Oleh/By : DATO SERI DR MAHATHIR BIN MOHAMAD
Tempat/Venue : SUNWAY CONVENTION CENTRE
BANDAR SUNWAY, KUALA LUMPUR
Tarikh/Date : 10/10/2002
Tajuk/Title : THE NATIONAL CONFERENCE
"LEARNING FROM KOREA - SUSTAINING
GROWTH IN A DYNAMIC ENVIRONMENT"
Versi : ENGLISH
Penyampai : PM
I would like to thank the NEAC and ASLI for
inviting me today to speak on "Learning from Korea:
Sustaining Growth in a Dynamic Environment". This
topic is timely because Malaysia continues to explore
better and more efficient ways of doing things in
order to have a sustained high growth, given the
current rapidly changing global scene. I understand
that this Seminar is a part of our "Look East
Policy", which was introduced in 1983, to share
experiences with our East Asian neighbours on how to
develop our economy and have effective social and
national development.
2. When I visited Korea in May of this year, I saw
a country that has recovered well from a devastating
economic and financial crisis. It is now
participating actively in the new economy, based on
advanced technology and high-skilled activities. I
also observed a country practising strong work ethics
and culture and a hard-working population. These
solid fundamental helped Korea leapfrog from a
developing economy to a developed country status.
Korea has transformed herself from an agrarian
economy in the early sixties into a modern, vibrant
and wealthy industrial country in the new millennium,
a transformation that took about 40 years. It
achieved one of the fastest rates of economic growth
in the world. In 1960, GDP growth was only 1.1
percent but with the introduction of the First Five
Year Plan (1962-66), the average growth for that
period was at 7.8 percent. Between 1960 and 1996,
its per capita income grew by leaps and bounds, from
a mere US$79 to US$8,483. In fact, the per capita
income soared to US$10,603 in 1997 before succumbing
to the East Asian Crisis. In 1996, Korea was admitted
into the OECD.
3. The 1997 Asian crisis devastated the economies
of Korea and Malaysia, which were both enjoying a
high growth. As we all know, the massive outflow of
foreign capital during that period caused the sharp
depreciation of regional currencies and subsequently
led to severe contraction in our two economies. What
drove the attacks on these currencies was the
opportunities for some speculators to make a lot of
money. Unfortunately, our strong fundamentals were
forgotten when funds were being pulled out. But, the
quick recovery from the crisis has proved that our
fundamentals are indeed strong.
4. For Korea, the 1997-98 devastation was the worst
crisis since the Korean War. The Korean economy
contracted by 6.7 percent in 1998, where unemployment
peaked at 6.8 percent and exports fell by 4.7
percent. Korea had to borrow US$58.4 billion from the
IMF to weather the crisis. But this only served to
strengthen Korea's determination to regain their
economic growth and to build a stronger future. The
turnaround of the Korean economy came immediately.
Its GDP growth rebounded to 10.9 percent in 1999, 8.8
percent in 2000 and it even managed to expand by 4.5
percent in 2001, despite the 11th September
catastrophe. But what is most admirable is that
despite the deep crisis, Korea was able to repay her
IMF borrowing of more than 50 billion US Dollars.
5. Malaysia, which took a different route in
responding to the crisis, also had a rapid recovery.
The economic recession in 1998, where the gross
domestic product declined by 7.4 percent was the
worst we ever experienced. Private sector investment
declined by 55.2 percent in 1998 and as a result the
public sector had to take a leading role in reviving
the economy. Through fiscal expansion, a stable
domestic economic environment provided by pegging of
the ringgit and the robust export growth, Malaysia
achieved 5.8 percent GDP growth in 1999 and 8.3
percent in 2000. We have successfully removed non-
performing loans from the banking sector and
recapitalised some financial institutions.
Fortunately for Malaysia, the social impact was not
too severe. Inflation did not exceed 5 percent and
unemployment was held below 4 percent. Equally
important, social stability and cohesiveness were
unshaken.
6. Now that Korea and Malaysia have regained their
direction, we are faced with the challenges of
finding new sources of growth and enhancing our
competitiveness. These tasks are made more difficult
because of the ever-changing global environment.
