Oleh/By : DATO SERI DR MAHATHIR BIN MOHAMAD
Tempat/Venue : JW MARRIOTT HOTEL, KUALA LUMPUR
Tarikh/Date : 31-01-2001
Tajuk/Title : THE OPENING OF THE INTERNATIONAL
CONSULTATION ON GLOBALISATION
Versi : ENGLISH
Penyampai : PM
" GLOBALISATION AT THE SERVICE OF MANKIND
OR MANKIND AT THE SERVICE OF GLOBALISATION "
Firstly I would like to thank the organisers for giving
me this singular honour and opportunity of officially
opening the International Consultation on
Globalisation. Globalisation is on everyone's lips
nowadays. Until the protests in Seattle it was assumed
that globalisation was unstoppable, inevitable and
definitely the answer to all the problems, social,
economic and political of a world.
2. Globalisation is obviously a great idea whose time
has come. In a world where jet planes and worldwide
telecommunication have reduced it to a global village,
it is inevitable that globalisation becomes logical and
even unavoidable.
3. But in the past there were also many great ideas
which had been accepted as inevitable, but they have
all been proven wrong and had to be jettisoned finally.
4. Republicanism was considered inevitable because
feudalism and kings with divine rights had become too
oppressive and had to be got rid off. The return to
the public was believed to ensure that the public will
not oppress itself. But republics had to have leaders
and apparently they can be as oppressive and
inconsiderate as were the divine kings.
5. And so to Republicanism was added the idea of
absolute equality. Socialism and Communism were
supposed to do this. The aristocrats were to be
liquidated and a workers' Government would nationalise
everything and distribute all earnings to all the
workers equally.
6. It took more than seventy years and the killing of
millions before it was realised that a totally
egalitarian society just could not work. The great
panacea for the ills of human society was apparently
not so great after all. The heaven on earth that was
promised by the originators of the ideas turned out to
be anything but a heaven.
7. When it was abandoned Capitalism claimed victory.
During the challenge posed by socialistic
egalitarianism the capitalists had restrained
themselves. They showed a friendly face. They
accommodated some of the egalitarian ideas, and
accepted the need for their activities to be regulated.
8. The Governments curbed the more rapacious of their
schemes to reap the maximum profit from commerce and
industry, especially the finance industry. Monopolies
were made illegal.
9. But now that Capitalism had proven superior to
egalitarian Socialism and Communism new ideas for
creating a new heaven on earth poured from the mouth of
the victors. This new heaven will be built by doing
away with regulations, by an absolutely free market, by
breaking down the boundaries of nations and creating a
single global entity.
10. Can we be sure that these new ideas, this
globalisation will not go the way of the great ideas of
the past? Half a century down the road, or maybe a
century, will we be still lauding and practising
absolute Capitalism in a globalised world? Will not
Capitalism bring about the same misery that will force
people to rebel against it and probably overthrow it as
violently as the previous great ideas and their
proponents were rejected and violently discarded?
11. These are the things that we should think of
before we espouse globalisation too enthusiastically.
Globalisation as presently interpreted is the
brainchild of absolute Capitalism. Its objective is to
enlarge the sphere of Capitalist activities to the
whole world. The Capitalists had always resented their
confinement to their own countries. They resented the
independence of nations with their own systems and
policies which prevent their full economic exploitation
by those with the capital and the know-how. If the
borders of these independent countries could be brought
down and a single policy and system for the whole world
adopted then capital could move freely and be fully
employed to make even more capital. With huge amounts
of capital at their disposal they could develop even
bigger ambitions.
12. And so the world is presented with the great idea
of a global nation, of globalisation. But this
globalisation is to be confined to the free flow of
capital across borders.
13. Most of the countries of the world are capital
poor. For some time now foreign investments in these
poor countries had helped them to increase their wealth
and economic development. Malaysia is a prime example.
Foreign investments in the manufacturing industry had
propelled this country from an agricultural country to
an industrialised country.
14. Where before Malaysia only exported rubber and tin
and later on palm oil, today 82 per cent of Malaysia's
exports which total almost 100 billion U.S. Dollars is
made up of manufactured goods. The inflow of foreign
capital into the country has obviously enriched
Malaysia. Encouraged by this, Malaysia invited foreign
capital to invest in the stock market. Again Malaysia
benefited as the share prices shot up and market
capitalisation increased tremendously.
