Oleh/By : DATO' SERI DR.MAHATHIR BIN MOHAMAD
Tempat/Venue : PARLIMEN
Tarikh/Date : 30/10/2003
Tajuk/Title : INTRODUCING THE MOTION TO TABLE
THE MID-TERM REVIEW OF THE
EIGHTH MALAYSIA PLAN
Versi : ENGLISH
Penyampai : PM
Most Gracious and Most
Merciful, with great pleasure I present before this
distinguished House the following motion:
`That this House,
recognising the creditable economic growth and
achievement of our socioeconomic objectives despite
being adversely affected by the volatile global economy
during the first three years of the Eighth Malaysia
Plan; acknowledging and endorsing the continuous
efforts of the Government to achieve balanced and
sustainable growth during the remaining Plan period,
2004-2005; approves the Mid-Term Review of the Eighth
Malaysia Plan, which seeks to implement strategies and
programmes and allocate funds designed to achieve the
objectives and commitment of the National Vision Policy
as set out in Command Paper Number 30 of 2003;
That in approving the Mid-Term Review, this
distinguished House calls upon all Malaysians to strive
with stronger determination and give continuing support
to the Government to build Malaysia into a united,
socially just, resilient and competitive nation.'
With your permission, Mr. Speaker, I now table the Mid-
Term Review of the Eighth Malaysia Plan for
deliberation by the Honourable Members of this
distinguished House. This review is our way to ensure
our plan is updated and will achieve its objectives.
Introduction
Two months ago we joyously celebrated the forty-sixth
anniversary of Merdeka. If we look back, we will
realise that we have come a long way from that historic
Saturday in 1957 when we freed ourselves from more than
446 years of colonial bondage. At that time, our
country was poor with a per capita income of only US
300 dollars. The people did not really expect any
development and certainly not a better quality of life.
Many of the people and foreigners believed that the
different races would be against each other and the
Malays who were in the majority would seize power and
oppress the others. With that the situation would
become unstable and the country would regress
developmentally. This kind of situation actually
happened in many European colonies which became
independent. Allah be praised, this expectation proved
wrong. Malaysia actually developed fast until it has
become the most developed of the developing countries.
In forty-six years, from a country which depended only
on rubber and tin, we have become an industrial nation
and have gone on to become a sophisticated, information-
based industrial nation. The per capita income has
almost reached USD 4000, with a literacy rate of 94.1
percent. We have also produced 94,320 professionals,
including 13,869 doctors, 41,747 engineers and 10,688
lawyers.
Poverty has been reduced from 52.4 percent in 1970 to
5.1 percent in 2002. About 92 percent of houses in the
rural areas have been provided with electricity while
86 percent received water supply in 2003. Schools,
clinics and roads are enjoyed by most of the people.
At the same time the people have gained confidence in
themselves so much so that they now achieve world
records such as climbing Mount Everest, sailing solo
round the world, parachuting over the North Pole and
swimming across the English Channel. Many world
records are created such as pulling a 200 tonne train
with the teeth.
Now Malaysia is well-known throughout the world and has
become a model for other developing countries and the
Muslim countries.
Our success is due to the new character and culture
which have been instilled among the people. Malaysians
are responsible, moderate and love peace and security.
We are more ready to share than to take everything for
ourselves. In other words Malaysians are not greedy.
We reject socialism which believes that if the
Government takes over all businesses and industries,
Government will get 100 percent of the profits and thus
distribute them equally among the people. We do not
seize the businesses and private property. We believe
that if the private sector is given the opportunity and
support, they are more likely to succeed and through
paying more taxes which can be spent on the people.
Today the world has accepted the view that socialism
cannot bring economic success to a country.
Corporations and industries owned by Governments cannot
achieve success. On the other hand the free market
system is more likely to earn profits and to increase
taxes paid to the Government. Actually at the time of
independence the total budget of the Government was RM
1.0 billion or 19.5 percent of GDP. Today it is RM
112.5 billion or 29.2 percent of GDP. Clearly our
choice of a regulated capitalist system is far better
than to nationalise all the businesses of the private
sector as promoted by socialists.
In 1969 racial riots broke out. We were successful in
putting an end to this outbreak but we also learnt a
lot from it. The Coalition Government which was
supported by all communities devised the New Economic
Policy to distribute the wealth of the country in a
fair manner among the different communities. Although
we have not achieved our target but the fact is that
the economic disparities between the races have been
reduced. Actually the relationship between the
different races is far better today than at any time in
Malaysia's history. From owning only 2.4 percent of
the wealth of the nation in 1970, the Bumiputeras today
own 18.7 percent of a much bigger aggregate wealth i.e.
from RM 126 million in 1970 to RM 73,162 million in
2002, 581 fold increase.
While the redistribution of wealth is being made the
economy grew fast. If not for the attack by the rogue
currency traders, the growth would achieve an average
of seven percent per year. But although this target
was not achieved, we still managed the recovery faster
than others. In 2003 we will achieve 4.5 percent
growth. At the same time our financial situation is
sound. The external debt is 48.2 percent of GDP, lower
than the level considered as safe. Our external
reserves is also high at RM 159.4 billion or 41.9
billion US Dollar as at end October 2003. Our trade
shows a surplus for 70 continuous months.
We are the 18th biggest trading nation in the world.
Our total trade is twice the size of our GDP. As a
trading nation we must ensure the world market. This
is a difficult thing to handle because the wages of our
workers are higher than our neighbours. Yet we want
our workers to enjoy increasingly higher standards of
living.
The earnings of the workers can be increased by
increasing their productivity. This can be done by
improving the skills and the knowledge of our workers.
It can also be done through investments in more
sophisticated systems and production machinery and
through the use of automation and I.T.
More effective than a raise in wages is the increase in
our purchasing power. Actually our Ringgit has the
same purchasing power in our country as the American
Dollar in America. This means that even though our
earnings is low compared to wages in developed
countries we can purchase goods and services three
times more than the workers in the developed countries
earning the same wages. Because our wages are low our
production cost is also low and this makes our goods
and services more competitive.
We will continue our cost of living through controlling
prices and wages so that we can enjoy a good living
standard while ensuring our exports remain competitive.
It is no use to raise incomes if it will all be
swallowed up by the increased cost of the goods and
services that we buy. In other words increases in
income which is followed by inflation are of no
benefit. In addition the people who save will lose and
the national economy will regress. Because of this our
approach to handling our national economy and finances
will be maintained.
Eighth Malaysia Plan
In April 2001, I presented the Eighth Malaysia Plan to
this distinguished House. The Eighth Plan sets out
policies, strategies and programmes to achieve the
National Vision Policy's objective of building a
resilient and competitive nation. The focus of the
Eighth Plan is to raise the level of development and
generate sustainable growth so that all Malaysians can
enjoy prosperity and a higher quality of life.
Economic growth is promoted alongside efforts to narrow
social, economic and regional imbalances. As the
economy needs to move to higher value added activities,
the strategy under the Plan is to shift from labour-
intensive growth strategy to one that is knowledge-
intensive. Human resource development and technology
enhancement are given priority. The Eighth Plan
emphasises the need for the private sector to be
dynamic and to spearhead economic growth. The public
sector is to continue to provide the institutional
framework and infrastructure for a pro-business
environment.
Macroeconomic Performance
The first three years of the Eighth Plan period have
been exceptionally challenging for Malaysia due to
unforeseen circumstances. It began with the slowdown
in the global economy caused by the downturn of the US
economy and collapse in world electronics demand. This
was aggravated by the September 11 incident in the US
in the same year. After a short breather in 2002, the
events in the first half of this year, particularly the
invasion of Iraq and the outbreak of the Severe Acute
Respiratory Syndrome (SARS) have again negatively
affected economic recovery.
By the Grace of Allah, the Malaysian economy was able
to recover with growth this year estimated at 4.5
percent. During the review period, 2001-2003, the
economy continued to expand and registered a real Gross
Domestic Product (GDP) growth of 3.0 per cent per annum
even though the external factors and the large share of
electrical and electronics goods, which accounts for
around 70 per cent of manufactured exports, still
prevails.
We should take pride that our per capita income rose by
2.4 per cent per annum from RM12,843 in 2001 to
RM14,324 in 2003. Measured in terms of purchasing power
parity, the improvement in per capita income would be
more impressive, growing at an average rate of 3.9 per
cent per annum to US$9,380 in 2003. Growth was
achieved in an environment of stable prices and low
unemployment. The external trade position of the
country was also strong as reflected by the sizeable
surplus in the current account of the balance of
payments every year. In addition, the fiscal deficit
remained within prudent limits despite the increase in
public expenditure as a result of the Government's pump-
priming efforts. We also managed to reduce the
incidence of poverty, provide better housing and basic
amenities, particularly to those in the low-income
group and improve the quality of life of all
Malaysians.