Challenges such as rapidly changing technology,
volatile capital flows, globalisation, barriers to
trade, shortage of skilled labour, the digital divide
and so forth will determine our future. They must be
dealt with as effectively as possible. Capital flows
that have demonstrated their ugly side to us should
come under some form of regulation as we try to bring
about greater order in the global economic system.
That is why Malaysia has so often called for a review
of the international financial architecture, to
ensure that the greed of a few does not jeopardise
the livelihoods of many.
7. Technological advancement requires a high level
of knowledge, innovation and creativity, which are
directly related to the level and type of education
and learning. Korea has succeeded in enhancing
technological capability through education and skill
training. We in Malaysia feel the same compelling
need to remain competitive.
8. Technical progress and reductions in transport
and communication costs have made a more
interdependent and competitive world. Nowadays
investors seek first-mover advantages, speed to the
market, and first-rate access to customers and
sources of information. The rapid development of
information and communication technology (ICT) and
the Internet has exposed inefficiencies in the
functioning of markets, firms and institutions. It
also put downward pressure on prices and continuously
reminds us of the need to restructure and adapt to
changing conditions. ICT can also improve the
efficiency of interaction among government agencies
and the delivery of government services, as well as
being a channel for communication with the public.
This will bring the re-organisation of administrative
and political institutions and dramatic reductions in
the cost of delivering services. In addition, new
ways and means of networking will change social
patterns of work, shopping, learning and leisure.
9. As a country that is well integrated with the
global economy, Malaysia can look at Korea's success
in penetrating the international market. Korea is
the eleventh largest trading nation in the world and
is home to the world's largest steel producer. It has
created global brands, for example, LG and Samsung
are household names in electrical and electronic
goods, while Hyundai and Kia are popular cars in the
U.S. and Europe. Korea has become the world's fifth
largest automotive producer rising from tenth
position just ten years ago.
10. But the Korean achievements are not only on the
economic front. It successfully hosted the Olympic
Games in 1988 and more recently co-hosted with Japan
the football World Cup.
11. Obviously many factors have combined well
together for Korea to be where it is now. So, our
main task today is to know what these factors are,
analyse how they were developed and how they function
and finally, what lessons Malaysia can learn. But
most important of all, the challenge for Malaysia
will be to translate these learning experiences into
policies and strategies, to make the Korean
experience work for us too.
12. What have been the underlying factors that
generate this kind of success? It is well known that
Koreans place a premium on education and strongly
believe it to be a key to success. Korea has the
highest per capita number of Ph.Ds in the world, so
we can expect its level of thinking, creativity,
productivity and innovation to reflect the knowledge
contained within the society. As part of its push to
improve human resource development, the Korean
Government is promoting virtual universities,
technical education and lifelong learning.
13. Human resource development in Korea has put
great emphasis on skill training to produce skilled
labour. For example, engineers in Korean automotive
companies have gone beyond re-engineering to achieve
by the 1990's true technological independence.
14. Increases in scientific and technological
capability and very rapid advances in ICT means that
knowledge and information are the key to Korea's
competitiveness. Steps were taken to increase the ICT
infrastructure. Korea has completed its optical cable
network programme in 107 of 144 major targeted
regions. Korea also has taken measures to make
available computers to the majority of the
population. Malaysia has also embraced this strategy
through its policy of "one-home one-computer". We
need also to maintain Korean discipline and
diligence.
15. These efforts resulted in the successful
development of Korea's information society. Korea
ranks sixth in the world in terms of the number of
internet users, with the nation's on-line financial
trading system among the most advanced. The Internet
penetration rate by household increased from 45
percent in 1998 to 71 percent in 2000.
16. In light of the global and domestic challenges
and the Korean experience, Malaysia needs to examine
her position critically. Creating a globally
competitive work force is undoubtedly the key to
enhancing competitiveness and to attract new
investments. We can no longer be competitive in
attracting "low tech" investments and depending on
low cost labour. Under our Second Industrial Master
Plan (1996-2005), we have shifted our focus to
capital-intensive industries with higher technology
content, thus reducing the need for unskilled or low-
skilled workers. The Plan is also to strengthen our
export competitiveness through new export products
and new markets and to compete on quality and
service.
17. So what do we have to do to ensure that we
achieve our Vision 2020 of being a developed country?
Our strategies include building a domestic economy
that is robust and resilient and to also be globally
competitive. These strategies are focused on three
areas; education, technology and strategic global and
regional integration.
