Oleh/By: : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : HOTEL ISTANA, KUALA LUMPUR
Tarikh/Date : 24/07/2000
Tajuk/Title : MAJLIS PERASMIAN MALAYSIA
INCORPORATED SUMMIT 2000
Saya ucapkan terima kasih kepada pihak penganjur,
ASLI dan MAMPU, kerana menjemput saya untuk
merasmikan majlis pelancaran persidangan Malaysia
Incorporated Summit 2000 pada hari ini.
2. Persidangan ini adalah sesuai dan tepat
pada masanya setelah sekian lama kita mengamalkan
konsep dan Dasar Persyarikatan Malaysia. Ternyata
konsep Persyarikatan Malaysia telah banyak menyumbang
kepada pembangunan negara yang pesat dalam dua dekad
terakhir abad yang baru lepas.
3. The idea of Malaysia Incorporated is not a
Malaysian original. When Japan rebuilt itself after
the devastation of the country during the Pacific War,
its performance was so remarkably good that many seek
to understand the method or approach adopted by Japan.
Western observers concluded that it was the close
collaboration between the Government and the private
sector which made Japan's fantastic recovery possible.
the Western Press coined the word Japan
Incorporated and implied that this was something
improper and unprincipled. Governments it seems
should be bureaucratic and put as many obstacles as
they can in the way of the private sector. The more
successful the private sector the more should the
Government tax it, ostensibly in the interest of
spreading the revenue and wealth to the rest of the
people. In the early years after the Second World War
a few socialist Governments in Europe actually imposed
corporate taxes of more than 90 per cent. The idea
seemed to be to punish business and to take away as
much of their profit as possible. Japan's
collaboration between Government and business was
therefore considered bad practice and reprehensible.
As usual the West tried to make out that their views
were universal and everyone must accept them.
4. Malaysia like most countries was in the habit
of adopting Western ideas without question. Thus
Malaysia tended to set up state enterprises and to
retain monopolistic services with the Government.
Public servants were anything but servants of the
public. They were not expected to be helpful towards
the private sector. A rather negative attitude was
adopted. Delays were the general rule and if anything
could be rejected it was rejected. The slightest
mistake or failure to comply with policies or
regulations would result in rejection. There was
almost a feeling that there was no reason for civil
servants to facilitate approval when it meant making
some businessmen rich while the civil servant seemingly
gained nothing at all.
5. The business community for their part would
look at the civil servants as their bete noire or
enemies almost. They dislike having to grovel before
these bureaucrats in order to get through a statutory
requirement. Where they could cheat they would and
some resorted to bribes in order to get necessary
approvals.
6. The end result was retarded progress for the
economic growth of the country. Every transaction
with the Government would take an unconscionable
length of time. Approval to build a business premise in
Kuala Lumpur took up to five years and quite often no
approval was given because of some minor breaches or
failure to conform to some obscure policy. There were
hardly any high rise building in Kuala Lumpur and only
a limited number of shops and houses could be built.
Applications for housing projects would gather dust at
City Hall.
7. It became clear that unless the approach to public-
private sector relations was changed Malaysia would not
develop and certainly would not develop fast.
8. Japan Incorporated may be improper to the West
but there is no reason why it should seem so to
Malaysia. What was a fact was that collaboration
between business and Government in Japan had performed
miracles for the recovery of Japan. By the 1980's
Japan had become the second biggest economy in the
world. Despite being earthquake prone, despite
having to depend totally on foreign sources of fuel
and material the cities of Japan grew rapidly and
the infrastructure needs of rapid growth were met.
9. The question that we asked ourselves is why
should there be confrontation between Government and
business when close cooperation between the public and
private sectors of Japan worked so well in
rebuilding and prospering Japan. Looking closely we
realised that a substantial amount of the profit
by the business accrued to the Government through
corporate and other taxes. At that time 45 per cent
of the profits accrued to the Government. It was
obvious that the more profit the businesses made the
bigger the revenue for the Government. And bigger
revenue means not only a bigger Governmental
development budget but also better and higher
salaries for the Government servants. The
Government servants therefore have a stake in the
companies they dealt with. If the company loses not
only will the Government get no revenue but the
Government employees too would lose. Government and
its employees should therefore help to ensure that the
private sector made the maximum profit.
10. It was for this reason that Malaysia adopted
the Malaysia Incorporated concept. There was the fear
that if the Government employees, especially the
decision makers get too close to the private sector
they would be corrupted by the businessmen. This
was a possibility that was real and could not be
ignored. But then even if the Civil servants
had a confrontational attitude towards the private
sector they could still be corrupted. They needed
only to delay the official processes to invite
corruption. As much as it could not be denied
that the Malaysia Incorporated concept could lead
to corruption, the confrontational official attitude
of the past had also resulted in corruption. But
in addition the old attitude resulted in everything
being slowed down and unacceptable delays and these
delays cost money. On balance it would seem that
the risk of corruption because of the Malaysia
Incorporated concept was less than with the old
boorish bureaucratic aloofness. The Government felt
that the Malaysia Incorporated concept was worth
adopting.