To mitigate the impact of the global economic slowdown
on the Malaysian economy, the Government introduced two
fiscal stimulus packages in 2001 and the Package of New
Strategies in May of this year. This contributed to
the rapid expansion of public consumption by 12.1 per
cent and public investment by 9.6 per cent. Private
consumption also accelerated from 2.4 per cent in 2001
to 5.2 per cent in 2003. The growth in public sector
demand and private consumption helped to offset the
contraction in private investment. With the improving
economic outlook, private investment has now turned
around as evidenced by the growth in loans and private
debt securities. Exports have also strengthened with
inroads being made into non-traditional markets.
During the review period, the economy experienced broad-
based growth with increasing contribution coming from
the services sector. Growth in the finance, insurance,
real estate and business services was supported by
increased collection of insurance premiums and bank
lending activities. The transport and communications
subsectors saw a strong expansion in air cargo and
trade-related and transhipment activities undertaken in
Port Klang and Port of Tanjung Pelepas (PTP). Earnings
from travel, tourism and education rose from RM19.0
billion in 2000 to RM22.9 billion in 2003. Private
institutions of higher learning attracted an increasing
number of foreign students, particularly from China and
Indonesia; and the private healthcare industry catered
to a growing number of people from Brunei, Indonesia,
Saudi Arabia and Singapore.
In the manufacturing sector, the domestic-oriented
industries benefited from fiscal stimulus packages and
low interest rates and became the main contributors to
growth in the sector. The transport equipment, food
processing, fabricated metal and construction-related
industries recorded a strong performance. Among the
export-oriented industries, the electronics industry
turned around in 2002 with the improvement in the
global demand for semiconductors. The manufacturing
sector progressed by moving up the value chain into
high technology and knowledge-intensive activities as
we can no longer compete in low-wage labour-intensive
industries. The agriculture sector also improved as a
result of the increased output of food crops, fisheries
and livestock as well as better commodity prices.
During the review period the current account surplus
was maintained and remains large. The narrowing
deficit in the services account arising from the higher
surplus in travel, which includes education, also
contributed to the current account surplus. By the end
of 2003, the current account surplus is expected to be
about 10 per cent of GNP.
The expansionary fiscal stance of the Government aimed
at cushioning the global economic slowdown and
offsetting the lacklustre performance of the private
sector resulted in a significant increase in operating
and development expenditure. The control of Government
deficit is more difficult. Clearly high Government
expenditure cannot be continued. Expansionary packages
can only be sustained for a short period. We cannot
use expansionary packages as a way to create
opportunities for those who regard them as windfalls.
Having gained opportunities from the package, they must
return to the usual opportunities.
Issues and Challenges
Although we expect the global economic environment to
improve during the remaining Plan period, we must be
prepared to meet new challenges that will test our
resilience, productivity, resourcefulness and
innovative capabilities. The external environment, both
politically as well as economically, will continue to
be of key concern.
Although the invasion of Iraq was short and its
immediate impact on the economy was limited, it is
becoming apparent that it will have longer term
implications. As we have witnessed, the invasion of
Iraq has been followed by a series of attacks on the US
interests and those of its allies in several parts of
the world. This could be very destabilising for
economies and could affect economic recovery. As we
have seen previously, it is bound to shatter consumer
and business confidence and dampen global trade and
investment. The cost of doing business will inevitably
increase due to added risks from these uncertainties.
While we have to acknowledge that these developments
are beyond our control, we need to continue to
undertake measures to strengthen the resilience of the
economy, so that we can withstand and mitigate the
impact of these external shocks, should they occur.
While we acknowledge that globalisation can contribute
towards increasing trade and capital flows across
countries, its present interpretation will benefit the
rich countries more because the stress is on free trade
and not fair trade. The stress on competitiveness will
also benefit their giant corporations.
We will try to change the globalisation agenda through
the WTO but in the meantime we must prepare to compete
in an inequitable environment. If Malaysians want to
continue to succeed they have to find a niche where
they can achieve world quality. They have also to
improve their marketing skills so as to gain a place in
the value chain.
We are also going to see increased competition from new
players in the global market, including China and
India. These economies are fast emerging as attractive
centres for investment in the production of goods and
services with high technology. Low wages, industrious
work force and a big domestic market will give them
competitive edge.
Malaysian businesses must identify areas which they
must concentrate the efforts and capital to ensure our
competitiveness would increase. But we must not again
make the mistake of depending too much on a few
businesses as we did before with rubber and tin.
Policy Focus of the Mid-Term Review
The policy thrusts of the Third Outline Perspective
Plan and the Eighth Plan will be continued to address
these challenges. In addition, the Mid-term Review
will build upon the Package of New Strategies
introduced in May 2003, address critical problem areas
and sources of vulnerabilities as well as tackle longer
term and structural issues to restore the dynamism of
the economy. With this, the policy focus of the Mid-
Term Review will be to:
- reinforce macroeconomic fundamentals;
- bolster economic resilience to better withstand
shocks;
- retool the economy to enhance its
competitiveness;
- reactivate private investment in particular
local sources to assume its role as the engine
of growth;
- venture into new areas of growth;
- accelerate the transition from low technology
and labour intensive economy to one that is high
technology and knowledge-based;
- increase supply of quality human resources to
meet the demands of an economy that is moving to
higher value added activities;
- develop a more equitable society to ensure
everyone benefits from development;
- promote an exemplary value system compatible
with high achievement by all communities; and
- enhance international cooperation for
prosperity.
Strengthening Macroeconomic Performance
The Government will continue to pursue sound
macroeconomic policies to ensure strong fundamentals,
such as low inflation rate, adequate savings, healthy
balance of payments, stable exchange rate and prudent
fiscal position. In addition, efforts will be taken to
strengthen economic resilience to enable the economy to
withstand shocks, including by broadening the economic
base, developing a more efficient financial sector and
capital market as well as improving risk management and
corporate governance.
The macroeconomic prospects for the next two years are
expected to be promising. Real GDP is projected to
grow at an average rate of 6.0 per cent per annum
consistent with the long-term potential output of the
economy. This rate of growth will put us back on track
to realise the development targets set out in the
National Vision Policy and Vision 2020. Based on this
rate of growth, per capita Gross National Product (GNP)
would increase by 4.4 per cent on average to RM15,600
and in terms of purchasing power parity will be faster
at 5.5 per cent and will reach US$10,400 in 2005.
Growth is expected to be supported by strong domestic
demand and sustained growth of the world economy.
Consistent with our policy of encouraging the private
sector to spearhead economic growth, private demand
will be the driving force of the Malaysian economy. We
expect private investment to turn around and grow at
about 12 per cent per annum in response to the improved
domestic and external demand. Small- and medium-scale
enterprises (SMEs) will be used as the catalyst to spur
domestic investment. We would like to see SMEs playing
a bigger role in the economy as in countries such as
Japan, Taiwan and South Korea. To increase the dynamism
of SMEs, concerted efforts will be made to upgrade
their technological capability, promote greater usage
of information and communications technology (ICT) as
well as increase their ability to innovate and develop
new products with own brand names. Efforts will also be
taken to improve the access of SMEs to financing,
including customising the financing facilities to suit
their needs.
While we will also continue to promote foreign direct
investment (FDI) more attention will be paid to local
sources of investments. Agriculture, especially cattle
farming, goat rearing, fresh and marine acquaculture,
mixed farming provide good potentials. Investors in
these areas will be supported and given incentives
especially those intended for export. Similarly with
metal fabrication and infrastructure skills exports.
The Government will cooperate with Malaysian
contractors to get and implement projects abroad.
Private consumption is expected to remain robust and
grow at 7 per cent per annum basically driven by
improving consumer confidence and increasing disposable
income. The favourable fiscal and monetary policies,
brighter employment prospects, recovery in external
demand, better commodity prices and the positive wealth
effect from a buoyant stock market will promote private
consumption. Our policy to maintain low interest rates
and increase accessibility to financing is also
expected to increase demand for consumer durables.
The Government, however, will reduce the growth in
public investment to a more sustainable level in the
next two years commensurate with the expected recovery
in private sector investment and the strong growth in
public consumption.
With better prospects in world trade, Malaysia's
exports are expected to increase and grow at 7.4 per
cent per annum. Given the robust export performance,
the surplus in the merchandise account that was
sustained during the review period is expected to
continue. The deficit in the services account will be
reduced because of higher inflows from tourism,
education, transport, finance, health and professional
services. For the remaining Plan period, the current
account is expected to remain in surplus at 10 per cent
of GNP in 2005.
The manufacturing and services sectors will continue to
be the major contributors to growth. The manufacturing
sector is expected to return to the high growth path of
7.8 per cent per annum. Growth will result from the
electronics and electrical subsector and the transport
equipment subsector. The services sector is expected to
grow at 6 per cent per annum, contributed mainly by the
finance, insurance, real estate and business services;
the wholesale and retail trade, hotels and restaurants;
and transport, storage and communications subsectors.
