Oleh/By : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : CAIRO, EGYPT
Tarikh/Date : 18/06/2000
Tajuk/Title : THE MEETING WITH MEMBERS OF
THE INDUSTRIAL AND POWER
COMMITTEE OF THE EGYPTIAN SENATE
" MALAYSIA'S EXPERIENCE IN INDUSTRIALISATION"
During the colonial period Malaysia, or rather
Malaya, was the biggest producer of tin and rubber in
the world. There was hardly any manufacturing
industry. Practically all manufactured goods had to be
imported.
2. After independence in 1957 the problem of
unemployment became more serious as the tin and rubber
industries provided few job opportunities. The only
way to create jobs was to go into manufacturing.
3. But Malaysians had no experience in manufacturing,
no technology, no capital and no management know-how or
marketing skills. In those days countries wishing to
industrialise had to depend on local entrepreneurs
willing to risk the little capital they had and buy or
steal technology or pay prohibitive royalty. There was
no way for them to produce and compete in the
international market.
4. Japan was about the only country which
successfully industrialised on its own. But Japan had
indigenous skills in various crafts and was familiar
with metals. Most countries, and certainly Malaysia,
had no such background. Besides the colonial masters
ensured that we were limited to producing commodities.
Over time we believed that producing manufactured goods
required some kind of extraordinary skills and even
some magic which was beyond us.
5. But early after independence we realised that
unless we could create jobs for our people we would be
faced with serious social and political problems. We
would in fact become poorer and poorer and be worse off
than when we were colonies.
6. The little industrialisation that we managed by
ourselves was in import substitute products. But what
we produced with our primitive factories were inferior
to imports and invariably cost more. We had to impose
high import duties in order to protect our products.
This only deprived our people of much needed
manufactured goods to improve their standard of living.
Wages and incomes could not rise, so that the local
market could not absorb local products in sufficient
volumes to increase production efficiency. There was
no way to export our inferior goods as they could
compete neither in quality nor in price.
7. It seemed that Malaysia was doomed to remain a
producer of natural commodities and to remain backward
and poor. But we decided to change our mindset and to
invite foreigners to use Malaysia as an industrial base
for their products for the world market. However we
were not too confident that our workers could master
the skills of manufacturing.
8. At that time the Japanese were producing and
marketing superior and cheap goods for world markets.
The Europeans with their high cost of labour etc could
not compete with the Japanese. To lower their cost
they had to move to low labour cost countries. And so
Malaysia's offer of a cheap manufacturing base was
hesitantly accepted.
9. To make manufacturing in Malaysia more attractive
the Government offered a ten years tax holiday during
which time there would be no corporate tax or tax on
products exported to foreign markets. Bureaucratic
hassles were minimised and illegal gratification of any
kind was strictly dealt with.
10. The foreign investors soon found that the
skillful, low-paid and disciplined Malaysian work force
enabled them to reduce their cost and make their
products competitive. The investments increased
tremendously and soon Malaysian exports of manufactured
goods exceeded exports of rubber, tin and even
petroleum. Today 80 per cent of Malaysia's exports are
made up of high-value electronic and electrical goods.
11. Initially Malaysia encouraged labour intensive
industries so as to reduce unemployment. The policy
was so successful that today we have almost two million
foreign workers, a large number of whom work in foreign
manufacturing companies.
12. But the benefits to Malaysia go beyond that.
Malaysians acquired skills in manufacturing, in the
management of sophisticated manufacturing facilities
and systems and in marketing. Soon local companies
began to produce the component parts and finally
complete products of Malaysian designs and brands. The
spin-off is not limited to the industries which were
introduced by foreign investors. Malaysians began to
venture into many new industries as Malaysian
entrepreneurs feel more confident in their own ability
and in the skills of the Malaysian work force. Today
locals produce a wide range of quality products which
are marketed worldwide. Few now question Malaysian
skills or the quality of Malaysian products.
13. The Government plays a very big role in the
Malaysian industrialisation process. Industrial Master
Plans were drawn up to give direction to the overall
process. Certain industries are targeted and given
special incentives and help. Funds were set up and
banks are urged to be supportive of certain industries
during each plan period.
14. Marketing teams were sent out by the Government
headed by the Minister of International Trade and
Industry to persuade foreign industrialists to invest
in Malaysia. Malaysian entrepreneurs were put into
contact with foreign partners during these promotional
trips. As a result there were many joint ventures.
15. For 100 per cent export oriented industries 100
per cent foreign ownership is allowed. If the goods
are to be sold in the local market the usual import
duty has to be paid. Alternatively Malaysians should
hold shares in the company.
16. The Malaysian Government is business friendly. We
practice the concept of Malaysia Incorporated in which
Malaysian civil servants and political leaders are
required to be as helpful to the private sector as
possible. We recognise that the private sector,
whether local or foreign is contributing to our
economic development. Besides many of them pay
corporate and other taxes and the more profit they have
the more taxes will the Government collect. And of
course the salaries of the Government servants are paid
from these taxes. In fact even Government development
for the people comes from these taxes. So it pays for
us to help the companies make profits.
17. The result of this business friendly attitude of
the Government is that the country is able to attract a
lot of investments, both local and foreign. And this
naturally contributes towards the industrialisation
process and the growth of the GDP.
18. But as you are aware industrialisation is not a
static process. Technologies and products change very
quickly. Some products have a shelf-life of only a few
months. Every now and again a radically new technology
changes the industries completely. The advent of the
transistor and the microchip changed production methods
completely making robots and automation possible. With
these changes new skills must be acquired by both the
workers and the engineers.
19. Today Information Technology (I.T.) has totally
changed both the products and the methods of
production. Instead of manually skilled labour we now
need knowledge workers.
20. Malaysia decided to embrace I.T. because our
workers cannot get high wages from the old industries
and besides we no longer have enough workers, having to
rely on a huge number of foreign workers.
21. We created the Multimedia Super Corridor (MSC), an
area measuring 15Kmx50Km which include the cities of
Kuala Lumpur, the new administrative capital,
Putrajaya, the new Cybercity and the Kuala Lumpur
International Airport. Within the MSC new cyber laws,
policies and practices, together with state of the art
communication infrastructure have been provided.
Special incentives for world class international
companies involve in I.T. and Multimedia to locate
their R&D, operations, content production, field
experiments and high tech manufacturing in the MSC have
resulted in considerable investments. Local I.T.
companies also locate themselves in this Corridor.
Interaction between locals and foreigners enabled a lot
of knowledge and technology to be absorbed, thus
enhancing Malaysia industrial capability in I.T.
22. A Multimedia University has been set up to train
the knowledge workers needed for the I.T. firms
operating in the area. A large body of foreign
students have been admitted and the graduates can
expect good jobs anywhere since the demand for such
knowledge workers is going to increase considerably.
23. With the MSC Malaysia is ready to face the
challenges of the I.T. Age. Still Malaysia is not
fully industrialised although it is no longer dependent
on agricultural or mining products. We are still a
developing country and with globalisation there is a
danger that we may lose control over our
industrialisation program.
24. We have as you know recovered from the foreign
induced economic turmoil. We are very vigilant. Our
experience in industrialisation has been very wide. I
think I can say we succeeded in our industrialisation
plan. But I cannot say whether the next attack will
destroy us or not.
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