Oleh/By : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : THE PALACE OF THE GOLDEN HORSES
HOTEL SG. BESI, KUALA LUMPUR
Tarikh/Date : 23/05/2000
Tajuk/Title : THE OFFICIAL OPENING OF THE
THIRD ASIA AFRICA FORUM (AAF III)
Let me on this occasion welcome all the
participants to the Asia Africa Forum III (AAF III) and
to Malaysia. While the Tokyo International Conference
on African Development (TICAD) process and the Asia
Africa Forum facilitated exchanges of experiences
between Asian and African countries on many aspects of
development, we now have to prepare ourselves to face
and deal with special challenges and dangers arising
from new ideas about the structure of the world's
economy, world trade and international finance. Most
of all we have to deal with the self-declared right off
some countries to interfere in the affairs of other
countries.
2. The Asia-Africa Forum III, is therefore crucial
for the representatives of our two continents to seize
the opportunity to exchange ideas on our perceptions of
the things to come and how we propose to deal with
them.
3. Allow me now to share with you Malaysia's
experiences in the two areas, which are the focus of
the Forum, namely, private sector development and
agricultural development.
4. Experiences in Asia indicate that effective
development requires a careful balancing of the roles
of the Government and the private sector across a broad
range of policies and actions. While there is no magic
formula on the correct mix of policies that will ensure
development at all times for all places, there is
recognition that Governments need to provide political
stability, guidance, legal framework, policies,
infrastructure, investment incentives; in short,
promote a predictable and attractive climate for
enterprises in the private sector to flourish. The
private sector can then play its part by efficiently
producing and trading in goods and providing the
services needed by society and of course enriching the
people.
5. Since the early 1980s, Malaysia had stressed that
this country will rely on the private sector as the
primary engine of economic growth. We had lost faith
in state enterprises. But our fledging private sector
could not fully respond to the challenge. We had
therefore to rely on foreign private investments.
However, by 1988 the local private sector bloomed and
the economy expanded at an average annual rate of eight
per cent. This high growth rate would have continued
if not for the manipulation of our currency by currency
traders. For almost one and a half years we struggled
to find a solution to this problem.
6. Through good and difficult times Malaysia
emphasised on a strong public-private sector
partnership. The groundwork for this co-operation was
laid in 1983 when the Malaysia Incorporated concept was
introduced. Broadly defined, Malaysia Inc. as it is
referred to, perceives the whole country as a giant
corporation in which the Government and the private
sector and the workers work and cooperate in order to
achieve maximum returns. By efficiently processing all
bureaucratic procedures involving business activities,
profits could be maximised. Since the Government gets
28 per cent of the profits by way of corporate tax,
Governmental cooperation pays. Workers get better
incomes and since Government revenue is also spent for
the benefit of the people, everyone benefits from the
Malaysia Incorporated concept.
7. Another key approach is privatisation. As with
most Governments, the Malaysian Government is not
efficient when it comes to exploiting the profit
potential of its many companies, departments and
agencies. The private sector does this much better.
The Government does not sell all the shares but retain
some in order to gain from the expected profits and
also to benefit from capital gains by selling later.
The important thing is that the Government does not
interfere with good management.
8. Malaysia's privatisation does not involve selling
Government assets to foreigners in order to get foreign
exchange to settle debts. We sell largely to
Malaysians though we do allow for a certain percentage
to be sold to foreign investors, especially strategic
partners.
9. The result of privatisation has been gratifying.
Where before we had to make budget allocations yearly
to these Government entities, now we don't have to.
Instead we actually earn considerable dividends for the
Government and make considerable capital gains. Not
having too much foreign equity means less outflow of
funds from the country.
10. For the people, there is better service and better
infrastructure. The good expressway system that you
may have noticed is an example of the kind of benefits
the people get from our kind of privatisation. There
is no way for the Government to provide all these
because apart from being inefficient, Government has to
wait for revenue increases before borrowing for
infrastructure projects.
11. However limiting factors must be recognised. If
the private sector is not strong and efficient we may
end up having to re-nationalise. In some cases it is
better to invite strong and capable foreign
participation in order to minimise failures. Such a
need should not involve outright sale because if you do
this the profits will just flow out.
12. Privatised entities must be supported, even
subsidised by the Government. This is not because we
want to help the investors make profits but because we
do not want the people to pay too much for the services
they receive. It has to be remembered that the
Government is still collecting various taxes from the
people and they are therefore entitled to pay less than
the actual cost of the services they receive.
Transferring assets which give no return to the
Government is not a big sacrifice but it helps in
reducing capital costs.