Enhancing Competitiveness and Resilience
As I mentioned in the 2004 Budget speech, according to
the World Competitiveness Yearbook 2003, Malaysia is
now ranked as the fourth most competitive nation in the
world among countries with a population of more than 20
million. This is a major improvement in the country's
competitiveness ranking from its tenth position in 2001
and sixth position in 2002. In terms of economic
performance, government efficiency, business
efficiency, and infrastructure, Malaysia ranks among
the top ten countries.
While we can compliment ourselves for this achievement,
we cannot afford to feel comfortable and begin to rest
on our laurels. We must bear in mind that we are a
global trading nation and want to remain so in the true
sense of the word. This is because a very high
percentage of our exports and imports are due to
foreign investors. Their contribution to our earnings
is not as big as the size of their trade. Because of
this we will stimulate and give emphasis to locally
owned industries which contribute more towards the
economic growth of the country. Our capabilities in
industries have increased and become more
sophisticated. We are now able to produce almost all
the products we export and more than that, Japan, Korea
and China bought or learnt foreign techonology and have
their own industries. And they succeeded. We can do
the same. While we continue to encourage foreign
direct investments, we have to try to increase local
investments.
For this the Government will take initiatives to
provide a more business-friendly environment which can
help promote wealth creation. We will try to reduce
the cost of doing business, review the incentive
structure, improve the market and ensure the supply of
manpower in keeping with the technology and needs of
the market. We have also to improve the utilisation of
the existing infrastructure much more to increase the
skills and economic productivity in a wider area.
Where necessary the Government will also provide new
and up-to-date physical infrastructure.
As announced in the Package of New Strategies in May of
this year, the Government is committed to reducing the
regulatory burden and improving the delivery system.
It will improve the facilitation of investment, fast
track approvals at all levels of administration,
streamline procedures, strengthen human resource
capacity and capability, expand the use of ICT, ensure
compliance to the client's charter as well as
strengthen management integrity and governance.
Although we are committed to shifting from an input-
driven growth strategy to a productivity-driven growth
strategy, progress towards achieving this strategic
shift will take time. During the review period, the
contribution of total factor productivity (TFP) to GDP
growth was 25.5 per cent while labour and capital
inputs contributed the rest. It must be emphasised that
in the medium to long-term, improvements in TFP are
more important in driving sustained growth than higher
investment rates.
A recent assessment of productivity at firm level found
an enormous variation in productivity performance
across industries. Higher TFP was recorded among firms
that were large, technologically more advanced,
involved in exporting and having foreign direct
investment. It was also found that the firms with
higher productivity grew faster. Firms should,
therefore, give greater importance to increasing
productivity and efficiency. They must upgrade their
technological capability, innovate and undertake
research and development (R&D), increase the
application of ICT in their internal and external
operations, reduce production cost and raise the
quality of their product or service. Labour
productivity will need to be increased through
continuous skill upgrading as well as improving
entrepreneurial and managerial skills. Firms will also
need to migrate to a productivity-linked wage system.
Continuing Distribution Agenda
Prior to the New Economic Policy, the incidence of
poverty in Malaysia stood at 52.4 per cent in 1970. In
fact, when I first presented the Mid-Term Review of the
4th Malaysia Plan in 1983, the incidence of poverty was
still high at about 21 per cent. Now, I am pleased to
report that the incidence of poverty has declined to
5.1 per cent in 2002 and we expect to totally eradicate
poverty in 2005. As for household income, the mean
household income of all Malaysians grew almost three
fold from RM1,098 per month in 1983 to RM3, 011 in
2002. This increase is not seen in any other country.
From these figures it is clear that the Government
development plans have succeeded in achieving their
objectives. But when poverty has been eradicated we
have to raise the criteria for poverty so as to
increase the income of those below this new level.
The Government will therefore intensify efforts by
continuing the implementation of the Skim Pembangunan
Kesejahteraan Rakyat (SPKR) through income-generating
projects. But the people must complement this by
acquiring skills and knowledge and by working harder
and with determination. Among the programmes that will
be continued include Program Pembangunan Bersepadu Desa
Terpencil, Program Pembangunan Minda Insan, Housing
Assistance Programme and Skim ASB-Sejahtera.
A special household income survey is being undertaken
to determine the state of poverty, income level and the
quality of life of Bumiputera minority groups in Sabah
and Sarawak. The first phase of the survey covering
nine minority groups has been completed and it
indicates that the incidence of poverty is highest
among the Rungus, Sulu and Orang Sungei in Sabah and
the Penan, Kenyah and Kajang in Sarawak. In the
Peninsular the Orang Asli are among the poorest. Based
on the findings the Government is formulating more
focussed programmes to alleviate poverty and improve
the quality of life of the people living in the
interior and remote areas of Sabah and Sarawak and the
Orang Asli in the Peninsular.
To complement the efforts of the Government in poverty
eradication, the non - governmental organisations
(NGOs) and the private sector should further expand
their activities and coverage of their programmes in
assisting the poor.
The most important thing is to create job
opportunities, to provide education and training.
Providing subsidies will erode self-confidence and
undermine the creation of a resilient Malaysian
society. The Government will reduce subsidies in
phases.
The issue of income imbalance between and within ethnic
groups, income groups, regions and states will also
continue to be addressed. Presently the disparity in
the income of the highest and the lowest paid in the
Government has been reduced. At the time of
independence the highest ranking officer of the
Government was paid 78 times the salary of the lowest
ranking employee. It is the same with the disparity in
the pay of the highest and lowest in the private
sector. Now the highest paid officer in the Government
is only 29 times the salary of the lowest.
With regard to the restructuring of society, all ethnic
groups recorded an increase in ownership of share
capital during the review period. Bumiputera ownership
of share capital based on par value increased from
RM63.0 billion in 2000 to RM73.2 billion in 2002,
recording a growth rate of 7.8 per cent per annum.
However, Bumiputera share of equity decreased slightly
from 18.9 per cent in 2000 to 18.7 per cent in 2002.
Bumiputra companies are still too friable and are
easily adversely affected by factors such as turmoil
and low economic growth. Chinese ownership of share
capital increased to RM159.8 billion in 2002, growing
at 11.2 per cent per annum during the review period.
Meanwhile, the Indian equity increased to almost RM6.0
billion in 2002, with a growth rate of 7.6 per cent.
The Government is aware that efforts to increase
Bumiputera equity ownership during the remaining Plan
period will become more challenging particularly with
globalisation and greater market liberalisation. Hence,
more effort will be needed to provide opportunities to
Bumiputera in selected sectors if the target of at
least 30 per cent Bumiputera equity ownership by 2010
is to be met. Towards this end the Government will set
up a new investment institution, Dana Harapan to
attract and mobilise Bumiputera resources. This will
enable the introduction of innovative unit trust
products and further expand investment opportunities
for Bumiputera. In addition, the Government will award
at least 60 per cent of procurements and contract works
in Government projects to responsible, competent and
capable Bumiputera.
As part of our restructuring efforts, attention was
also given to the restructuring of employment to ensure
that the pattern of employment reflects the ethnic
composition of the nation. We have noticed
improvements in the participation of Bumiputera in the
professional, managerial and other high-income
occupations. In eight selected professional
occupations, namely, accountants, architects, doctors,
dentists, veterinary surgeons, engineers, surveyors and
lawyers, the proportion of Bumiputera registered
increased from 35.5 per cent in 2000 to 37.2 per cent
in 2002.
Education and training will remain an important
strategy to meet the employment restructuring
objectives. Assistance will be given to qualified
Bumiputera students to study in public and private
institutions of higher learning, particularly in
science, ICT and professional courses. Moral education
and good values will be propagated so that a culture
suited to achieving success will be developed and
practised. Steps to increase non-Bumiputera
participation in the public service will be continued,
especially in professions in which they are not well
represented, such as teaching, nursing, police and the
armed forces. We note that non-Bumiputera are already
well represented in other professions.
The Government will also continue to implement various
programmes and provide support to develop a competitive
and resilient Bumiputera Commercial and Industrial
Community (BCIC). Packaged programmes such as the
Vendor Development Programme, the Franchise Development
Programme and the Venture Capital Scheme that emphasise
quality management, efficiency and good business
practices will be promoted to facilitate the
development of BCIC.
Accelerating Transition to a Knowledge-Based and High
Technology Economy
Knowledge is becoming increasingly important for
generating sustainable economic growth, maintaining
competitiveness and transforming the way the
administration, the industries and the individuals
manage. We embarked on efforts to move from an input-
driven to a knowledge and productivity-driven economy
in the mid-1990s.
We started to lay the foundation for a knowledge-based
economy with the formulation of the National IT Agenda
and the establishment of the Multimedia Super Corridor.
The Third Outline Perspective Plan in 2001 reiterated
the Government's commitment to take a comprehensive
approach to effect the transition to an information and
knowledge-based economy. We went on to formulate the
Knowledge-based Economy Master Plan in 2002 which
includes all aspects that needed to be addressed to
effect this transition including in the areas of human
resource, physical and institutional infrastructure,
science and technology capability as well as the issue
of digital divide. The pressure to accelerate the
process has now intensified as a result of increased
global competition.
