Oleh : DATO SERI DR MAHATHIR BIN MOHAMAD
Tempat : SUNWAY LAGOON RESORT
HOTEL PETALING JAYA
Tarikh : 17-10-2000
Tajuk : THE OFFICIAL OPENING OF K-ECONOMY
CONFERENCE
Penyampai : PM
" E-MIGRATION -
RISING TO THE CHALLENGES OF THE NEW ECONOMIC FRONTIER "
I am sure you are all aware of how little I know
about economics. However, as both the International
Monetary Fund and Mr Soros have admitted that I
actually know something about it, perhaps I may be
allowed to share a few thoughts with you on Knowledge
or K-Economy.
2. I believe many of us are still suspicious of new terms
like "The K-Economy". It sounds so "airy fairy", so
impossibly vague. Perhaps, even now, there are those who
regard it in the same way as they regard ghosts. They hope
it will go away and bother someone else.
3. So how "real" is this knowledge economy? It is real for
the graphs show that productivity growth doubled in
knowledge-rich economies. It is real because the way
countries with flourishing knowledge-based economies have
leapt ahead in world competitive rankings. Obviously since
it is real we will have to do something about it. We will
have to espouse it and make it work for us in the same way
that it has worked for others.
4. Like many people around the world, we are at a fork in
the road. The path we choose will alter our future --
perhaps irrevocably. Even as we sit back and question its
usefulness, the K-Economy is posing its own challenges for
us. Can we master it or will those who master it race ahead
of us, leaving us breathless as the industrial age had done
in the past. Will we again lose out because we are late in
grasping the opportunity to start together with others?
5. Whether we enter the new economy early or late, one
thing is certain. We cannot ignore this radical turn in the
way business is done, in the way economy is managed and
grown. We cannot ignore the massive leverage that knowledge
provides those with the skill to use knowledge.
6. Knowledge of course have always played a role in the
progress of nations. Knowledge of the stars and the
geography of continents had enabled the early civilisations
to trade with distant places and exploit distant lands.
Knowledge of the sciences had contributed to the industrial
age. But today knowledge refers more to the speed of
communication and the spread of information and data.
7. Everything that anyone needs to know in order to make a
decision is at everyone's fingertips literally. The
deciding factor is the skill and the speed with which one
uses the information in order to decide. And that skill and
speed comes from the depth of knowledge that one has of how
the different elements and technological capacities can be
made to work to yield a desired result.
8. Never in the history of human civilisation has software
become so important a complement of hardware. The hardware
may be the same but software determines what hardware can
deliver or not deliver. As new software are developed the
old hardware will become more versatile, delivering what it
was not able to deliver before. And software, more than
hardware, is dependent on knowledge and the innovations
which come from it.
9. Thus everyone knows of Electronic-commerce but it took
a man with ideas and knowledge to come up with Amazon.com.
Suddenly billion of dollars worth of worldwide business
becomes possible for a single man with an unknown low-
capital company. The means of communication, the data and
the goods are there but knowledge about the way goods can be
procured, paid for and delivered in a modern financial
system made Amazon.com a fantastic business. It is not yet
profitable but it has certainly pioneered the way business
will be done in the knowledge-based economy.
10. We should all be enthusiastic about knowledge as the
basis for doing business. But we should also remember that
when new things replace the old there will always be a cost.
The ease of selling through cyber-space will probably
increase the consumption of products but it will also
destroy those who were in the business before the K-economy.
Thus when dot.coms businesses supply goods and services
faster, more efficiently and at lowers costs, the old
players will be put out of business. There is much talk of
creative destruction. It is fine if what is destroyed is
owned by those who create, but far too often they are not
the same people. Thus others will have to pay the price for
the success of the new creations of the new E-business.
11. When the dot.com companies supply directly to the
consumers, they and the delivering companies will make
money. But the old importers, distributors and retailers
will go out of business. Indeed even Governments may lose
out as the small quantities of goods delivered direct to the
consumers may attract no duty at all. And of course the
Government will lose the corporate tax paid by local
companies including the transport companies.
12. Whether this is good or bad is difficult to determine
now. We have not had enough experience of the real workings
of E-commerce and the Knowledge economy. There may be other
benefits to the destroyed businesses and to the Government.
