Oleh/By : DATO SERI DR MAHATHIR BIN MOHAMAD
Tempat/Venue : SUNWAY LAGOON RESORT HOTEL,
BANDAR SUNWAY
Tarikh/Date : 08/10/2002
Tajuk/Title : THE "MALAYSIA-CHINA ECONOMIC
CONFERENCE-CHALLENGES, IMPACT
AND PROSPECTS"
Versi : ENGLISH
Penyampai : PM
I would like to thank the organisers for inviting
me this morning to officially open the "Malaysia-China
Economic Conference".
2. Since Malaysia established diplomatic relations
with China in 1974, efforts have been taken at
Government-to-Government level to put in place several
bilateral cooperation mechanisms to facilitate and
enhance trade and economic relations between the two
countries. These efforts have assisted in fostering
closer trade and investment ties between Malaysia and
China.
3. China's rapid economic development in recent years
has enabled it to become a regional and global economic
power. The Malaysian business community should view
China's progression as an opportunity for both
countries to cooperate for mutual benefits.
4. China has become an important and growing market
for Malaysia's exports of goods and services. China can
also be viewed as a competitive location for joint
ventures between Malaysian and Chinese companies to
serve the Chinese, regional and global markets and a
source of Foreign Direct Investments into Malaysia.
5. China's rapid progress in the trade and economic
fields has certainly posed competition for Malaysia's
exports in the international market. We are witnessing
a trend whereby Chinese products are getting better in
quality and are competitively priced and this is posing
stiff competition to our products. In addition, Chinese
products are also complying with world standards and
are gaining recognition and acceptance amongst
consumers in Malaysia's traditional markets such as the
US, Japan, and the European Union.
6. Today, manufactured products account for about 80
per cent of China's global exports. Chinese
manufacturers have acquired the capability and capacity
of producing a wide range of products such as the
latest models of electrical and electric products,
cosmetics and jewellery.
7. Chinese companies have also promoted brand names,
which have gained international recognition. Certain
Chinese brand names are now well accepted in developed
markets such as in the US and Europe. In addition, a
recent survey indicated that 7 out of the 10 most
recognised brands in China are homegrown, compared to
five years ago where Japanese brands dominated the
list.
8. The export capacity of Chinese exporters is
enhanced by a big domestic demand which has enabled
Chinese companies to achieve economies of scale and
meet large export orders on time.
9. It is also noted that many leading Multinational
Corporations and foreign companies have made and are
making investments in China. Some even have relocated
their labour intensive manufacturing operations from
other countries including Malaysia to China to take
advantage of lower labour cost. For example, many
Japanese electrical and electronic companies have
established their manufacturing units in China to
produce TVs and radios. The products are then exported
back to Japan and other countries.
10. China's commitments in carrying out reforms to
comply with the WTO, together with its comparative
advantage of lower production cost, large domestic
market and abundant labour has enabled it to be a
magnet for foreign direct investments. China is drawing
away investments from other countries in the region.
From 1997-2000, China attracted an average of US$42
billion net FDI per year. In 2001, FDI inflows into
China amounted to US$46.8 billion. China alone took-up
over 70 per cent of the FDI inflows into the developing
countries.
11. Despite the difficult and diverse challenges posed
by China, I urge the Malaysian business community to
view the economic development underway in China in a
positive manner. Although China is a competitor, it
also presents opportunities for cooperation towards
increased trade and investment cross flows. Malaysian
firms should therefore position themselves to partake
of the large business potential in China.
12. Malaysia and China have already established strong
bilateral trade links. Trade between the two countries
have been enhanced over the years. Since 1991, total
trade has grown by 6-fold, exports to China by 7-fold
and imports from China by 6-fold. During the first
seven months of 2002, China has emerged as Malaysia's
4th largest export market as well as import source.
From China's perspective in 2001 Malaysia was its 10th
largest trading partner, 9th largest import source and
14th largest export market. For the period January to
June 2002, Malaysia was China's 7th largest trading
partner globally and largest trading partner amongst
the ASEAN countries. The strong expansion of bilateral
trade in recent years is a reflection of the potential
that exists to further expand trade and investment
linkages between the two countries.
13. The composition of goods traded between Malaysia
and China has changed over the years. Today, around 47
per cent of Malaysia's exports to China are made-up of
electrical and electronic products. Other products
include palm oil, chemical and chemical products,
petroleum and machinery equipment. Likewise, 55 per
cent of Malaysia's imports from China are also made-up
of electrical and electronic products followed by
machinery equipment, cereals, chemical and chemical
products and textiles and garment. The volume of trade
and range of goods transacted could be expanded
further. This requires more intense effort on the part
of Malaysian exporters to access the large domestic
market in China.