While Malaysia is already well poised to receive global
knowledge, local inventiveness is still lagging. The
innovative and technological capability of our
industries is generally low. Many of our industries
merely use existing or modified technology. The
success of the rubber and palm oil industries resulting
from research and development has not spread to the
manufacturing industry. If the manufacturing industry
continues to wait for inventions by other people, they
will certainly be left behind and they will fail. The
Government is committed to introduce appropriate
incentives to promote and improve S&T and innovative
capability so that more Malaysian firms can make the
technological transition to become inventors.
This year the Government launched the Science and
Technology Policy II so as to prepare the framework for
this move. The policy introduces new dimensions and
emphasises the strengthening of research and
technological capacity and capability,
commercialisation of research outputs, developing human
resource, nurturing a culture of science, innovation
and entrepreneurship as well as ensuring a greater
diffusion and application of technology. To boost the
commercialisation of R&D findings, measures will be
taken to increase the rate of diffusion of research
findings generated by public research institutions and
universities as well as enhance public-private sector
collaboration. I would like to urge the private sector
to support government initiatives by investing in R&D
and to collaborate with institutions of higher learning
and research institutes.
To ensure adequate supply of quality S&T human
resource, high achievers among students will be
encouraged to pursue studies in pure sciences,
including at the post-graduate and post-doctoral
levels. Additional scholarships and other forms of
financial assistance will be provided for this purpose.
We will also continue to relax procedures for the
hiring of highly skilled foreign workers in technology
intensive sectors.
Biotechnology has been identified as one of the key
technologies that will contribute towards Malaysia's
transformation to a developed nation by 2020. To
support the development of the biotechnology industry
in Malaysia, three interim laboratories have been
established, namely, in the fields of genomics and
molecular biology in UKM, agricultural biotechnology in
MARDI and nutraceutical and pharmaceutical
biotechnology in UPM. In addition, the strategic
partnership with the Massachusetts Institute of
Technology (MIT) under the Malaysian-MIT Biotechnology
Partnership Programme will provide the foundation to
spur the development of domestic R&D capability and
capacity in biotechnology.
Malaysia holds great promise to be developed into a
regional as well as global ICT and multimedia hub.
During the review period, the Government has undertaken
concerted efforts towards realising this goal. Policy
adjustments have been made to liberalise and promote a
competitive and dynamic environment for the healthy
growth of the ICT and multimedia industries. These
initiatives were successful in stimulating the growth
of many advanced value-added services, including voice,
data and text-based applications as well as the market
for electronic-based contact and data centres in the
country.
Our investments in ICT and high quality infrastructure
have also increased the attractiveness of Malaysia as a
preferred location for MNCs to set up operational
headquarters, international procurement centres,
regional distribution centres, integrated logistic
centres, and R&D centres. To accelerate the development
of Malaysia as an ICT hub during the review period, the
National ICT Roadmap will be prepared while expanding
telecommunications infrastructure.
The Multimedia Super Corridor, which was launched just
seven years ago, has been successful in accelerating
the development of ICT-related industries. At the end
of August 2003, 919 companies have been awarded MSC
status, including 59 world-class companies and 273
foreign-owned companies. The total sales of MSC-status
companies rose from RM3.93 billion last year to RM5.83
billion this year.
We have also put in place world-leading framework of
cyberlaws and established Cyberjaya and Putrajaya as
world-leading intelligent cities. During the seventh
International Advisory Meeting held recently, the MSC
received endorsement and praises from its members and
they recognised that it has progressed beyond all
expectations. During the second phase, which will last
until 2010, the MSC will be linked to other global
cybercities.
While the country forges ahead in ICT development, we
have been conscious of the need to reduce the digital
divide across locations and communities. This is to
ensure that those in rural and remote areas do not lose
out in this transformation process. The Government has
intensified efforts to provide ICT facilities and
Internet access to the underserved groups, including
establishing 16 Internet Desa and 15 InfoDesa centres
nationwide.
To intensify our efforts to bridge the digital divide,
the National Framework on Digital Divide will be
formulated to provide guidelines on project
implementation and avoid redundancies. The mastery of
English and the teaching of science and mathematics in
English will contribute towards this objective.
Human Resource Development
Human capital is the key to our future. Creating a
globally competitive workforce is undoubtedly
fundamental to enhancing competitiveness and attracting
new investments. In this regard, human resource
development will focus on three dimensions, namely,
developing knowledge, acquiring skills and inculcating
positive values. Developing highly educated and multi-
skilled workers does not necessarily ensure higher
productivity as it is equally important for workers to
internalise good work ethics at all levels.
The success or failure of a nation is closely related
to its culture including the totality of the values
held and practised. As such the Government will
endeavour to forge a Malaysian system of values that
stresses positive attitude to work, discipline,
diligence and a sense of responsibility. If these
values are internalised, all Malaysian, be they in the
rural our urban areas, or from whatever ethnic group,
will be able to enjoy a better and more comfortable
life.
Accordingly training and educational centres will
include in their curriculum teaching of culture and its
effects.
We recognise that Science and Mathematics are important
in effecting technological change. Therefore, greater
emphasis and prominence will be given to these
subjects. Apart from using English as the medium of
instruction, the teaching and learning of these
subjects in schools will be made more interesting by
using electronic course ware with local orientation and
placing greater emphasis on practical work in science.
Our aim is to further improve the quality of the labour
force. By 2010, about 35 per cent of the labour force
will have tertiary level qualification, that is, double
the present level of 17.1 per cent. The target set for
2010, is still low compared with the current levels
achieved by some developed countries such as Japan at
36 per cent, the United States at 41 per cent, Ireland
at 43 per cent and Finland 36 per cent.
To meet the increasing demand for tertiary education,
especially in technical fields, besides expanding the
capacity of existing universities, we have now
established university colleges. These university
colleges are focusing on engineering and technology
related areas of study and are emphasising a hands-on
experience using the experiential and action learning
approach. We have found that the first batch of
graduates from an university college were able to
secure jobs quite easily.
As the capacity of the public sector is limited, the
private sector must further expand its involvement in
the provision of education and training. The reduced
interest rate and revised repayment schedule of the
Perbadanan Tabung Pendidikan Tinggi Nasional loan
announced under the 2004 Budget will enable more
qualified candidates to pursue tertiary education. An
additional allocation of RM500 million has also been
provided to the Skills Development Fund to enable more
candidates to pursue skills training. The guidelines
on the provision of loans have also been reviewed to
ensure effective utilisation of the Fund.
The slowdown in economic growth during the review
period has resulted in the increase in the number of
unemployed graduates. To mitigate the situation and
take advantage of the lull in the labour market, the
government launched specific training programmes in
2001 to further enhance the knowledge and skills of
these graduates. Under the Package of New Strategies
and the 2004 Budget, additional funds for training and
tax incentives on cost incurred by employers for hiring
these graduates has been provided. To further enhance
the employability of their graduates, tertiary
institutions will intensify efforts to equip them with
the necessary soft skills such as communication, team
work and problem solving.
In almost every country fluency in English is regarded
so important so much so that learning this language is
given priority. If we wish to compete to get jobs, we
too have to do so. Because of this the study of
English, and science and mathematics will be stressed
and taught in English. Mastery of other languages is
also encouraged. In this age anyone wishing to succeed
must be fluent in at least two languages.
Workplace training will be made an integral part of the
training delivery system to ensure skills training are
more market-oriented. The implementation of the dual
training approach, adapted to the local context, will
ensure skills and knowledge of workers are constantly
updated to match the modern and sophisticated
production processes utilised by firms. This training
approach, which involves training at both the
institution and the work place, will contribute to the
increase in training opportunities for school leavers
and workers.
Education has been identified as an export industry and
important source of foreign exchange earning. In this
regard, private institutions of higher learning should
create their own niche areas in specific fields of
study and leverage on the promotion of Malaysia as a
regional centre of educational excellence. We will
introduce appropriate measures to promote competition
among local institutions of higher learning so that
they emerge as premier and highly reputable
universities at par with Cambridge in England, Harvard
in America and Waseda in Japan. Four education
promotion offices have been established to support
private sector initiatives in getting foreign students.
Increasing Effectiveness of Public Sector Expenditure
The Government will continue to adopt a prudent fiscal
policy during the remaining Plan period. Fiscal
discipline will be enhanced by applying strict cost
control. This is to prevent cost escalation and ensure
that development projects give returns commensurate
with the value of money spent. The purpose of
implementing development projects is to bring benefit
to people. While it can give good profits to the
contractors it should not cause a loss to the people as
in the case of the science laboratories.
In this connection, the Government will not show
leniency to contractors who fail to deliver their
projects on time and in accordance with the agreed
quality. The Government will not hesitate to terminate
the contracts of these errant contractors, blacklist
and prevent them from participating in future tenders.
