Oleh/By : DATO SERI DR MAHATHIR BIN MOHAMAD
Tempat/Venue : THE KING FAISAL HALL RIYADH
INTER-CONTINENTAL HOTEL
Tarikh/Date : 19/10/2002
Tajuk/Title : SEMINAR ON THE FUTURE VISION FOR
THE SAUDI ECONOMY
Versi : ENGLISH
Penyampai : PM
I feel greatly honoured that I should be asked to
speak at this symposium. However I feel quite
unqualified to do justice to the subject which is the
"Future Vision for the Saudi Economy".
2. I really do not know much about the economy of
Saudi Arabia apart from the fact that it is a huge
producer and exporter of oil. It is very different from
Malaysia's economy, an economy that is totally dependent
on trade. Malaysia's trade is two times the size of its
Gross National Product. Even for Japan, a well known
nation for its huge exports, trade amounts to less than
30 percent of its GNP. Malaysia's economy is therefore
a function of its trade, its exports of electronic,
electrical and other manufactured goods which make up 80
percent of the total, together with its exports of oil
and other raw materials which make up the balance of 20
percent.
3. On the other hand, and here I stand to be
corrected, Saudi's economy is dependent largely on the
production and export of petroleum. I believe that Saudi
exports 10 million barrels of oil a day. I am boggled
by this figure as Malaysia produces only 650,000 barrels
a day and now export only 100,000 barrels, the rest is
consumed locally.
4. At say 20 U.S. dollars a barrel, 10 million barrels
would earn 200 million dollars a day and in a year the
earning would be 73 billion dollars. Of course we have
to deduct the cost of production, which is low by
comparison to Malaysia's off shore production. The
balance would still be huge and would be pure Government
revenue for a country with a much smaller population
than Malaysia's 24 million.
5. We are told that at the present rate of production
the known reserves will last 200 years. If this is true
then the future of Saudi economy would still be fuelled
by oil.
6. The possibility that alternative fuel would
displace oil in the foreseeable future is still remote.
There will be some progress in making power generation
for electricity and motor driven vehicles more
efficient, but not such that it will not be offset by
the growing demand for more power.
7. So, much of the future of Saudi economy would still
be based on the production and sale of oil to the world.
But Malaysia is very conversant with the danger posed by
dependence on raw commodities, especially one single
commodity.
8. We used to produce only rubber and tin. The bottom
fell out of the rubber market when synthetics were
invented. And as for tin, the main use for it is in tin
cans. When new packaging materials like aluminum,
paper, glass, and plastics were introduced, the demand
for tin dropped very quickly. If we had continued to
depend on these commodities, Malaysia's economy would be
one-twentieth our present size.
9. As we all know the oil price can drop. A one U.S.
Dollar drop in price per barrel can make a huge loss in
income for countries producing huge quantities of oil.
For Malaysia which produces 650,000 barrels a day and
exports only 100,000 barrels, it means a loss of 100,000
U.S. Dollars a day or 36.5 million U.S. Dollars per
year. Our total export is approximately 100 billion
U.S. Dollars per year. Oil export is therefore not
significant. For Saudi Arabia it would make a big dent
in your revenue. And the drop can be much more than one
U.S. Dollar.
10. For Malaysia the loss in the demand for tin and
rubber forced us to turn to manufacturing. We had no
expertise in this area, nor did we have the capital. On
the other hand if we want to export and earn foreign
exchange we had to achieve world standards for our
products. We took a short cut. We invited foreign
investors and provided attractive incentives. Today, of
the nearly 100 billion U.S. Dollars of Malaysia's
exports, 80 percent is made up of manufactured goods.
11. Malaysians quickly learnt from the foreign owned
industries the skills in manufacturing and today many of
the manufactured exports are from Malaysian owned
manufacturing plants managed by Malaysians.
12. Malaysia had an abundance of labour who were highly
trainable. So we opted for labour intensive industries.
Our population is relatively small and we cannot afford
to exclude women, including Muslim women, from our
labour force. Actually women are highly skilled and in
the electronic industry their manual skill and ability
to concentrate on their jobs proved most productive.