13. In the case of toll expressways, the Government
sold the completed portion at below cost so that the
total cost of the expressway is lowered and toll rates
are low. Selling Government assets at market price
will render the services costly, making charges for
public use high and probably end up in major losses and
failure as usage will be low. Privatisation will
become unpopular and so will the Government.
14. In the Information Age, societies must be
information-rich and inventive in the application of
information. While we should welcome the opportunities
for new businesses, we may also lose much because of
some of them. Take Amazon.com the founder of which is
Time's Man of the Year. You can buy practically
anything you want from Amazon.com and it will be
delivered at your doorsteps by international courier
operators. The price would be very low because the
company orders in bulk and gets the best rate for
delivery by competing couriers. Obviously consumers
everywhere will benefit.
15. The down side is that local importers, agents,
distributors and retailers will be put out of business.
The Government will earn no tax from these businesses
or from import duties. Jobs will be lost by the
millions.
16. The producers of goods and suppliers of services
will have to accept less and less profit. For the
production workers there will be less pay. Probably
production will have to shift to low wage countries
resulting in loss of jobs in high wage countries.
17. While the shares of manufacturing and service
companies will depreciate, those of Dot.com companies
will appreciate a hundred fold, creating a sense of
wealth. If the companies collapse there will be no
assets to distribute. The original founder may have
taken his capital gains already and a lot of investors
who had bought at high prices will find themselves left
with useless virtual wealth.
18. The producers of goods and services find
difficulty in raising capital and low share prices and
low profits may make the manufacturing industries
unattractive. The investors will sell out in order to
invest in dot.com companies. In the end there may be
no goods to sell.
19. Information can enrich us but without rules and
laws it can impoverish us and destroy us. So don't be
too ready to accept everything done in the name of
globalisation and the free flows of capital and goods,
that the Information Age is supposed to make
inevitable.
20. Malaysia's experience with agriculture is no
different from those of other countries. We need
agriculture because we need food for a growing
population. But there is only so much that we can
produce ourselves. We have to accept the need to
import. To import we need money. But agriculture
earns less foreign exchange than manufacturing. It
provides less jobs. It does not enrich people. It is
subject to price manipulations by speculators and their
futures trading. Prices can plunge overnight leaving
our people destitute.
21. For Malaysia agriculture involves tree crops i.e.
industrial agriculture like rubber and oil palms. Cost
of production must be as low as possible and margins
must be as high as possible. If there is a price
collapse our profits will be reduced but we will not
lose. Our competitive advantage in terms of soil and
climate must be fully exploited. And when a commodity
looks like losing demand for whatever cause, we get out
of it. Now we are busily getting out of rubber,
preferring to import it rather than producing
ourselves.
22. In the space of 42 years of independence we have
formulated three different agricultural policies. We
do this in response to market demand. We have to be
agile. Today we are using high technology to grow more
food for our own consumption and for export. We are
more and more into aquaculture and breeding of selected
animals. We are changing from monocrops to mixed
farming and crop rotation.
23. We now import almost three billion Dollars of food
but we export two and a half billion Dollars.
24. New strategies have been developed for
agriculture. Our experience is that big modern estates
do better than small farms run by individuals. We
cannot close down or amalgamate the small farms but we
can have a nucleus of big farms with small farms as
satellites, using the facilities of the big farms. In
any case, the children of the small farmers are now
better educated and are giving up farming. Eventually
farms in Malaysia will be large efficient estates. In
preparation for this, our universities are offering
courses in mix-farm management. We hope to be able to
deal with the success of our educational policy and the
migration from the farms to the towns.
25. Malaysia is a trading nation. Trade involves not
just exporting but also importing. We have always tried
to produce less food than we consume. We produce only
65 to 70 per cent of the rice we need. Thus we are
able to import from our neighbours and to sell to them
what we produce. The devaluation of our currency by
rogue traders increases the Ringgit cost of our imports
but it also increases the Ringgit earnings of our
agricultural exports. The balance is precarious but by
carefully monitoring and controlling prices, inflation
has been held reasonably low. It is a factor which
enables us to fight against economic depression and
help the recovery and return to a growth path.
26. We have recently revised our National Agriculture
Policy III targets and approaches to ensure that the
food sector contribution to GDP increases from three
per cent or 6.1 billion Ringgit to six per cent or 12.5
billion Ringgit. The new approaches will be centered
on transforming the pre-production, production and post-
production processes and will be consistent with our K-
economy drive. It involves big scale production and
mechanisation, private sector participation and will be
technology and knowledge intensive. What we have
learnt which can be of relevance to African countries
is the need to effectively balance between various
sectors, between industrial and food crops to ensure
the long term sustainability of the sector, self-
sufficiency and more importantly, to protect the
interest of the people involved.