This will ensure that only those with good track
record, credible and able to deliver are given the
chance to bid for Government contracts.
As a move to cap the rising cost of development
projects, the Government has decided that there will no
longer be direct negotiations for projects unless
absolutely necessary and only in exceptional
circumstances. Contracts for development projects will
be awarded either based on open or restricted tenders,
because there are now many good Bumiputera contractors
and they must compete with each other. To control cost
all projects must be referred to the Sub-Committee on
Standards and Cost.
85. Projects will only be implemented on a fast track
basis if time is of the essence. The number of projects
that will be undertaken using this approach is expected
to be reduced as we improve our planning capability and
implement two year budgeting system. For projects
undertaken using the design and build approach, we
will now require separate consultants for the design
and different contractors for the construction.
During the first three years of the Eighth Malaysia
Plan, as I mentioned earlier, the Government was forced
to take counter-cyclical measures to cushion the
effects of the global economic slowdown and sluggish
private sector activities. As a result of the
expansionary fiscal stance, 99.3 per cent of the
original Eighth Malaysia Plan development expenditure
ceiling of RM110 billion would have been spent by the
end of this year. The Government, therefore, intends to
increase the development ceiling of the Eighth Plan by
RM50 billion to RM160 billion. The increase means that
for the next two years, the average development
expenditure will be RM25.4 billion per year, that is,
equivalent to the annual level of development
expenditure prior to the economic slowdown.
During the review period, the fiscal deficit was
maintained at 5.5 per cent of GDP. We were fortunate to
have the fiscal flexibility to be able to adopt a
proactive fiscal stance to soften the impact of adverse
external conditions. This is because of our strong and
prudent economic management. The Government will
continue to maintain its deficit and debt within
sustainable levels. The fiscal deficit is expected to
decline to 1.8 per cent of GDP by the end of the Plan
period.
To optimise growth that can be generated from the
remaining allocation, in undertaking development
projects, the Government will require that these
projects maximise the use of local materials and
components, thus reducing leakages from the economy.
Projects that are selected will be those that bring
maximum benefits and have strong linkages with the
domestic economy so as to maximise the multiplier
effect.
Of the total revised allocation of RM160 billion, more
than 80 per cent is for the economic and social sector.
Education and training will receive the highest
allocation, accounting for 25 per cent of the total
development expenditure. The health sector will receive
5.9 per cent, housing 3.9 per cent and local
authorities and welfare services 5.0 per cent. The
major portion of the allocation for the economic sector
is for the development of infrastructure and utilities.
Enhancing Infrastructure to Support Economic Activity
The development of infrastructure and utilities will
continue to focus on enhancing accessibility to less
developed, recreational and potential growth areas.
During the review period, the Government expended
RM10.79 billion for the building of roads and bridges
projects. This included the Titi Karangan-Kupang
section of the Second East-West Link Road and the Pos
Blau-Kampung Kuala Betis section of the Simpang Pulai-
Gua Musang-Kuala Betis Road. Several road upgrading
projects were also completed such as the Brinchang
Lojing Road, the Beaufort-Sindumin Road and the Betong-
Kayu Malam Road. Consequently, the national road
network increased by 2,140 km to 75,160 km.
During the remaining Plan period, additional funds will
be allocated to expedite the completion of major road
projects, including the Simpang Pulai-Gua Musang-Kuala
Berang Road, Bentong-Kuala Lipis Road, Trans Eastern
Kedah Hinterland Highway, Kuching-Serian Road, Nangoh-
Kanibongan Road, Sepulut Kalabakan Road and Sipitang-
Tenom Road.
During the review period, efficient traffic management
systems were instituted to improve traffic flows in
urban centres, including the Integrated Transport
Information System in Kuala Lumpur and Klang Valley. In
addition, various measures were taken to improve the
efficiency, convenience and reliability of public
transport as well as encourage its use. The Government
also intensified efforts to create a more integrated,
efficient and multimodal urban transport system. The
number of passengers using light rail transit systems
in Kuala Lumpur increased during the review period. In
addition, the KL Monorail, which provides an 8.6
kilometre intra-city light rail network, commenced
operations in August 2003.
For the remaining Plan period, the Government will give
priority to ensure accessibility and seamless transfer
between the various modes of public transport,
especially in the Klang Valley. Multimodal public
transportation will be enhanced with the operation of
integrated transport terminals. Construction of
integrated terminals at Bandar Tasik Selatan, Jalan
Ipoh and Gombak at the fringes of Kuala Lumpur will
commence. The Sentul integrated Station will be built
with private sector participation and the Putrajaya
Monorail Line 1 will be completed. A Public Transport
Authority will also be established to plan, coordinate
and implement public transportation system in major
cities as well as ferry and other riverine
transportation.
During the review period, the Government focused on
promoting increased usage of local ports, especially
Port Klang and PTP by expanding capacity, upgrading and
increasing facilities of ports as well as improving
efficiency and productivity. Efforts were also taken to
improve other supporting maritime-related services. A
number of port related projects were completed, such as
additional berths at PTP, new basin at Kuantan Port and
additional container berths and yards at West Port. A
third LNG jetty was completed at Bintulu Port. The
Cabotage Policy was also reviewed with the aim of
encouraging the use of local ships to ferry passengers
and cargo between two or more destinations in the
country.
For the remaining Plan period, the Government will
intensify its efforts to promote Port Klang as a mega
hub and distripark as well as PTPand Senai air and sea
freight transhipment centres. At the same time, the
Government will also enhance the safety of maritime
navigation and reduce marine pollution by establishing
a Malaysian Maritime Enforcement Agency. A maritime
training centre will also be constructed at Pulau
Indah, Port Klang to complement the Malaysian Maritime
Academy. Other measures that will be implemented
include the installation of the Automatic
Identification System to monitor vessel movements in
the Straits of Malacca.
During the review period, airport capacity was expanded
with the commercial operation of two new airports in
Tawau and Bintulu and completion of upgrading works on
several existing airports. Flight safety was also
enhanced with the installation of navigational aids.
During the remaining Plan period, the Government will
continue to focus on measures to increase the usage of
existing facilities, expand capacity in specific areas
as well as improve the efficiency of services. Efforts
will be intensified to promote KL International Airport
(KLIA) as a regional aviation hub. This will include
attracting more international airlines to KLIA as well
as encouraging existing airlines to increase their
frequency. In addition, the international airports of
Kuching and Kota Kinabalu as well as airports in
Labuan, Alor Setar, Pulau Pangkor and Melaka will be
upgraded. A new airport will also be built in Pulau
Tioman to support its development as a duty-free island
resort.
In respect of rail transport, efforts were taken to
improve quality, efficiency and safety to passenger and
freight services during the Review period. During the
remaining Plan period, the Rawang-Ipoh Double Tracking
Project will be completed and this will reduce
passenger train travel time from Kuala Lumpur to Ipoh
from three and a half hours to two. The double
tracking from Ipoh to Padang Besar and Seremban to
Johor Bahru is also expected to begin before the end of
the Plan period. Keretapi Tanah Melayu Berhad will
further improve its freight service to enable it to
become a major regional intermodal transporter with
land, sea and air connectivity.
As for electricity, its generation capacity increased
from 14,291 megawatt in 2000 to 18,562 megawatt in
2003. This was to meet the growth in peak demand. The
rural electricity coverage also improved during the
review period, with coverage for Sabah increasing from
67.1 per cent in 2000 to 69.8 per cent in 2003 and for
Sarawak from 66.9 per cent to 77.3 per cent in 2003.
For the remaining Plan period, the energy subsector
will focus on ensuring sufficient and reliable supply
of electricity as well as optimal fuel mix in power
generation. The accumulated installed capacity is
expected to increase to 20,267 megawatt by 2005. The
rural electrification programme will be continued with
the implementation of about 850 projects. This will
increase the rural electricity coverage in Sabah to
72.8 per cent and in Sarawak to 80.8 per cent by the
end of the Plan period.
During the review period, the Government also continued
to take measures to ensure efficient management of
water supply. Several source work projects including
the Sungai Selangor Dam, Teluk Bahang/Batu Feringgi
Water Supply Project in Pulau Pinang, Kuala Jelai Phase
II and Sungai Terip Phase III water treatment plants in
Negeri Sembilan were completed, increasing total
national water production capacity by 12 per cent.
To ensure sustainability of water supply, the
Government will undertake efforts to improve efficiency
and rehabilitation of existing water supply systems,
and construct new source works. For this purpose, the
Federal Government with the agreement of the states
will assume a more active role in planning, managing
and coordinating water resource programmes in the
country. The development of water resources will be
undertaken with emphasis given to Integrated Water
Resources Management. A management information system
will be set up to integrate the databases of all water
supply authorities. In addition, the construction of
the Pahang-Selangor Interstate Raw Water Transfer will
begin before the end of the Plan period. The
multipurpose Beris Dam, in Kedah and the Jus Dam in
Melaka will be completed in 2004 while the Chereh Dam
in Pahang will be completed in 2005.