13. Malaysia's Muslim population make up only 56
percent of the total. If we exclude the women, Muslim
human resource would be reduced to 28 percent. We are
competing with non-Muslims in our country and non-
Muslims elsewhere and we cannot afford to reduce our
competitive edge by half.
14. Today despite all our efforts we are short of
labour. We have now to go for hitech, capital intensive
industries in order to grow the economy and give our
people and the nation better earnings.
15. Is Malaysia's experience relevant to the vision of
Saudi future? To a certain extent, yes. Where
Malaysia's assets lie in its highly skilled and
trainable labour force, Saudi assets lie obviously in
its oil or more correctly energy resources. Also you
have abundant land i.e. space and you have shown that
you can grow plants even on the most arid area. I am
sure you have phosphates and other minerals that are
valuable in themselves or as fertiliser.
16. Saudi's abundance of oil is due to the peninsular
being a great swamp in prehistoric time. It is quite
possible for the desert to be reafforested if proper
irrigation is carried out utilising the aquifers which
must be plentiful if the zam-zam well is any indication.
I don't think the whole desert should be forested but
some parts of it can. I believe that with
reforestation, rain will come and cultivation of all
kinds of crops will be possible. It will not take a
year or a decade but over time watering using modern
scientific methods can achieve this. You have already
grown wheat with artificial irrigation. It is costly in
the short term but over the long term it can prove
beneficial -- not the growing of wheat but
reforestation.
17. But your greatest asset is still oil or energy.
You now export crude oil largely. But obviously you can
convert oil into other products. The greatest product
is power. If instead of selling oil, you generate and
sell electrical power, the income would be steady.
Power prices do not fluctuate as much as oil prices. It
follows that power exports can cushion the vagaries of
oil prices.
18. Oil can be piped for long distances. It can also
be shipped to any part of the world. Using the leverage
of your low price oil, even below market, Saudi Arabia
can build and own power plants all over the world. At
least it can go into joint-venture with the countries
it supplies power to. The attraction would be the
constant supply of low-priced oil to the power plants.
19. The great retailers of oil products in the world do
not have oil resources at home any more. When they
exhausted their domestic sources they went out to look
for oil all over the world. Today they dominate the
world's oil supply even though they have to depend on
foreign sources.
20. Most national oil companies seem happy to collect
royalties from the production and export of their oil by
the majors. The Malaysian national oil company,
Petronas, has ventured abroad. Today it operates in 32
different countries, prospecting, producing, piping,
refining, and marketing oil. It retails oil in
Southeast Asia and in Southern Africa. Kuwait is
another country which retails petroleum products at the
pumps outside of Kuwait.
21. There is no reason why Saudi oil cannot be retailed
very much like the retailing activities of Shell, Mobil
etc. You have the advantage of enormous supply. Retail
prices do not always go down when crude prices fall.
Retailing petroleum products can again cushion the
uncertainties of crude oil prices.
22. Desalination is now very costly. But by investing
in research, it may be possible to lower the cost of
desalination. There are countries in the region in need
of water. Saudi desalinated water can be a money earner
for the country.
23. Then there are other industries which are energy
intensive. Aluminum smelting is just one. There must
be numerous industries which are dependent on cheap
energy. The value added would compensate for the lower
priced fuel.
24. Perhaps the question would be asked as to why Saudi
oil should not always be sold at world market price. We
can also ask why a country like Malaysia should sell its
labour at lower price than the developed countries. Or
why should labour cost much less in China and in many
other developing countries? Aren't we selling our
assets cheap?
25. The answer is that it is not cheap. The lower
wages are compensated by a lower cost of living. At
present one U.S. Dollar is equal to 3.8. Malaysian
Ringgit. But one Ringgit buys goods and services in
Malaysia as much as one U.S. Dollar buys in the United
States. So our people have a fairly good life despite
low wages. And consequently with low wages for our
labour we are competitive.