15. But let us look again at the role of foreign
capital in these areas. Although the manufacturing
plants are foreign-owned but the capital brought in
represents only a fraction of the capital invested. A
big portion of the capital is borrowed from local
banks. So it is not true that there is such a big
inflow of foreign capital. What is true is the inflow
of foreign know-how in manufacturing and marketing,
something that is more essential than just capital.
16. Still one should not quibble about this as the
foreign direct investments in productive capacities
definitely contributed to the growth of the Malaysian
economy. The Government did not expect any direct
revenue from foreign investments. Tax holidays were
given freely for extended periods. The main benefit
derived by the country was the creation of jobs for the
people. Malaysia's unemployment rate is among the
lowest in the world.
17. Foreign investments in the stock market tells a
slightly different story. Inflow of foreign capital
into the stock market pushed up stock prices making the
Malaysian companies richer than their profits or assets
could justify. On the strength of their high share
values the companies and local investors were able to
borrow much more and to expand their businesses. The
economy prospered. But the over-priced shares expose
the country to market manipulations.
18. The strength and health of the Malaysian economy
was such that the exchange rate of the Ringgit was
steady. Business could be done without much need to
hedge. The availability of funds locally and the
relatively low interest rates made foreign borrowings
quite unnecessary for the local business.
19. In a way Malaysia had globalised earlier than most
countries. So confident was Malaysia that the free
movements of capital was good for the country that it
allowed the Ringgit to be freely traded on the foreign
exchange market. The market was free to determine the
exchange value of the Ringgit. For a long time this
confidence was justified as the exchange rate
fluctuation of the Malaysian Ringgit was minimal.
20. It must be remembered that the great benefits
obtained from Malaysia's own globalisation was during
the period when Capitalism had a friendly face. As has
been pointed out, the end of the Cold War removed the
need to show this friendly face. And this
unfriendliness is exhibited in the General Agreement on
Trade and Tariffs (GATT) rounds which dragged on for
years. In the meantime the countries had to depend on
bilateral trade agreements.
21. Bilateral trade agreements take into consideration
the various interest and constraints faced by each of
the countries concerned. The weak countries did not
feel too threatened as they could modify the agreements
to suit their needs, even though they were not always
able to protect themselves against various tariff and
non-tariff barriers. But when the World Trade
Organisation (WTO) was set up member countries of the
GATT had to negotiate multilateral trade agreements.
Now the interest of the individual countries could no
longer be considered. Instead general principles were
applied equally to all countries, big and small, rich
and poor. Such were the general principles which were
forced through the WTO that the poorer countries found
themselves having to compete with the rich without any
consideration for their handicaps. The principal
thrust of the WTO agreements was to remove or reduce
import duties and to equalise the rates so as to create
what is termed a level playing field.
22. Poor countries depend on import duties to fill
their coffers. Their corporate income tax yield very
little revenue for them. Doing away with import duty
is likely to hurt their finances. Besides, import
duties are useful for protecting local industries or
infant industries. Without them local products would
have no chance to compete against imports from the
highly efficient high volume industries of the rich.
23. Still the poor countries did not object to the WTO
and the progressive globalisation which was taking
place. Then came the currency crisis in East Asia.
The countries attacked were among the strongest
economies in the developing world. Yet simply by
devaluing their currencies they were reduced to begging
for help.
24. Countries like Malaysia which in the past had
welcomed the flow of foreign capital but which suffered
badly when the Malaysian Ringgit was devalued cannot
but rethink the benefits of globalisation. We consider
the free convertibility of the Ringgit and the free
market in currencies as part of the globalisation
process. We had thought that since our economy was
strong the Ringgit would not be attacked. But then we
were told that diseases affecting the currencies of our
neighbours are contagious. Although our Ringgit was
healthy, the sickness of the Thai Baht had sickened the
Ringgit.
25. Perhaps there is a basis for this. When
neighbouring currencies depreciate the cost of
production is supposed to go down and they would be
more competitive as exporters. Malaysia was said to be
competing with Thailand and the fall in the Thai Baht
should make our exports less competitive. Our economy
would therefore suffer as a result of the devaluation
of the Thai Baht. It is however doubtful that we would
go into deep recession.
26. Still in anticipation of the economic downturn in
Malaysia the currency traders claimed they must get rid
of their Ringgits. And when they sold the Ringgits
its exchange value naturally fell. It should be
mentioned here that the currency traders never really
held any Ringgit. What they did was to borrow the
Ringgit and short-sell it. They were never in danger
of losing any money. They merely saw an opportunity to
make quick profit by short-selling the Ringgit. The
result was to cause the Ringgit to devalue just as they
had predicted.
