years Malaysia has foreign
banks, 13 altogether now? They own one third of all
banking assets. Are the efficiency and competition
gains to be achieved only when 100 per cent of all the
banks in Malaysia are foreign owned? I suspect that 50
per cent of the attacks on our so-called neglect of
structural reform would simply and miraculously
disappear if we agreed to sell all our banks to
foreigners. The other half would disappear if we gave
the fullest encouragement to foreign capital to buy up
the rest of productive Malaysia.
43. We see no reason to sell our family silver when we
do not need foreign cash. Some 41 per cent of our
total GDP is saved - something that makes Japan's
savings rate look rather low. Yet great experts who
know their textbooks and who have vast experience in
capital-starved Latin America and Eastern Europe and
elsewhere keep telling us we must adopt policies that
will ensure the inflow of foreign funds.
44. We see no reason to sell Malaysian corporations,
which we have spent a generation to foster, at fire
sale prices - especially since we were able to put out
the fire before it got completely out of hand. Our
selective capital controls did that.
45. When we did so, we took the greatest care to leave
foreign direct investment untouched. These selective
capital controls became even more selective in February
when we allowed the repatriation of equity capital
(subject to a repatriation levy). As of September 1,
1999 all old money which could not bolt after we closed
the stable gates, can now leave without any condition
whatsoever. We are very gratified that since we opened
what many commentators called "the flood-gates" on
September 1, 1999, very very little foreign capital has
left.
46. The single and only reason why we adopted the
September 1, 1998 selective measures was to stabilise
the Ringgit. It was not to buttress the Ringgit. It
was not to hold the Ringgit at some unsustainable
level. It was not to strengthen the Ringgit exchange
rate.
47. Without the very bold and laboriously-calculated
selective measures to guarantee currency stability, we
were certain that the crazy currency gyrations of the
Malaysian Ringgit would continue. The IMF measures did
not stabilise Asian currencies until banks stopped
lending to highly leveraged funds after the LTCM
debacle and Asian countries ignored the IMF
directions. The recent attacks on the Baht shows that
it is still not safe out there.
48. But we were told by the keepers of the holy writs
that we were plain stupid or crazy. A senior Clinton
administration official was quoted as telling the New
York Times that the measures would be a "spectacular
failure". Although all that we did was to declare a
peg of 3.8 Ringgit to the US dollar and to no longer
allow the Malaysian Ringgit to be bought and sold
offshore, we were said to have abandoned the market
system. The great International Herald Tribune said
that "Malaysia last week shut the door on the global
economy".
49. As the 17th biggest trading nation in the world,
we would be committing suicide if we were to shut the
door on the global economy. We are of course not very
bright, but we are not that stupid. Our trade with the
world has actually increased while foreign direct
investment and foreign tourists are still coming in in
droves.
50. Mr Michel Camdessus has now said: "I praise the
way in which Malaysia has been able to adopt a soft
system of controls". I would like to place on record
our thanks for the kind words now coming from the IMF
and elsewhere.
51. The favourite question now being asked by foreign
currency traders, foreign portfolio investors and the
know-all foreign media who think that "investment"
means foreign equity investment and "global capitalism"
means currency trading, is this: when will Malaysia
lift all the measures and allow the Ringgit once again
to be furiously traded on international markets.
52. We have said often enough that the controls will
not be lifted until the International Financial Regime
is made safer through reforms. There is absolutely no
reason why the interest of a few rich currency traders
should be allowed to prevent reforms for making
currency attacks less destructive from being made.
While waiting for this, we will continue with our
controls because we are not doing anyone any great deal
of harm and we are doing ourselves a great deal of
good.
53. Some have argued that this planet has a choice
between making the world safe for global capitalism or
making global capitalism safe for the world. I think
that we must do both. I am not against global
capitalism per se.
54. But I do believe passionately that we must make
currency speculation - a small but dangerous part of
global capitalism -- safe for the world.
55. All this talk about global financial architecture
is so much hot air. The powers that be are enjoying
unprecedented prosperity and they see no reason to do
anything. They see benefits from being able to push up
currencies here and push them down there. So who cares
about millions being thrown out of jobs, unable to buy
food and medicine, looting and rioting and overthrowing
Governments. They are all happening to other people in
other countries.
56. We in Malaysia have seen the devastation wrought
on our country and on our neigbours. They are very
real to us. And we are not about to return to the good
old ways until the good old ways are changed.
57. Malaysia has managed its heterogenous people and
its complex economy relatively well. We must be doing
something right. We are not asking the world to follow
us. All we are asking is to be left to do things in
our own way.
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