18. Human capital is key to our future and for this
we have to leverage our capacity on education.
Education in the ICT era will be very different
because it is going to shift from merely book-based
learning to web-based learning. Science and
mathematics have been the core drivers of
technological change and so must be emphasised and
given prominence. Malaysia is going a step further by
opting to teach these two key subjects in English.
We realise that learning from the web requires a good
command of the language because more than 70 percent
of the web content is in English.
19. And now perhaps we should study what is being
taught in Korean schools, understand their values and
spirit and examine the basis for transformation. We
have sent our people to be trained in Korea and to
date 317 government sponsored students have graduated
from the Korean system either in academic or
technical subjects. Today another 131 students are in
Korea undergoing training in technical fields, so
crucial in current technological development. But
perhaps to create critical mass faster, we should
consider training our people here in Malaysia but
adapting the Korean formula to suit our environment
and objectives.
20. I think we could have joint venture skill
training programmes to enhance the development of our
human resource skills. This is what we have been
doing with Germany, France and Britain. We should
also build our own universities into world class
ones. Another method is to forge alliances with
world-class universities, acquiring knowledge through
the exchange of professors and students, and
conducting joint research projects.
21. Technological development depends very much on
R&D capacity. We see in Korea the existence of a
close nexus between government and the private
sector. This co-operation on R&D has become a key
strategic competitive advantage for any country that
aims to participate in the new economy. The private
sector supports the government initiatives to develop
technological capacity by investing in R&D. This is
because the private sector can best identify what
research needs to be done. Businessmen have the
motivation, capital and know-how to commercialise
research findings.
22. Internal efforts to generate growth are
sometimes insufficient and must be complemented by
linkage with the global economy. For an open economy
such as Malaysia, securing export markets and
attracting foreign investment are essential parts of
its economic growth. Therefore, to generate higher
growth in the East Asia region, we must work at intra-
regional economic relationships in trade, investment
and cooperation. The concept of ASEAN+3 means the ten
ASEAN countries need to have closer relationships
with Korea, Japan and China. Together, ASEAN+3 have
tremendous human resources of about 1.9 billion
people while Europe has 590 million and North America
has 400 million people. In terms of share of global
GDP, the North East Asian economies contributed 20
percent in 1999 and this is expected to reach 30
percent by 2020. This is the market that we need to
engage.
23. ASEAN+3 or EAEG was mooted some time ago but the
response was lukewarm. But now, the market has
recognised the inter-linkages between these
economies. It was demonstrated only too well by the
regional contagion effect of the 1997 crisis in East
Asia. More positively, in the first half of 2002,
when the US and EU economies did not perform well,
growth for East Asian countries came from trade
within our region. This shows that the future success
of East Asian nations will have to rely on
themselves.
24. The ASEAN+3 have pushed ahead on their agenda of
regional economic integration. Partial regional
integration is in hand with China and ASEAN having
agreed to establish a free trade area in ten years.
Japan and Singapore have already concluded their
negotiations for an Economic Partnership Agreement.
Japan is also seeking greater cooperation with the
rest of ASEAN under the Closer Economic Partnership
plan. Steadily, the momentum for East Asian regional
economic integration is growing. But I hope these
separate regional integration initiatives will
converge, to achieve a comprehensive and consistent
regional integration.
25. Against the backdrop of a deepening global
slowdown, structural reforms and revitalisation of
Asian economies cannot be delayed. East Asia must
reduce its dependence on exports outside the region.
It must base its economic growth more firmly on
domestic and regional demand. To stimulate regional
demand, the reduction of barriers to cross-border
movement of resources will be critical, thereby
integrating long-fragmented regional markets. This in
turn, will enhance the profitability of businesses
serving the regional market. But, unfettered
liberalisation can also cause instability. To avoid
this we should take into consideration each nation's
national objectives in the liberalisation process to
ensure that economic growth and national development
are sustained.
26. In conclusion, Malaysia and Korea have some
common experiences in our development process. Both
our countries have progressed from agriculture to
industry and now we are entering the next stage of
services and a knowledge-based economy. We have
learnt many lessons along the way that we can share
with each other. What is important is that we should
work together and develop our shared Asian dream. We
will co-operate and prosper together.
Sumber : Pejabat Perdana Menteri
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