27. The fall in exchange value rendered the country
poor in terms of capacity to pay for imports. And
Malaysia imports a lot of essentials, non-essentials
and components for its industries. All these became
expensive and affected the profitability of the
companies and impoverished everyone.
28. When the currency depreciated in exchange rate
terms, foreign portfolio investors found that their
shares had also depreciated in foreign currency terms
even if the share prices did not fall. But the
currency turmoil resulted in share prices rapidly
falling. Fearing further losses the foreign short-term
investors sold off their shares quickly. The result
was an even more rapid and deeper fall in share prices.
With this the local businesses went into a tail-spin,
being unable to meet margin calls and to operate. The
percentage of non-performing loans leaped and banks
began to show signs of strain.
29. By now the economy had become really bad and
needed to be helped. For the tiger economies of East
Asia the only help was from the International Monetary
Fund (IMF). But the Fund was not going to help without
extracting some concession. Accusing the countries of
irresponsible governance, of corruption and cronyism,
the IMF demanded that loans would only be given if the
countries submitted to IMF control over the economy and
open up their countries to foreign business. What this
means is that foreign banks and businesses could
operate completely without restriction in the countries
getting IMF loans. Additionally the foreign banks and
investors should be free to pick up the shares of the
local banks and business at the low prices which the
dumping of their shares by foreign investors had
caused.
30. It seems to many that it was grossly unfair for
the people who had pushed down the share prices to be
allowed to buy the shares at the depreciated prices.
They may not have deliberately devalued the shares but
whether deliberate or not it was they who caused the
stock market to plunge. Now they are benefiting from
this plunge.
31. But then we are told that that is how the free
market operates. Indeed the free market is
disciplining the Governments and forcing them to give
up their corruption, cronyisms etc. It seems that it
is necessary to destroy their economies along with a
lot of innocent people in order to punish them.
32. Unfortunately for many rebuilding has not been as
easy as destroying. Many of the economies destroyed by
this particular manifestation of globalisation have not
yet recovered.
33. In the face of this can we just continue accepting
globalisation unquestioningly? What we foresee is more
assaults on the economies of the weak countries by the
strong in the future. Or we may lose control of our
economies to the foreign banks and businesses.
34. We see for example the formation of giant banks
and corporations belonging to the rich countries. Each
one of these entities is now much bigger than any one
of the developing countries. Once the borders are down
these giants will move in to compete with the puny
banks and corporations of the developing countries.
The field may be level but the contest will not be
between equals. There is no doubt that the giants are
going to win. In the end the banks and businesses of
the developing countries will be bankrupted and will be
gobbled up by the foreign giants.
35. Perhaps this will improve efficiency. Perhaps the
locals working for the foreign giants will get better
pay and perks. But will foreign ownership of all the
wealth of these countries be in the interest of the
countries and people?
36. Most of the developing countries have programmes
for wealth distribution in order to solve social
problems. In Malaysia we have to help the deprived
indigenous community get a fair share of the wealth of
the country through an affirmative action programme.
This programme undoubtedly affects the productivity and
efficiency of businesses. But it is good for avoiding
racial tension and disruptive activities which can
damage business even more.
37. Foreign owners are not interested in the social
problems of countries. They want to maximise profits.
Governments will have to tackle social and political
problems. So when the economy is totally in foreign
hands it is likely that social unrest will increase.
38. But then those who control the economy would also
like to ensure that the Governments are business
friendly. If the Governments are not cooperative
enough then the Governments should be changed. This
involves interference in internal politics. But
powerful foreign business would not be too particular
about not interfering in local affairs. In subtle ways
or overtly they will interfere. The result is a loss
of independence for the country.
39. Maybe we are imagining these things. Maybe
globalisation will not result in the loss of a
country's independence. But can we be sure? There
really is no assurance this would not happen.
40. We have seen how much the IMF interferes in the
internal affairs of the countries which borrowed its
money. Leaders and Governments had to be changed
according to the wishes of the IMF and other
international agencies.
41. Malaysia is a recalcitrant. Malaysia is a
heretic. Malaysia is cynical about globalisation. But
it is not globalisation per se. It is the current
interpretation of globalisation. Globalisation and the
free market should not mean capital flows only. Even
if it does, it should accept some form of regulation so
that economic turmoils will not be the result. It has
been pointed out that free trade under the WTO is not
free, it is regulated. So why shouldn't the process of
globalisation be regulated?