11. Having accepted the Malaysia Incorporated it
was necessary to educate both the civil servants and
the business community. They must understand the basis
and the rational of the Malaysia Incorporated concept
and how they should use it for the faster and
higher
economic development of the country. This was no
easy task especially as the opposition saw this as an
issue to attack the Government. The foreign press
was as usual extremely negative. They saw in
this an opportunity to condemn yet another Asian
Government which had chosen what they labelled as an
improper form of administration.
12. Detractors notwithstanding, the
Malaysia Incorporated concept gradually changed
the public/private sector relation. Bureaucratic
procedures moved at a faster pace as civil servants
interact closely with the business community and
expedited the official processes. The civil servants
understood as much as the businessmen that time meant
money and that delays in the economic growth of the
country would cost the civil servants as much as the
business people.
13. The test of the pudding is in the eating. Did
the Malaysia Incorporated concept contribute towards
the development and enrichment of Malaysia? This is
not so easy to pinpoint and to assess as Malaysia
adopted, devised and implemented numerous other ways to
speed up the development of the country.
14. Apart from the Malaysia Incorporated
approach Malaysia also went in early and
extensively into privatisation, into
industrialisation through foreign direct investment,
into tax free incentives for industrialisation,
increased budgeting for tourism, big expositions,
expanded trade with the countries of the South while
increasing exports generally to traditional markets and
many other economic stimuli. All these contributed
towards Malaysia's rapid growth. But then all these
efforts required the close cooperation between the
private sector and the Government sector and this is
facilitated by Malaysia Incorporated. In other words
the concept helped all the other efforts to achieve
success. So the Malaysia Incorporated approach
contributed to all the other policies and methods to
expedite the development of the nation. How much it
helped is difficult to qualify. But clearly it
contributed.
15. Malaysia's economic growth is one of the
highest in the world. It must be remembered that
when the Malaysia Incorporated concept was introduced
Malaysia was not doing well at all. The country
was going through its periodical economic downturn in
the first half of the 1980-1990 decade. There was
still too much dependence on the production of
commodities like tin, rubber and to a lesser extent,
palm oil. Production of petroleum and gas was low.
Manufacturing was still a low contributor towards the
economy.
16. The demand for the traditional commodities was
low at that time and prices were bad. Palm oil was
trading less than RM500 per ton, when the cost of
production was more than RM500 in most cases. It
looked as if Malaysia would not make much progress.
Such was the revenue of the Government that Ministers
had to take a pay cut. 17. The Malaysia
Incorporated concept was introduced in 1983. It took
time to be understood, adopted and practised and to
yield result. But by 1986 the economy began to turn
around. From then on it continued to grow at more
than seven per cent annually. And it would have
continued to grow if not for the attack on the Ringgit
which precipitated a financial and economic turmoil.
18. During the implementation of the
Malaysia Incorporated concept, the Government and the
private sectors were in constant dialogue. The
economic and finance ministries held regular dialogues
every year in order to iron out problems. These
were serious sessions where the private sector was
free to air their grouses and criticisms and to make
suggestions on how the bureaucrats and the
Government could improve the services rendered to the
private sector.
19. On the other hand the Government was able
to explain policies and procedures instituted by
the Government in order to develop the country.
Most importantly both sides not only learnt to
understand each other better but acted on the
suggestions and ideas to improve the services and the
dealings between the two sectors.
20. Malaysia is a multi-racial country in which
the different races are not equally developed.
The indigenous people, the Bumiputeras, lag behind in
the business sector while dominating the public sector.
In other words there was a racial element which
influenced the thinking of the private and public
sectors. Confrontation was more likely than cooperation
between the two sectors. If the racial elements
were not properly handled then the interaction
between the Government and the business community
would be bugged with all kinds of problems.
21. Under these conditions a policy of
close cooperation between the public and private
sectors became even more critical. Left to
themselves the Malay-dominated Government service
would tend to obstruct the Chinese-dominated
private sector. But the Malaysia Incorporated
approach made it possible for both sides to
downplay racial differences. They were both working
for the same Corporation, Malaysia, and they knew
that they both stood to gain or to lose depending
on how the Corporation performs. Their close working
relations not only contributed towards
facilitating bureaucratic procedures and business and
therefore contributing towards Malaysia's good economic
growth but it actually contributed towards greater
racial harmony as well. The Government and the private
sector people were no longer strangers to each other.
Annual Malaysia Incorporated Golf Tournaments helped
cement the relations between the sectors and also the
two major races in Malaysia.