Development efforts in the sewerage subsector during
the review period focused on improving services through
the construction of new infrastructure as well as
upgrading and rehabilitation of existing systems.
Capital and refurbishment works were undertaken to
improve the quality of effluent discharged into surface
water bodies, thereby improving the environment. The
capital development programme for sewerage will
continue during the remaining Plan period. The
construction works for Phase 1 of the National Sewerage
Project will commence while the tendering process for
Phase 2 will be initiated. The projects under Phase 1
will provide an additional sewerage treatment capacity
of 979,000 population equivalent (PE) when completed in
2005. The Sanitation Commission will also be
established to formulate economic and safety
regulations to safeguard public interest and to promote
the development of sewerage and solid waste management.
The country has come a long way in the development of
its infrastructure, which is now almost at par with
many developed countries. The installation, operation
and maintenance of these facilities do not come free of
charge. They come at a cost. This cost has to be paid
either by the Government or the private sector. Truly
the Government does not have the funds to build all the
infrastructure for the people from taxes collected. If
we wait until the Government has the funds, then it
would take a long time for the infrastructure to the
built. Because of this the private sector will have to
invest. They will not invest unless they get a
reasonable return. Users must therefore be prepared to
pay a reasonable fee for the services rendered.
Nevertheless the Government will support to the extent
that it can. In fact the payment by Malaysian
consumers is very much lower than is paid by consumers
in other countries. For the good of everyone consumers
must accept the concept of "user pays". It is grossly
unfair if people who do not use are forced to pay
through several taxes for the good of the users.
Developing New Sources of Growth in the Manufacturing
Sector
The manufacturing sector will continue to face new
challenges arising from increased competition from
emerging economies. Despite being adversely affected
by external factors since the Asian financial crisis,
this sector has remained critical to economic growth.
In 2003, this sector will contribute about 30.6 per
cent of GDP, 83.0 per cent of total exports and 27.8
per cent of total employment. The Government adopted
various measures to minimise the adverse impact of
external conditions on the sector through stimulus
packages. The stimulus packages introduced during the
review period assisted this sector by improving access
to funding, providing tax incentives and enhancing
human resource development. Funds for training and
retraining were established to raise the productivity
and efficiency of the workforce.
Taking into consideration the external challenges,
there is a need to strengthen the manufacturing sector
and accelerate the shift to high technology and
knowledge-based industries. With regard to this the
Government will focus on reducing red tape, reviewing
work processes and streamlining procedures, in order to
create a business-friendly environment.
Several areas in the manufacturing sector have been
identified as having potential to be developed into new
sources of growth. The marine industry offers
opportunities in building and repairing ships, boats,
vessels, ferries, leisure crafts, yachts and the
development of other ancillary industries. The
machinery and equipment as well as the metal
fabrication industry will also be further developed.
The Bio-Valley project will be implemented to attract
investment in biotechnology-related activities. The
aerospace industry will be further developed with the
implementation of the National Satellite Programme.
The food-processing industry will focus on new market
segments including convenience food, halal food and
nutritional food in line with the changing lifestyle of
consumers. Manufacturing-related services such as R&D,
distribution, marketing, packaging, branding, designing
and prototyping that are important to increase value
added to the manufacturing products will also be
promoted.
To increase industrial productivity, including SMEs,
the Government will support the establishment of
trading companies ala Japanese "sogo shoshas" to become
the conduit for the marketing of Malaysian products
abroad. Local companies must be prepared to pay a
reasonable commission for this service, while the "sogo
shoshas" should provide the best service to the markets
and buyers abroad.
To raise the capacity and capability of SMEs, a broad
range of programmes will continue to be implemented to
ensure that they are reliable suppliers to lead
companies and their worldwide operations. In line with
the Small and Medium Industry Development Plan, SMEs
will continue to be provided with financial, managerial
and technical know-how. On their part, however, SMEs
must give up their lackadaisical attitude of business-
as-usual and take conscious steps to enhance their
competitiveness and productivity.
Revitalising Agriculture
The agriculture sector will be given a more important
role in the national economy. The sector grew by 1.5
per cent during the review period as a result of
increased output of palm oil and food commodities.
Agricultural export earnings rose by 26 per cent per
annum from RM 23 billion in 2000 to RM29 billion in
2003 supported by the higher prices of primary and food
commodities. The improvement in the export of food
commodities was a result of increasing investments in
large scale food production and improvements in quality
undertaken in the context of the Ministry of
Agriculture Incorporated approach. While the country
has yet to reverse its position as a net food importer,
it has achieved self-sufficiency in poultry and eggs
and near sufficiency in fisheries.
In the next two years, the agriculture sector is
expected to grow at a higher rate of 2.7 per cent per
annum. The growth of this sector will be derived from
the increased output of industrial crops, food
production and the contribution from new activities.
Fish farming or aquaculture has been identified as
having great growth potential. The Government will
intensify efforts to develop new infrastructure,
improvement in skills and technologies to promote
modern aquaculture. This involves the breeding of a
variety of marketable and highly demanded fish and
crustaceans. To support commercial scale fish fry and
related downstream fish farming activities, the
Government will accelerate the implementation of the
National Seedling Programme and Action Plan for
Hatchery Development. In addition, the Government will
provide support services to encourage investments in
the tuna industry by establishing four Tuna Regional
Development Centres in Johor, Pulau Pinang, Sabah and
Labuan. Other activities that will be promoted include
large-scale commercial cultivation of seaweed and
production of ornamental fish.
The government will also intensify efforts to develop
the potentials of biomass and biotechnology products
for domestic and export markets. Programmes to develop
speciality natural products such as herbs, spices and
medicinal plants on an integrated and commercial basis
will be accelerated. In addition, the National
Botanical Garden project will be developed as a
showcase for new investment opportunities in the
agriculture sector, apart from being a recreational and
tourist site.
In order to boost developments in the agriculture
sector, more effective enabling technologies will be
promoted. Among these will be the extensive use and
applications of ICT related technologies and adoption
of e-commerce. In this regard, the Agriculture
Technology-Industry-Government-Electronic Revolution or
the AgriTIGeR, aimed at enhancing productivity and
increasing competitiveness in the agriculture sector,
will be extended to more areas including Sabah and
Sarawak. Under AgriTIGeR, a cost-effective business-to-
business supply chain management application and a
portal called Agribazaar will be further developed.
The Agribazaar will function as an exchange gateway for
agricultural communities and traders to conduct online
transactions.
Apart from sustaining Malaysia's competitiveness in
palm oil vis-.-vis other oils and fats in the world
market, efforts are underway to develop the country
into a competitive food exporter. For this to be
successful, it would need to be underpinned by the
development of strong support services, including
access to business-related information and efficient
distribution channels.
The processing of local agricultural produce should be
made into a big industry. There is a need for this
sector to move up the value chain through greater
utilisation of knowledge and high-technology.
Labour out migration from the agriculture sector has
resulted in an aging agricultural workforce. To inject
dynamism back into the sector, more technicians,
professionals and entrepreneurs will be trained in
modern agricultural practices and skills. The National
Agricultural Training Centre will be entrusted to plan,
coordinate and evaluate skill-training programmes. The
provision of agricultural professionals such as soil
scientists, microbiologists, biotechnologists and
nutritionists will be addressed. This productivity
improvements will be achieved by promoting greater
mechanisation and automation, and adoption of labour-
saving technology.
Venturing into New Sources of Growth in the Services
Sector
The services sector continued to expand at an average
rate of 4.7 per cent during the review period. The
strong growth was largely contributed by the transport,
storage and communication subsector as well as the
finance, insurance, real estate and business services
subsector.
Education, tourism, Islamic finance, health, transport,
professional and consultancy as well as ICT-related and
manufacturing-related services will be further
exploited to realise their full potential so that they
can drive economic growth and contribute more
significantly to export earnings. The growth of these
service industries are poised to accelerate given that
most of the related infrastructures are already in
place. In an effort to promote these services, the
Government will undertake more effective and
coordinated promotion programmes.
Over the last few years, tourism has increasingly
contributed to foreign exchange earnings and the growth
of the other sectors. In 2001 and 2002, tourist
arrivals surpassed the targets set. In 2001, the total
number of tourist arrivals was12.8 million, exceeding
the target by 6.5 per cent. In the following year, the
number of tourist arrivals increased to 13.3 million
and exceeded the target by 10.8 per cent. Nevertheless
because of the invasion of Iraq and the outbreak of
SARS, tourist arrivals dropped by 31 per cent in the
first half of this year. However, I am happy to note
that in the past few months, we are already witnessing
an upward trend in tourist arrivals.