26. Now we know that petroleum product prices in Saudi
is much lower than product prices in most other
countries. So selling the oil cheaply to your own
industries should not be unusual. When your products
e.g. power are sold to other countries based on your
lower oil prices, you may seem to be subsidising other
countries. But by the same token cheap Chinese goods
may be considered as the workers in China subsidising
consumers in other countries. China would not become an
economic giant in such a short time if Chinese labour
demands world prices.
27. Wages and incomes cannot be standardised worldwide.
In any case Saudi Arabia will bear hardly any
transportation costs when using its own oil. This alone
will ensure that Saudi's domestic oil prices will be
cheaper for all consumers, including industries.
Accordingly the price of exported Saudi energy and
energy intensive products would be competitive indeed.
28. Malaysia's strategy for industrialisation can be
used by Saudi Arabia by taking advantage of fuel cost
rather than labour cost. Of course if the high wages
paid to Saudi workers and managers can be made lower,
Saudi products can be made even more competitive. As
far as technology is concerned, this can be bought or
foreign partners invited to participate. It is of
course necessary for investment by foreigners to be made
attractive and bureaucratic procedures minimized.
Political stability is essential also.
29. We are now in the Information age. ICT is the
driving force for economic progress. Here there is no
need for a big workforce. But there is certainly a need
for workers highly educated in science and mathematics.
These are subjects which the Arabs excelled in the past.
I will not name the great Arab scientists,
mathematicians and medical doctors. They pioneered
modern science. Unfortunately at a certain stage the
Muslims turn their backs on science and mathematics.
Since then their civilisation has declined and until
today they are among the least educated and least
advanced people in the world. I venture to say that in
neglecting these essential subjects they have actually
disregarded the injunctions of Islam to seek knowledge
and to be prepared with the necessary strength to
protect themselves and their religion.
30. Be that as it may, the fact is that today we
Muslims cannot neglect science and mathematics if we
want to avoid being weak and oppressed. The total human
resources of the Muslim countries must be fully educated
in science and mathematics. We cannot of course exclude
our women if we want to maximise our productive
potential.
31. The future of Saudi Arabia is no exception. Your
magnificent surgeons have proven to the world their
skills. I am sure in the field of I.T. Saudi Arabia can
excel in the future if it sets about producing the
required human resources.
32. I have visualised a Saudi Arabia that is fully
developed in the true sense. Per Capita income and high
standard of living do not mean being developed. To be
developed means to be master in some of the important
fields of industrial production, finance, technology and
in particular leading edge technology.
33. There are Muslims who believe that being modern and
advanced mean being unIslamic. We forget the
modernising effect of Islam on the Jahililliah Arabs.
It was Islam's modernising effect, in the context of
Arab society of those days, that helped the spread of
the religion and built the Muslim Empire. And Islam
would have continued to modernise the Muslim world and
cause it to be always a world power if at a particular
stage Muslim had not turned away from modernisation in
favour of recreating the world of the first years of
Hijrah. Some Muslims believe even now that Islam can
only thrive in the world of the early years of Islam.
These people believe that Islam is not for all times.
And as a result they neglect the modernising role of
Islam and they have become backward.
34. Modernisation need not lead to atheism, to
Godlessness, as is happening in the West. Indeed
Islamic modernisation can achieve a balance between this
world and the hereafter as we always appeal in our
prayers to Allah s.w.t.
35. Our holy places will remain our holy places even if
Saudi Arabia becomes a great industrial and financial
power based on its oil and its many other God-given
resources. Allah knows that the Muslim ummah is in dire
need of a Muslim country which is a world power. Saudi
Arabia is well positioned to become one if it chooses to
do so and is helped by the ummah worldwide.
36. This desire to have a Muslim country as a world
power is not because we want to embark on a world
conquest. It is simply to ensure that Muslims and their
countries are not oppressed as they are today.
37. If we adhere strictly to the teachings of Islam, we
can be economically and politically strong without
losing our identity and our faith.
38. I have tried to outline a future vision of the
Saudi economy. What I have said is entirely possible,
subject of course to there being the will to do what is
needed. The choice is yours. Islam is not in the way.
In fact Islam enjoins us to do all that I have said can
be done.
Sumber : Pejabat Perdana Menteri
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