14. It is heartening to note that Malaysian companies
in fact have taken steps to make inroads into the
Chinese market. Cumulative Malaysian investments up to
June 2002 in China amounted to RM9.31 billion in 2216
approved projects. In 2001, Malaysia ranked as the
18th largest foreign investor in China. Amongst the
major sectors invested are in the production of wood-
based products, computers, office equipment, plastic-
based products and foodstuffs. Investments in the
service sector include infrastructure development,
construction, power generation and hypermarket business
chain.
15. As the world's most populous nation with an
increased GDP per capita and disposable income, China
presents a potentially large market to tap. Since 1978,
China's economic growth has averaged at 10 per cent per
annum. Despite a global economic slowdown in 2001,
China still recorded an economic growth of 7.3 per cent
and the GDP growth for 2002 is forecast at seven per
cent.
16. Demand for foreign goods is increasing in line
with the increase in purchasing power of the 130
million Chinese middle-class concentrated mostly in the
major cities and growth centres such as Shanghai,
Beijing, Guangzhou and other coastal cities. The
Chinese middle and higher income earners have developed
a taste for higher-end, branded imported products.
Malaysian companies should intensify efforts in
producing high-end branded consumer products such as
garments, apparels, shoes and handbags and others that
can be attractive to the affluent Chinese consumers.
This approach would allow manufacturers to build a
niche market and avoid from competing with me-too
products or low-value mass- produced goods.
17. China's huge domestic market and its abundance
labour should be made use of by Malaysian enterprises
seeking overseas market and production facilities. A
more feasible and effective way is to be near the
market by setting up production bases in China. This
could be done through joint manufacturing activities
and marketing efforts to gain firm foothold in the
domestic market. As China itself produces a wide range
of products very competitively, these products can be
used as components for the final products, which can be
sold in the domestic and global markets. The Malaysian
business community has the advantage of understanding
the Chinese languages and cultures and this advantage
should be used effectively in facilitating business
ties between both countries.
18. Malaysian firms are also urged to ally with
Chinese manufacturers in areas where the Chinese have
technological advantage. This partnership would help
Malaysian companies to penetrate the Chinese market as
well as regional and global markets. Companies from
Malaysia and China by complementing each other could
further improve their competitiveness in the regional
and global markets.
19. Research and development and the application of
modern technologies have enabled Malaysia to export
globally food products that meet international
standards. China has a substantial Muslim population
estimated at 60 million. In view of the size of the
"halal" food market, we are in a good position to
supply "halal" food for the Muslim community in China.
Malaysian companies could also establish "halal" food
outlets in China. In addition to "halal" food, we can
also export other "halal" product such as cosmetics,
toiletries and skin care products to China.
20. Malaysian entrepreneurs could also explore
opportunities for cooperation and collaboration with
their Chinese counterparts in the services sector such
as in healthcare related services, education, tourism,
franchising, retail trade, chain stores, supermarkets,
telecommunications, information and communication
technology, consultancy services, management and
logistics.
21. China's membership in the WTO has allowed for
improved market access for Malaysia's products.
Commitments by China in the WTO will reduce average
tariffs to 15 per cent for agriculture products and 8.9
per cent for industrial goods. Among the products
where increased market access opportunities have been
created for Malaysia are:
i Increased global quota for palm oil from 1.5
million metric tonnes in 2000 to 3.168
million tonnes in 2005. The quota will be
phased out beginning 2006;
ii Reduction of out of quota palm oil import
tariffs from 63.3 per cent to 9 per cent in
2006 on par with soybean oil; and
iii Phased elimination or reduction of duties on
semi-conductors, furniture, wooden panel
products and consumer electronics.
22. China's WTO commitments also include
liberalisation of trade in services. Better access is
created for foreign services providers in China.
Allowing more foreign firms to operate in China will
raise wages for Chinese workers and provide them
greater purchasing power. This environment would be
beneficial to China's trading partners including
Malaysia as more imported products can be purchased by
Chinese consumers.
23. China's growth can contribute to the prosperity of
neighbouring countries. ASEAN-China FTA envisaged
within 10 years is being negotiated with the context of
a broad ASEAN-China cooperation framework which will
involve other areas such as finance, tourism,
agriculture, HRD, SMEs, intellectual property rights,
environment, forestry, energy and sub-regional
development. The FTA would eventually open-up new
opportunities and areas for collaboration between
Malaysia and China as well as with other ASEAN member
countries.
24. On that note, I have great pleasure to declare the
"Malaysia-China Economic Conference officially open.
Sumber : Pejabat Perdana Menteri
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