To realise the full potential of the tourism industry,
the Government will undertake measures to promote
domestic and international tourism and intensify
initiatives in tourism product development. Among
others, education, health, sports, agro- and eco-
tourism will be further developed to maximise the
potential of the tourism industry. Malaysia's unique
cultural heritage will be emphasised in the
implementation of these measures. To promote cultural
and natural heritage sites, efforts will be undertaken
to include Taman Negara in Peninsular Malaysia, Niah
Caves in Sarawak and the Maliau Basin in Sabah as well
as the Historic Inner Cities of Melaka and Pulau Pinang
as World Heritage Sites. Domestic tourism will also be
intensified through attractive value-for-money packages
in cooperation with the country's airlines. At the
same time, workers in the tourism industry will be
trained and equipped with the necessary skills to meet
the varied demands and expectations of the tourists.
Marketing and promotional activities will concentrate
on expanding the tourism market share by sustaining
existing markets and developing newly identified
markets. In this regard, we will send tourism
promotion missions to markets such as the Middle East
countries as well as China, India, Japan and United
States. The unique selling points of the tourism
industry will continue to be marketed based on the tag
line "Malaysia Truly Asia". To further enhance the
attractiveness of Malaysia as a shopping destination,
entrepreneurs will be encouraged to increase efforts to
obtain agency and dealership rights of new and emerging
international consumer products and brand names. In
addition, the possibility of establishing direct
international flights from selected cities will be
explored to facilitate access to duty free shopping
destinations in the country.
As part of efforts to increase tourist arrivals, more
event-related activities will be organised and quality
tourism products and services provided, based on the
uniqueness and strength of niche products. In
addition, the Blue Flag and Green Globe certifications
will be introduced to tourist sites. The Blue Flag is
awarded to beaches that meet international standards
while the Green Globe certification is given to eco-
tourism sites that adhere to environmental protection
and improvement.
Eco-tourism, agro-tourism and rural tourism will be
further developed to fully capitalise on the beautiful
scenery, peaceful countryside and flora and fauna.
Existing accommodation and attractions will be upgraded
and new ones developed. In addition, the
implementation of the "one district one industry"
programme will increase the participation of local
communities through handicraft industries and the
supply of handcraft products for tourists.
To promote the cruise industry, we will continue to
develop cruise centres in various parts of the country.
Towards this end, marinas will be built at strategic
locations such as in Pulau Pinang, Pulau Pangkor,
Klang, Port Dickson, Melaka and Muar, and cruise
terminals at Pulau Pinang and Melaka will be upgraded.
This will allow cruise ships and leisure boats to sail
to different sites of interest as well as enable
tourists to engage in more activities and stay longer.
In addition, existing jetties and passenger terminals
will be upgraded to ensure comfort and safety of
passengers especially in areas where riverine is the
main means of transportation, as in Sabah and Sarawak.
The availability of a sophisticated and efficient
health care delivery system, alternative therapies as
well as an attractive natural environment has
positioned Malaysia as an emerging health tourism
centre. In this regard, special tour packages with
health components will be introduced. To further
promote edu-tourism, efforts will be undertaken to
encourage private institutions of higher learning to
improve education facilities and services, expand the
curricula and enhance their teaching capabilities.
Promotional efforts will be intensified to attract more
foreign students to pursue their studies in Malaysia.
As sports tourism offers vast potential in attracting
tourists to the country, we will continue to hold
sports events and promote new sports for this purpose.
Tourism
As part of the efforts to encourage and finance tourism
operators to provide various tourism-related products
and services, the Government launched the Special Fund
for Tourism and Infrastructure in October 2002 with an
allocation of RM 400 million. In addition, the
stimulus package announced on 21 May 2003 had increased
the allocation for the Tourism Infrastructure Fund from
RM 200 million to RM 700 million to further enhance the
effectiveness of tourism programmes. Among the tourism
development strategies that will be pursued in the
remaining Plan period include engaging in product
development and promotion; enhancing human resource
development in the tourism industry; and encouraging
and facilitating domestic tourism.
Retail and Wholesale Businesses
Strategic steps will be taken to accelerate the
development of the retail and wholesale trade sector.
Local institutions of higher learning will be
encouraged to offer courses in distributive trade while
the Government will conduct specific courses in retail
trade at its skills development and training centres.
At the same time, consumer education will be continued.
The Consumer Claims Tribunal will be established in all
states during the remaining Plan period. An agency
dealing with the public as well as the service
providers and traders will be established at the state
level to address complaints filed by consumers against
service providers and traders.
Fair trade practices policy and legislation will be
formulated to promote healthy competition and prevent
anti-competitive behaviour such as collusion, cartel,
price-fixing and abuse of market power. This policy,
while increasing productivity and efficiency, will
promote the entry and participation of small
enterprises into the distributive trade sector. The
proposed policy and legislation will be implemented in
stages.
Hypermarkets will be encouraged to work with local
producers to source locally produced goods of high
quality at competitive prices. This will also provide
an avenue for domestic firms, particularly SMEs and
handicraft producers to market their products
domestically and overseas.
Bumiputera participation in the distributive trade
sector will be enhanced by conducting training
programmes on product quality standards, packaging,
branding and marketing. This will ensure products
produced will be of export quality and meet consumer
demand. Further efforts will be undertaken to improve
the programmes and activities of PROSPER. In this
context, business plan workshops and business
consultancy clinics will be conducted to assist, guide
and provide strategic direction to participants to
enhance the effectiveness of the programmes and
activities of PROSPER. In this regard, the development
of concept shops for lighting, laundry and dry
cleaning, home d.cor, mini market, sports shop and
automotive workshop for future replication will be
considered for implementation. Whether all these will
succeed depends on the willingness of Bumiputeras to
participate in this field. If they refuse then no one
should complain why there are no Bumiputeras in the
urban areas in Malaysia.
Since the introduction of Islamic banking twenty years
ago, we have made great strides in expanding its market
share of banking assets, deposits and financing,
reflecting its increasing prominence, consistent with
the Government's efforts to promote Islamic banking.
This has given the clients, whether Muslim or non-
Muslim to choose what system they prefer. At the end
of June 2003, the market share of Islamic banking
assets rose to 9.4 per cent of the total banking
assets.
Islamic finance, including Islamic banking and capital
market, will be developed as strategic niche market
segments. We will introduce more competitive and
innovative Islamic products as well as diversify the
product base through the mobilisation of untapped
Islamic assets. Initiatives will also be directed at
developing mutually beneficial strategic alliances with
other major Islamic capital markets to create
opportunities for both Malaysia and its partners by
enhancing the matching of the global pool of funding
sources from Islamic communities with Syariah-compliant
investment opportunities.
Sustainable Development
The path to sustainable living is a three fold process,
one that promotes the economic vigour of the country to
maintain higher living standards, another to ensure the
promotion of social justice and cohesion, and finally a
process that monitors and protects the environment to
prevent degradation. Accordingly, we will continue to
pursue sound management and development of our
environment and natural resources in order to
strengthen the long-term growth of the nation and
achieve sustainable development. Sustainable
development is an essential condition for long-term
economic growth and lasting improvements in our quality
of life. It may be seen as a need to create win-win-
win opportunities to simultaneously achieve economic,
social and environmental objectives.
It is also important to remember that it is not enough
to improve the quality of people's lives today; we have
to ensure that today's gains do not come at the expense
of constrained opportunities for future development.
Fortunately, as Malaysia built its economic
foundations, the concern for the environment and
sustainability was firmly rooted. Not only were a set
of guiding principles established to maintain a healthy
environment for human habitation, but also the need to
preserve natural heritage and take into account the
impact of population growth and industrialisation was
clearly recognised. By the mid-1980s, environmental
protection was already a key factor in the equation for
national progress. Among the many efforts to sustain
both economic and environmental soundness were actions
to minimise the impact of human activities related to
deforestation, urbanisation and tourism; emphasising
prevention through conservation instead of curative
measures; and incorporating environmental planning in
development projects.
The last decade has been characterised by the adoption
of the concept of balanced development, where apart
from economic growth, the protection of the environment
and Malaysia's natural resource base was given
prominence.
The rakyat, the private sector, NGOs and community-
based organisations have a critical role in these
efforts as partners and advocates, and in ensuring that
the nation's environmental and natural resource goals
are reached efficiently.
Improving Quality of Life
A major yardstick in judging progress of a nation is
the improving quality of life of the people. We in
Malaysia recognise that the people have the right to
benefit from development and the Government has the
responsibility of ensuring the overall conditions for
socio-economic growth.
We have concentrated our efforts in eradicating
poverty, improving the condition of the lower-income
group, providing opportunities for higher levels of
income, investing in education, health, housing and
other amenities, ensuring improved working conditions
and protecting the environment. There is truly no
reason for anyone to be poor in Malaysia. Whoever is
prepared to seize the opportunity provided by the
Government and God's abundant generosity should surely
enjoy a good life and earn a good income. But if we
ignore God's bounty and all the efforts of the
Government then outsiders will enjoy all the benefits.