27. Our approach hitherto has been to exchange
experiences. We should now move forward to forge smart
partnerships that will lead to a win-win situation and
the betterment of all. This forum should therefore
look at ways and means to foster more trade of goods
and services between Africa and Asia. We may need to
introduce innovative approaches and dismantle existing
barriers. We could also enter into more Bilateral
Payment Arrangements, consider inter-regional trade
arrangements, intensify trade promotional efforts, use
currencies other than U.S. Dollar to effect settlements
and adopt counter trade.
28. It is essential that we put our act together as
the global economy is now iniquitous. The disparities
in income and lifestyles between the rich and the poor
have reached unprecedented proportions. Some eighty
percent of the world GNP is concentrated in
industrialised countries and the poorest twenty per
cent have only a share of 1.4 per cent of the world
GNP. Globalisation ideologues propagated that those
countries which open up will experience such dynamic
economic development that, within the foreseeable
future, the world will see a convergence between the
rich and the poor. This is far from what is happening.
On the contrary, it was reported that the richest two
per cent of the world population, which in 1960 was 30
times better off than the poorest twenty per cent, are
today 61 times better off.
29. Based on our own experiences recently, we do not
share the optimism that globalisation will
automatically solve development problems. We see
powerful processes that continue to marginalise many
countries of the South. We see the adverse social and
economic consequences brought about by the twin forces
of globalisation and liberalisation adding to the
burdens of the South. For poorer countries,
globalisation and liberalisation have meant opening up
to foreign imports and finances which can displace
local enterprises and businesses. Unless the
interpretations of globalisation and liberalisation are
changed we think the poor will not only lose more but
they would virtually be colonised again.
30. We must not allow the uncontrolled spread of
globalisation and their negative consequences to affect
us. Governments and international organisations must
assume an active role in controlling and regulating the
globalisation process, making it more socially
accountable. Placing all the blame of the recent
crisis in the East Asian economies on their governments
is wrong. A large part of the problem lies in the
international structures, where there is an absence of
mechanisms for fair, equitable and just global
governance.
31. Globalisation and liberalisation should not mean
neglecting the interests of our people and our
countries. The weak and the poor countries should have
an effective role in the formulation of this process.
Developing countries have vast experiences, both good
and bad. Many of us have experienced the benefits of
foreign direct investments. Some of us have also seen
how nations can be impoverished overnight. Surely, with
our experiences, we can help shape a globalisation that
benefits all, where wealth is more equitably
distributed between the rich and the poor.
32. Developing countries by definition are poor,
some are very poor. Alone we can do practically
nothing to help ourselves. Most of us are under the
control of agencies like the IMF or the dominant powers
in the world. Their creditor role has forced us to
submit to policies, which make us permanent debtors.
There seems to be no future for us.
33. But if we act together we may yet be able to
influence the processes, which affect us. There are
among the rich and the powerful some sympathetic
elements who are either genuinely sympathetic towards
us or can make common cause with us for their own
vested interests. We saw this in Seattle and at the
World Economic Forum in Davos. If we work with them
our clout would be leveraged.
34. The new capitalists are more powerful and less
considerate. They are backed by their powerful
Governments. Where once Western Governments used to
abhor monopolies, they are now encouraging the
formation of cartels and oligopolies to dominate the
world. Each one of their mega entities is bigger in
terms of capital than any of us developing countries.
35. As you will have noted, the rich countries of
the North are ganging up while their corporations are
merging to form huge specialised companies. We on the
other hand, are greatly divided partly because we don't
seem to know how to work together but mostly because
the super powers actively prevent us from cooperating.
A glaring example is the proposed East Asia Economic
Community. The U.S. made it clear that it does not
approve and so it cannot be formed. Now the U.S. is
even opposing the setting up of the Asian Monetary Fund
for fear it might undermine the IMF and therefore U.S.
hegemony. Fortunately, we can still talk to each other
as we are doing now. We can therefore learn from each
other. Malaysia has learnt a lot by studying other
developing countries and we stand ready to open our
books to interested developing countries. We had
looked East, looked at South Korea, Japan, Taiwan and
even colonial Hong Kong and learnt much. Africa can
learn much from looking East also.
36. Finally, I would like to commend the Japanese
Government, the United Nations and the Global Coalition
of Africa for their significant contributions in
organising this conference. I hope and pray that the
Asia-Africa Forum III will result in greater
understanding among us of the challenges that lie ahead
and the need for greater collaboration among the
countries of our two continents.
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