Oleh : DATO SERI DR MAHATHIR BIN MOHAMAD
Tempat : THE ONE WHITEHALL PLACE,
UNITED KINGDOM
Tarikh : 05-10-2000
Tajuk : THE THIRD MEETING OF THE
MALAYSIAN-BRITISH BUSINESS
COUNCIL & CONFERENCE ON
MALAYSIA-BRITISH PARTNERSHIP FOR
THE 21ST CENTURY
Penyampai : PM
" STRENGTHENING GROWTH AND MUTUAL PROSPERITY "
I would like to thank the organiser, ASLI for inviting
me to address this third meeting of the captains of industry
and strategic business navigators from both Britain and
Malaysia.
2. Britain and Malaysia share an economic tradition and
trading ties that stretch over two centuries. Given this
background, we should look ahead for avenues and channels
whereby we can reinforce this relationship for the good of
both our countries. The importance of such cooperation has
become more so given the rapidly evolving landscape of the
world's economy which is being driven by new ideas and
perceptions. It is only through a strong partnership between
British and Malaysian companies that we can strengthen the
economic growth and prosperity of Malaysia and I am sure of
Britain too.
3. Malaysia's economic recovery has gathered significant
momentum this year. Underlying such positive outlook is the
clear evidence that the economy is becoming significantly
more resilient to external shocks and systemic risks. This
is made possible by recent policy measures to strengthen the
nation's external reserves, the financial system and the
corporate sector. The Malaysian economy rebounded to
register a growth of 5.6 per cent in 1999 after a
contraction of 7.2 per cent in 1998 which had followed a
growth of a similar figure the preceding year. The first
quarter of this year recorded a strong GDP growth of 11.9
per cent whilst the second quarter notched 8.8 per cent.
Growth has been broad-based driven both by aggregate demand
and supply.
4. Although all sectors of the economy have registered
positive output growth, the manufacturing and services
sectors stood out as the most robust sectors. The
manufacturing sector will benefit from the stronger growth
expected in world trade, a robust recovery in the East Asian
economies and stronger domestic demand. Manufacturing output
is forecast to sustain a growth of eight per cent this year,
while export-oriented manufacturing industries are expected
to step up their output by an average of 7.9 per cent,
driven largely by continued strong overseas sales orders for
electronic products and parts, underpinned by rapid
developments in information technology applications.
Meanwhile, the services sector is expected to increase in
terms of value-added at a rate of 5.3 per cent, with all the
sub-sectors projected to record stronger growth.
5. In addition, inflation has remained fairly stable
despite the pick-up in economic activities and increase in
capacity use in major sectors. It moderated to 2.8 per cent
in 1999 from 5.3 per cent the year before and is expected to
be kept below four per cent this year. Barring any major
downside risks that could derail the favourable world
economic outlook, these developments should provide the
necessary impetus for Malaysia to record a GDP growth of 5.8
per cent this year, as projected by the Government.
6. Such heartening figures would not have been possible
had we not taken the controversial and much maligned
unorthodox measures to counter the downward spiral and to
ride out the recession. The selective capital controls have
almost been done away with, excepting for a 10 per cent levy
on repatriated profit. But controls on exchange rates will
stay and will remain at its present level. They have proven
to be of no harm to anyone and obviously they help business.
They have certainly contributed to the strong economic
recovery. The condemnation of Malaysia's unorthodox
measures has now lessened. Indeed many, including the
International Monetary Fund (IMF), and even the currency
traders have now acknowledged that the heretical ways of
Malaysia can even be adopted under certain circumstances.
The currently undervalued Ringgit, together with its fixed
rate against the US Dollar, the main trading currency of the
country, is attracting multinational companies to relocate
their operations to our Malaysian shores. Undoubtedly,
Malaysia remains an attractive location for foreign
investors and its export-led industry is internationally
competitive.
7. Now that the Malaysian economy has regained its
footing, it should help stimulate closer economic ties
between Malaysia and Britain. The time is especially
propitious for the business community from both sides. We
must cement our partnership for growth and mutual
prosperity. Britain has always been an important trading
partner for Malaysia. Despite the economic downturn towards
the close of the 20th century, the total bilateral trade
between Malaysia and Britain has seen a gradual increase
over the last seven years. From a total of 8.79 billion
Ringgit in 1993, Malaysia-British bilateral trade rose to
17.68 billion Ringgit in 1999. Even throughout the bleak
years of recession, the increase in bilateral trade did not
slow down significantly.