42. The WTO must allow a degree of regulation to be
instituted by member countries when the competition is
not between equals. Certain practices must be allowed.
There is no necessity to have only a few big companies.
Let there be many companies, big and small. Let them
compete with handicaps. If you can accept it in golf,
why not in trade?
43. Give time for adjustments, for equalising the
forces. In Japan some ten corporations produce
electronic products. They compete in the same markets.
They continuously improve and innovate. They seem to
see no necessity to acquire each other or to merge or
to swallow small players in order to become efficient.
We don't see any harm in their remaining separate. We
still enjoy their low-priced high quality products.
44. Then there are the workers. For countries like
India and China their people are their capital.
Already the brainy among them are being enticed away.
Why not also allow a free flow of human capital.
Countries with excess workers should be permitted to
export them to countries short of workers and plagued
with high cost labour. The productivity of the world
will certainly improve. And this should be good for
globalisation.
45. Then there is the need for time to effect the
changes required by globalisation. Change destabilises
and rapid change destabilises most of all. We should
allow ourselves more time to change into a globalised
economy. Those who are ready, those who are rich
should change first. The others can follow according
to their capacities, pausing to make correction,
learning from those who had changed earlier, adjusting
and consolidating.
46. The world of today is very rich because of a
combination of natural resources and the technologies
that Man has developed. There is really no reason why,
in a caring world, anyone should be poor. Africa,
Central Asia, South America and South Pacific can
easily be enriched by investing the huge surplus of
capital in developmental and productive capacities. If
the world is to be a global entity then there should
not be abject poverty in some parts and obscene wealth
in other parts. All must be reasonably well off.
Capital combined with modern technology have the
capacity to enrich the whole globe. We can invest in a
powerful railway system to carry the raw materials and
imports of Central Asia at low cost. We can develop
the great rivers of Latin America, Africa and Asia into
the kind of transportation channels that the Rhine and
the Danube are to Europe. We can transport excess
fresh water from melting snow to the arid deserts of
the world much in the same way that oil and gas are now
being piped over thousands of miles. We can do a whole
lot of things that can lend true meaning to
globalisation.
47. Surely globalisation must involve the whole world.
Today when we talk about globalisation we think only of
those countries with developed or developing markets.
We think of opening up existing markets. We think of
maximising our profits. But we are really not thinking
about the world, about the globe which encompasses the
familiar and the unfamiliar and inaccessible areas.
Yet what is more reasonable and logical than to think
of globalisation which involves the whole world. It is
not too far-fetched an idea. We only have to change
our mindsets. And if we accept globalisation to mean
the development of the whole world by the international
community, slowly at first but more rapidly later we
can really become a global community, a globalised
world.
48. No one has a monopoly of ideas. I know of course
that what I say here will never be reported by the
world press. Nobody outside this hall will hear of it.
But even if you as participants will not want to
consider a globalisation which is more literal, a
globalisation that involves the whole globe; even if
you will not discuss this preposterous idea, I am happy
because I have this opportunity to propound my ideas on
the real globalisation. A globalisation which involves
only a fraction of the world is not globalisation. A
globalisation that involves only capital flows and
predatory assaults on the weak by the strong is not
globalisation. A globalisation that benefits the few
and destroys the many is not globalisation. And a
hurried grab at the spoils is not globalisation.
49. Globalisation must be planned and planned
carefully. The planning must involve everyone from
every part of the globe. It must be for the good of
everyone and it must be proven to be good for everyone.
It must be implemented slowly, with the biggest effort
directed at the least developed parts of the world.
50. Market principles must be retained. Profit making
should not be regarded as a sin but profiteering, the
exploitation of the poor and the gullible by the rich
and the smart should be punishable by the international
community.
51. There should be free movement of capital and
labour but not to the detriment of the countries
involved. The world's productivity must be increased
and disparities of all kinds minimised.
52. I don't think we can do all these in our life time
or even in two life times. But we should begin. And
we should begin by thinking about it, thinking about
globalisation as a sharing of the wealth of the world
in raw material, capital, labour and technology, a
sharing that is not equal but fair.
53. This is globalisation in the service of mankind.
Globalisation must serve us and not we humankind serve
globalisation.
54. With that I would like to end my diatribe and
declare this International Consultation on
Globalisation open and to wish you a good round of
brain-bashing.
Sumber : Pejabat Perdana Menteri
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