22. But the Malaysia Incorporated concept also
helped in reducing the disparities between the
Bumiputeras and the non-Bumiputeras. Bumiputera
businessmen had always been inept in the conduct of
their relations with Government bureaucrats despite
their being of the same race. With the Malaysia
Incorporated concept in place Government bureaucrats
were more prepared to be more patient with the
Bumiputera businessmen, whose problems were usually
more numerous and taxing than those of the non-
Bumiputeras.
23. The economic turmoil caused by the devaluation
of the Ringgit tested Malaysia Incorporated to
the maximum. If the relation between the private and
the public sectors had been bad, Malaysia would not
have withstood the pressures caused by the
sudden impoverishment of the country. Although the
income of the civil servants were not much
affected their purchasing power deteriorated as the
prices of goods and essentials inflated with the
devaluation of the Ringgit. It would have been
easy for the civil servants to blame the business
community for price increases and their lowered
standard of living. They would not have accepted the
deferment of pay increases if they felt that the
private sector was using the Ringgit's depreciation
to increase prices.
24. But there was no animosity directed at
the business community by the Government servants.
In other countries, racial riots broke out and
the business community, made up largely of a
different race, was attacked repeatedly. Their shops
were razed to the ground and the goods looted. But
in Malaysia everyone was calm although clearly both
the private and the public sectors were suffering.
25. The Government i.e. the civil servants and
elected members had to work out a remedy for
rehabilitating the economy. Not having any unrest and
instability helped, but more importantly the civil
servants worked hard to implement the measures taken
by the Government to overcome the economic
downturn. They knew that the main beneficiaries
initially at least would be the private sector but
they seemed to realise that their own fortunes were
tied up with the success of the private sector. And
so in the spirit of Malaysia Incorporated they did
their utmost to turn around the economy. And as
can be seen Malaysia's recovery is faster and greater
than the other countries hit by the economic turmoil.
26. But we are now moving into the Information
Age where radical changes will take place and
the Government had pledged to adopt Electronic
Government. Communication between Government and the
private sectors will not only be more rapid but actual
physical contacts may be minimal. Personal relations
will be affected and some may even think
thatefficient communication would replace the need
for mutual understanding between the bureaucrats
and the businessmen.
27. This would be a mistake. E-Government would
be less human if only efficiency counts. There must
be the human element in the conduct of affairs
between Government and the private sector. Perhaps
more can be done in a given time but good relations
between the people involved must contribute towards a
better and more humane Government. A robot Government
which deals electronically with the problem of human
relationship may be efficient but it would destroy
human society.
28. The Government of Malaysia is business
friendly by choice. We see Government as a
facilitator for all kinds of economic and social
activities. We are not being purely altruistic. We
get good returns from our business-friendly attitudes.
We do not discriminate between locals and foreign
unless there are good reasons but we favour the
growth and well-being of our country and people all
the time. We believe in a win- win formula. Both
sides must benefit in whatever transaction.
Certainly in helping the business community we
in the Government expect to benefit ourselves and
our country as a whole. 29. In the concept of
Malaysia Incorporated we think we have found a
formula for good governance. Governments must
raise revenue to pay for the administration and
development of the country. But the administration
must give back to the tax-payers through good service;
through service which would contribute to the well-
being and the wealth of the tax-payers. The revenue
is not for the administration to enjoy
exclusively. It is to pay for its contribution to the
task of making possible the kind of environment in
which the tax-payers can go about their business of
wealth creation.
30. Clearly the two sides are mutually
interdependent. Their relation is almost symbiotic.
They feed on each other, or put in another way, they
help sustain each other. They are not parasitic.
31. The Malaysia Incorporated concept
simply institutionalised a natural relation between
two important segments of society. There is no reason
to regard this relation as improper. It may lead
to corruption and cronyism, etc but the
confrontational approach to Government/private sector
relation can also lead to corruption and cronyism. When
people have bad values any system will lead to
abuses. Blaming the system does not help resolve
the problem. It is far better to try to tackle the
abuses than to reject or condemn a system which can
yield good results.
32. I hope that this summit will serve to re-invoke
the spirit of Malaysia Incorporated as a vehicle of
close public- private sector collaboration. We need to
continually educate and make more people aware of the
benefits of this policy. Although it has been in
existence for a long while now, there is still a lot of
misconceptions about the rationaleand objectives of the
policy. It is therefore necessary to explain and
educate the public as well as the private sectors what
Malaysia Incorporated is all about.
33. The Government is committed to building an
open and business-friendly environment as we seek to
reinvent the Malaysian business model for the 21st
century. It has to be a model that emphasises
capabilities, performance, core competencies,
creativity and innovativeness as key success factors in
a technology-driven and globally connected world. We
must ensure that Malaysia Incorporated as a proven
policy is not only maintained but that its
implementation is constantly reviewed and fine tuned
so that it will contribute to a fair and responsive
public sector, a dynamic private sector and a
productive and efficient workforce which together will
serve the country better.
34. Dengan ini saya dengan sukacitanya
merasmikan persidangan Malaysia Incorporated Summit
2000.
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