8. Among the European Union (EU) countries, Britain stands
out as Malaysia's second largest trading partner, accounting
for 22.2 per cent of Malaysia's total trade with the EU last
year. In global terms, Britain is our ninth largest trading
partner, accounting for 3.1 per cent of Malaysia's total
global trading. It is also worth mentioning that Malaysia's
export to Britain totalled 12.07 billion Ringgit in 1999,
thus making Britain our seventh largest export market in the
whole world. Out of the 14,586 cars exported by Proton until
March this year, a third was shipped to Britain.
9. Despite this we cannot rest on our laurels because I am
sure we can achieve more. I believe this is possible
especially in areas where our respective countries have
certain comparative advantages. For instance, much of
Malaysia's comparative advantage lies in its efficient low
cost manufacture of semi-conductors and components used in
automatic data processing machines and electrical apparatus.
These made up a large chunk of Malaysia's exports to
Britain. On the other hand, Britain's comparative advantage
lies in the manufacturing and exporting of thermionic
valves, tubes and related parts, and high-technology
products. In exploiting such comparative advantages in trade
and bilateral economic ties, both sides cannot help but
contribute to enhancing our bilateral trade. It is highly
commendable that your new trade development and promotion
organisation, Trade Partners UK, is actively promoting trade
and investment opportunities in Malaysia among British
companies.
10. There is a great deal of opportunities and avenues that
can be exploited by British-Malaysian partnerships which can
contribute towards greater economic growth and prosperity
for us both. In Malaysia itself, there are tremendous
opportunities for investments awaiting foreign investors.
Over the last 30 years, the Malaysian Government has
consistently maintained an investment-friendly and pro-
business environment, made more attractive by Malaysia's
political and socio-economic stability. This has been
particularly welcomed by all foreign investors as it has
provided them with a predictable stable and favourable
environment for doing business. I can assure the many
British captains of industry and potential investors present
at this meeting that the Malaysian Government will continue
to maintain the most conducive environment possible for
business which will pay off for those who are ready to
invest.
11. Malaysia's educated and productive workforce, excellent
infrastructure, consistent business friendly policies have
contributed to its success in attracting foreign direct
investments (FDI), especially in the manufacturing and
information technology sectors. Today, after a mere three
decades since Malaysia switched from plantations and mining
to manufacturing, it has gained a reputation as a cost-
competitive location for the manufacture of high technology
products for the regional and world markets.
12. Such is Malaysia's attractiveness as a manufacturing
centre that since 1995, 17.1 billion US Dollar has been
approved for investment, half of which is for manufacturing.
In the first seven months of this year alone, we have
received investment applications worth 4.6 billion US Dollar
-- a figure which has already exceeded the 3.68 billion US
Dollar worth of proposed projects during the whole of last
year. These figures bear testimony to Malaysia's continued
attractiveness as an investment hub in the region. Britain,
with investments worth 394 million US Dollar in 118
manufacturing projects between 1995 and July this year, is
the ninth largest investor in the Malaysian manufacturing
sector. You will agree with me that given our closeness this
is not what we should see. Britain should really rank among
the top three.
13. I believe Britain, with your vast experience in
industrialisation and your technological know-how, can play
a pivotal role in helping us to realise the aspirations and
targets laid down in Malaysia's Industrial Master Plan. One
of the many ways is through investing in our high value-
added manufacturing industries and technology sectors, and
at the same time facilitate the transfer of technological
know-how that would, at the end of the day, reap profound
benefits for both sides -- profits for the investors, and
technological advancement and growth for the Malaysian
industries.
14. Malaysia is fast becoming a favourite location of
multinational corporations for regional
manufacturing-related operations. As at 31 May this year,
the Malaysian Government has approved 636 representative
offices, 335 regional offices, 52 operational headquarters
(OHQs) and 47 international procurement centres (IPCs). The
opportunities for British companies to set up IPCs in
Malaysia are immense. An IPC will not only serve as a centre
to procure or distribute raw materials, components, and
finished products, but will also provide a strategic gateway
to tap and penetrate the markets of the surrounding region.
By the end of this year, the combined sales of these IPCs
located in Malaysia are expected to reach 3.97 billion US
Dollar. Our liberal equity policy which generally allows
foreign investors in Malaysia's manufacturing sector to hold
100 per cent equity in projects which export at least 80 per
cent of their production is another positive draw. Even more
attractive is the policy which permits foreign investors to
hold 100 per cent equity irrespective of their level of
exports for project applications received until the year
end.