The Malaysian Quality of Life Index, a composite
measurement based on 11 areas comprising 41 indicators,
registered an upward trend. This shows that the quality
of life of all Malaysians further improved in almost
all aspects following the Government's continued
efforts to implement programmes to increase income
levels and improve the provision of and access to
social services. But the Government will continue to
ensure that all Malaysians enjoy the benefits of
development through the provision of adequate and
quality social services.
Health promotion and disease prevention programmes
continued to be accorded high priority. The programmes
take into account the increasing affluence of society
and its sedentary and stress-filled lifestyles and
emphasised the promotion of a healthy lifestyle, better
nutrition, immunisation, safe drinking water supply as
well as food quality and safety. As part of the
preventive and promotive health programme, the thematic
lifestyle campaign focused on the practice of healthy
behaviour and food safety. The coverage and scope of
the childhood immunisation programme was further
improved. The National Food Safety Policy and a Plan
of Action were formulated to ensure the quality and
safety of locally produced and imported food. The
environmental health programme was also strengthened to
ensure a safe and healthy environment.
The health programmes has resulted in the life
expectancy at birth for males to improve from 70.3
years in 2001 to 70.5 in 2003 and that for females from
75.2 years to 75.4. The infant mortality rate improved
further from 6.3 per thousand live-births in 2001 to
5.7 in 2003.
During the review period, the provision of urban and
rural services was expanded to ensure that a greater
proportion of the population had access to enhanced
facilities for economic and social activities, and an
improved living environment. Housing and other social
services continued to be accorded priority. Measures
were taken to increase accessibility to adequate,
affordable and quality houses for all income groups.
Priority was accorded to the development of low- and
low medium-cost houses. The Government's Housing Loan
Scheme was reviewed to enable the low-income group to
own houses by increasing the amount of loan
eligibility. But we must remember that it is not
possible for everyone to own a house and they will
continue to rent their houses.
A total of 615,000 units of houses was targeted to be
built by both the public and private sectors during the
Plan period. At the end of the review period, three
quarters of the total units targeted for construction
were completed. Of this total, 339,854 units or 73.6
per cent were built by the private sector and the
balance by the public sector. In the low- and low-
medium cost housing categories, a total of 177,253
units or 48.8 per cent of the target was completed.
The issue of solid waste collection and disposal is
becoming increasingly important with the increase in
population. The Government recently completed a study
on a comprehensive approach towards solid waste
management. In addition, the privatised solid waste
management scheme was expanded with an additional nine
local authorities being included for the interim
collection of waste. A solid waste transfer station was
built in Kuala Lumpur to enhance the implementation of
an integrated waste management system. In this regard,
the National Campaign on Recycling was launched in
2001, and has been extended to 67 local authorities.
To avoid living in a mountain of rubbish the
cooperation of everyone is needed. The cost of
treating waste must be borne by the Government and the
people. If we wish to have the living standards of the
developed nations we must accept a reasonable standard.
Do not demand a standard that is higher than the
developed countries while refusing to pay for the same.
Landscape development activities were intensified to
provide additional leisure and recreational space and
to beautify the environment. Local Authorities
constructed 20 new public parks, while the 179 existing
parks were upgraded. Landscaping master plans were also
completed for six local authorities, namely, Johor
Bharu, Kuantan, Labuan, Langkawi, Seremban and Shah
Alam. During the review period, a million trees were
also distributed to all states for planting to enhance
greenery.
Government can provide the services and support. But
in the end the people themselves will determine whether
what is provided will benefit the people or not. It is
for this reason that an awareness campaign entitled
"Family First: Bring Your Heart Home" was launched at
the national and state levels. To assist families in
coping with the challenges and demands of daily living
as well as to improve family life, the Government has
approved the establishment of 29 Kompleks KASIH
Keluarga. Recognising that the family forms a
fundamental unit towards the development of a
progressive and caring society, emphasis will continue
to be given to strengthening the family unit.
The role of women has become wider because of their
willingness to acquire knowledge and to work. But
their role in bringing up their children is still
important. Lately we have been witnessing moral
collapse among school children. There may be other
reasons but poor upbringing at home must be one of the
reasons. Because many mothers work a way must be found
for the mothers to still play a role in the upbringing
of their children. Fathers too must play a role in
this and must show good examples. We do not want to
see the moral collapse in the west spread into our
country.
National Unity and Patriotism
Let me now move to an issue which is very important to
us. Ours is a multi-ethnic nation annd this can
destablise our social, political and economic
environment and affect the development of our country.
Incidentally there are not many opportunities for the
different races to mix and interact to enable
friendship to be formed. Their separation is increased
by the activities of extremist groups. If this trend
is not dealt with the peace and well-being of the
nation will be undermined. Because of this Government
has introduced the vision schools which will have the
National Schools, the Chinese schools and the Tamil
schools on one campus, so that the students can
participate in co-curriculum activities together. The
Government will also undertake various initiatives to
heighten the unity and understanding between the people
of different communities, cultures and traditions.
The Government has initiated various measures such as
Rukun Tetangga Programme for example to promote
harmonious living and caring. The concept of Rukun
Tetangga has been changed from neighbourhood watch to
community outreach. Its scope has been expanded to
include social outreach efforts that focused on
specific target groups such as the disabled, single
mothers and rehabilitated drug addicts with emphasis
given to capacity building, thereby enabling the
community to become self-reliant. Community empowerment
through the involvement of more professionals,
corporate citizens, government officers and pensioners
is being encouraged.
Mega Unity Programme was launched in May 2003 to help
bring communities together during the Unity Week.
Additional programmes will be implemented to further
enhance national integration between Peninsular
Malaysia, Sabah and Sarawak.
In 2004 National Services will be introduced so that a
number of Malaysian youths can be brought together and
undergo military training and social service. We
believe that the youth of different ethnic groups can
live together, train together, serve together and play
together. This will enable them to be exposed to their
respective cultures and they will better understand the
similarities and differences between them. With this
there should be less misunderstanding and tension
between them which can threaten the stability and
progress of the country.
Conclusion
The success or otherwise of a nation depends on the
citizens of that nation. If the citizens are diligent,
disciplined, in control of their feelings and are
prepared to face challenges and overcome obstructions
then that nation would be successful. The colour of
the skin, racial heritage, or natural resources are not
the most important factors, and certainly cannot
determine success. What determines success is the
culture or the value system which is accepted and
practised. That is why different races living on the
same country do not show the same success or failure.
Sometimes their achievements are extremely different.
In an increasingly interdependent world we cannot be
alone. We have to acknowledge that increasing
competition will be a permanent feature, especially
competition by countries with lower costs, which can
erode our strength in our traditional fields. In an
environment which is continuously changing, we have no
other choice other than to increase our
competitiveness, strengthen our resilience, and
increase our productivity and creativity.
The private sector must venture into new markets. This
requires a change in mindset from being comfortable
with traditional markets and to one that regards the
world as the market. We should make Malaysia the
gateway for products and services from other parts of
the world to the countries in this region. In
competing for the global market, we have to ensure that
our management practices are up to the highest
standards and we must uncompromisingly benchmark
ourselves against the world's best. We have to ensure
that our products and services are of the highest
quality and must be recognised by the world over as
such. For this we need to brand our products. We
would like to see more Malaysian branded products sold
in overseas markets. We want Malaysian firms to give
this aspect of marketing the utmost priority so that we
can gain from being active participants in the global
market.
We must never forget that national unity is our
greatest asset. In fact, it is the only asset that
makes it possible for us to enjoy the other assets that
the Almighty has showered on this land in abundance.
National unity in our multi-ethnic and multi-religious
country can only be maintained and strengthened if
there is a high level of understanding, tolerance and
mutual respect amongst our diverse peoples. We have
seen how many other multi-ethnic societies have failed
because each race places its own interest first before
the interest of the nation. If we are not careful we
too will fail and be destroyed.
We have to constantly and tirelessly work to strengthen
national unity and take immediate action to curb
tendencies that could work against the national
interest. No one should have a narrow view point and
accuse the Government of trying to destroy the culture
and language of any race. In reality it is only in
Malaysia that the interests of all races are
safeguarded and financed by the Government.
We must be prepared for any challenge that comes our
way. The Government on its part will provide the
leadership and the requisite resources. It will
conduct extensive consultations in formulating
strategies to face new challenges as, or even before,
they arise. The people, on their part, must remain
united and fully supportive of all measures that the
Government undertakes. It has been my pleasant
experience during my tenure as Prime Minister to find
all Malaysians rallying together in the face of a
crisis. This uniquely Malaysian characteristic must be
maintained at all costs and should never be sacrificed
in the interest of expediency of parochial self-
interest or political opportunism. As I retire from
the nation's highest elected office, I call upon every
Malaysian to rise to the occasion to face the
challenges as they emerge and shoulder the
responsibilities of citizenship. If we do this, there
is no reason why we cannot continue to be successful
and make this country a model for the world to emulate
Malaysia Boleh.
Sumber : Pejabat Perdana Menteri
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