Possibly the increase in the volume of business will
generate more business and more revenue. But we don't
really know. What we do know is that the destruction may be
considerable and there will be disruptions and instability.
13. The enthusiasm about the K-economy is infectious. Many
see unlimited growth and unprecedented new wealth being
generated. They see the dot.com and other Internet-based
companies as money spinners. Unable to take advantage
themselves of knowledge and the ease of communication that
has presented itself, they go into a frenzy of investments
putting money in anything at all that is even distinctly
related to E-commerce.
14. The result is predictable. The shares of the dot.com
companies sky-rocketed until they bear no relation
whatsoever to the actual business being done. Dot.com
companies may be based on knowledge but they still have to
deliver goods and services at prices which will give them a
reasonable return. In the rush to take advantage of the new
ways of exploiting data and knowledge, the economics of
doing business, the cost and the returns appear to have been
given too little attention. As a result profits were
difficult to achieve.
15. But as company shares shoot up there was a feeling of
euphoria over easy money, of wealth from nothing more than a
belief in the wonder of dot.com companies. As shares sky-
rocketed more money is poured into the purchase of shares.
Loans were raised based on the value of these rapidly rising
shares and expectations of more capital appreciation.
16. The bubble grew and grew and as expected it bursts. A
lot of people got hurt. A lot of money was lost. And
suddenly dot.com companies became liabilities as their
failure to make money became general knowledge.
17. But this does not mean that dot.com are incapable of
making profits or of growing. As is usual with business,
good management and proper accounting of the real potential
will yield good returns. There will be capital gains but
such gains must be related to assets and performance and not
romance or fanciful expectations.
18. Malaysians must embrace E-commerce and the Knowledge
Economy. But Malaysians must not place too high an
expectation from this new business. There is a lot of money
to be made from the right kind of application of data and
knowledge, the right software and the right ideas. It is
entirely possible for E-companies to grow rapidly and to
yield high returns for the innovators and entrepreneurs.
There will be failures but this should not deter the
realists bent on exploiting new ways of doing business.
19. The most attractive thing about E-commerce is how
easily you can become global. Borders do not restrict
business the way they do the old businesses. Market
penetration is much easier. There is no need to appoint
agents, and distributors. The sale is direct to the
consumer. The efficient and worldwide delivery services
provided by such companies as DHL and UPS ensures that goods
are delivered to the customers without need for local
transport and delivery companies.
20. Start-up companies in the Internet-based business come
fast and furious. They are really based on ideas for the
application of data and the speed and directness of
communication. But financing a new business will always be
difficult despite the venture capitalists being willing to
lose money on nine-tenth of their investments. But when a
company hits pay-dirt the returns can be very, very
considerable. Market capitalisations can grow very rapidly.
E-commerce companies which are only a few years old have
been known to buy up major corporations which are more than
a century old.
21. In E-commerce experience can even be a hindrance,
especially experience in the old business and the old way of
doing business. As a result many who venture into E-
business are young people, usually in their twenties, who
had just come out of universities. But a university
education is not a necessity. Indeed many of the most
successful people involved in start-ups of E-business are
university drop-outs. So no one need feel discouraged if
they have a good idea about an innovative application of
knowledge and data and the exploitation of the vast amount
of information available on the Internet. It is always
possible that their ideas may work and venture-capitalists
might be convinced enough of the feasibility so as to invest
in it.
22. Facilities are available in Malaysia now to test out
ideas and concepts of E-business. The Universities and
Cyberjaya have incubators where investments required is
small and common facilities are available. Once the
business develops and are viable enough it can move to
better facilities.
23. The Knowledge Economy is about information and
knowledge leading to better products and services. Even
growing `sawi' can be a K-Economy activity if the `sawi'
grower uses the Net to get information on how best to grow
`sawi' or on how to link supply and demand more efficiently.
24. I would like to challenge every single MCA member here
today to start looking at everything from the perspective of
cyberspace. How can you do the things that you are doing
now better and more profitably by applying knowledge and
readily available access to data and communication.
25. Today's seminar will not result in knowledge unless it
produces a change in your behaviour. Information only
becomes knowledge when it becomes so much a part of the way
you improve and enhance the way you do things.
26. The Knowledge Economy is all about learning. As long as
we are prepared to keep learning from each other and from
the world, the Knowledge Economy should be a piece of cake -
and an ever expanding one at that.
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