15. There are already several British companies which have
invested significantly in Malaysia, including Blue Circle
(approximately 40 million Pound), British Telecom (275
million Pound), BP (130 million Pound), and National Power
(80 million Pound), not to mention many others like Royal
Dutch Shell, Unilever, Rolls-Royce and Cold Storage. I look
forward to seeing the growth of such investments. At the
same time, given that Britain has one of the most business-
friendly environments in the EU, including easy access to
the EU, a skilled and flexible workforce, and a world-
leading science base, I am sure that Malaysian investors can
also benefit by investing in Britain. Proton's investment in
automobile engineering by acquiring Lotus is a prime example
of the many strategic opportunities available for Malaysians
to invest in Britain, especially in areas where we lack
technical expertise at home. In fact, the technology
acquired from the purchase of Lotus has enabled Proton to
improve the ride and handling of its cars. Excel the new
exhibition centre on the Thames is another example.
16. British-Malaysian partnership in the form of various
strategic investments will hugely benefit both countries in
being gateways to respective regions. By the year 2003,
Malaysia is poised to be an even more attractive location
and a strategic gateway to the ASEAN market given that intra-
regional tariffs will be reduced to between zero per cent
and five per cent with the establishment of the ASEAN Free
Trade Area (AFTA). Manufacturers with production bases in
Malaysia will be able to export freely or with minimal
duties to other ASEAN member countries. By the same token,
we see Britain as a strategic gateway for Malaysian
companies to penetrate not just the EU market but also
greater Europe.
17. Another crucial area which I believe British-Malaysian
partnership will augur very well for the new millennium is
in information and communication technology (ICT).
Undoubtedly, developments in ICT -- the internet in
particular -- and the convergence of technologies have
significantly shaped not only our lifestyles, but also the
nature of businesses and the way businesses are conducted.
The growth of E-business is phenomenal. While the radio and
the television have taken 38 years and 13 years respectively
to reach 50 million users, the internet has taken only five
years. If we fail to harness ICT, we will be left out in the
cold.
18. I would therefore urge both British and Malaysian
companies and technopreneurs to work together to capitalise
on the opportunities in the ICT sector. The Multimedia Super
Corridor (MSC) project in Malaysia offers British companies
a unique opportunity to catalyse a virtuous circle of
development among local, regional and international
businesses. The MSC should be highly attractive for British
companies wishing to develop or use multimedia technologies
to provide value, and for expansion into Asian markets. We
have put in place policies, practices and cyberlaws which
alongside Malaysia's relatively lower cost would make the
MSC a prime place to do business out of.
19. Currency turmoil notwithstanding the MSC project has
remained on track. There are already 362 MSC-status
companies with 37 being world class. By 2003, we aspire to
have 50 world class companies in the MSC. In the recent
annual International Advisory Panel (IAP) Meeting, members
gave their thumbs up for developments that have taken place
in the Corridor. Many were impressed that the MSC is
actually ahead of schedule.
20. There is much that British companies can offer Malaysia
in terms of technology, know-how, and capital and at the
same time the MSC can offer the platform for British
companies to incubate new breakthrough technologies that
will shape the future. I am glad that British companies
such as BT, Druid, Madge, and Reuters are playing a
significant role in the MSC. I can foresee there are more
avenues for cooperation among Malaysian companies and our
counterparts in the Silicone Glen and Fen in Scotland, as
well as Cambridge in England.
21. I am also pleased to see the strategic partnership
between Malaysia and Britain in developing Malaysia's own
"Universal Studios", known as the Entertainment Village (E-
Village). The three billion Ringgit project would complement
the efforts of the Multimedia University and other research
and content providers located within the MSC.
22. Knowledge is at a premium in the new economy. To
succeed we will need more knowledge and knowledge workers to
fill the expected demand of the MSC. We have worked out our
requirements for such workers and we feel we can train them.
Still we think there is an opportunity here for cooperation
in training at university and other levels. We use English
as the medium of instruction and needless to say, British
institutions of higher learning can play a role in the
education of our knowledge workers.
23. It is highly crucial for the business community of both
sides to strive together to synergise resources,
capabilities and experience to achieve common goals. Britain
and Malaysia can work together to minimise any negative
impact of globalisation. I urge the business community of
both countries to forge closer understanding that translates
into real cooperation and businesses.
24. These are the days of inter-dependence and inter-
connectivity. We have to realise that no one nation can live
and survive on its own. It is becoming increasingly clear
that the zero-sum game is obsolete. We need to work together
for mutual growth and prosperity. In this regard, I
sincerely wish to see the partnership between Britain and
Malaysia soar to greater heights with both countries
counting on each other's strengths to cement growth and
attain greater prosperity.
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