Oleh/By		:	DATO' SERI DR. MAHATHIR BIN MOHAMAD 
Tempat/Venue 	: 	THE HOLIDAY INN KUCHING, SARAWAK 
Tarikh/Date 	: 	15/12/86 
Tajuk/Title  	:	THE OPENING OF THE 40TH. ANNUAL DELEGATE 





 There is no denying that the Chinese community has played a very
significant role in the development of the economy of this country,
Malaysia.

2. From the very beginning they have been the traders and the
entrepreneurs and it is because of their diligence and their skills in
business that today we find Malaysia as one of the better developing
countries in the world.

3. Unfortunately, of course, our economy is based on the export or our
primary commodities to the rest of the world. Today we are facing the
recession because of the fall in prices of most of the commodities we are
exporting. What we earn from the export of the commodities have a direct
bearing on the domestic economy of this country.

4. Indeed we can almost say that this country is 100% dependent on the
export of commodities because it is from the profit that we have made
through the export of commodities that we re-invest or we expend within
the country which creates the demand and supply, which are so necessary
for keeping an economy going.

5. When a person sells rubber or tin, or palm oil and makes a profit, and
subsequently spends the money within the country, whether it be buying
consumer goods or buying houses or indeed spending money on food and
drinks and entertainment, the facts remain that every time he expends the
profits that he gained from abroad, somebody else within the country
stands to benefit.

6. Therefore, it follows that when the export activities decrease, as is
happening now, our earning from our export becomes very much lower and has
a definite and direct effect on the domestic economy of this country. That
is why when prices of commodities go down as it has done now we see the
effect on the domestic economy, we see a fall in demand for housing, a
fall in demand for consumer goods, motor vehicles, etc., which of course,
affects the earnings and jobs of a whole lot of other people who are not
directly involved in the export of commodities. Faced with these, we have
to think of how to overcome this problem cause by the fall in commodities
prices. We can sit down and cry, we can blame the Government or blame a
whole lot of other people, but what remains is that if we want to recover
we have got to understand the working of our economic system and we have
to make use of the different sectors of our economic activities in order
to regain our economic health.

7. This country has grown prosperous on a very traditional way. In the
past, all the big companies were owned by individuals, they were basically
family companies. We find that family companies have limited capacity to
expand and we have, therefore, adopted the western system of public
limited companies.

8. But the public limited companies require different kinds of
management. A private company involves managing money that belong to us,
but a public limited company involves managing money that does not belong
to us.

9. And unless we know how to manage funds that do not belong to us, unless
we have definite good ethics in the management of these funds, we are
going to get into trouble. If we misuse the funds as has happened now we
find that we are in greater trouble whenever trouble comes to us. In other
words, during a period of recession that is when all the bad practices
come to light and today we are seeing a very disturbing picture where
public funds have been misused by irresponsible people. If we are going to
recover, it is very necessary that we learn to have some ethics in the
managements of public funds. We learn to have a sense of responsibility
and we have to accept that in the management of funds that do not belong
to us we must submit to certain set of rules, certain ethics.

10. The Government does not want to interfere in the private sector. It
does not want to be involved in the companies and their
problems. Basically, the Government is here to keep law and order. To keep
law and order we need to have an administrative machinery, that must be
financed through the collection of taxes.

11. Therefore, the Government's only concern really is to collect taxes
and to maintain law and order and if we can do this alone, we could be
quite happy. Unfortunately, we have to be involved in overseeing a whole
lot of things which before we not be responsibilities of the
Government. We talk a lot about de-regulation.

12. The Government would like de-regulate but it can only de-regulate if
the private sector is willing to regulate itself. There should be
institution to oversee the workings of the different sectors of the
economy.

13. If we are going to have a stock exchange, then the management of that
stock exchange must be responsible enough to ensure they work properly,
that there is no mismanagement, no misappropriation of funds, etc. If it
fails to do that, then the Government is really not competent to do.

14. On the other hand if we do not regulate, then public funds will be
misused.

15. Therefore, if the people of this country do not want interference by
the Government in their affairs, then they must manage their affairs
well. they must set up standards, they must have proper ethics, they must
have bodies which supervise and willing to impose the rules and to punish
those who break the rules. If they don't do that then the Government would
no choice to move in and in it very clumsy way tries to do the right
thing. Of course in so doing we expose ourselves to all kinds of practices
which we have no right to involve in. Whenever we give authority to anyone
including the civil servants, we are exposing them to temptations. It is
better that we don't expose them to temptations if we can. Therefore, I
would like everyone, including the Chambers of Commerce to consider that
in a new environment where companies and managers are expected to manage
not their own funds but money belonging to the people, they must adopt
every responsibility attitude and not misuse funds in any way.

16. We have heard a lot of shortage of fund, about high interest rate
etc. We realise, of course, that high interest rate stands in the way of
greater investment and economic activities.

17. We have been trying to push down interest rate but this, of course, is
not very easy when a lot of people have kept their money in fixed deposit
at fixed interest rate in banks and banks are very reluctant to reduce
interest rate because they are committed to paying the people who have
deposited money with them at high interest rate. How this can be overcomed
will have to be worked out by us all.

18. I am very glad to hear the two-prong strategy that you have
initiated. You would like to see a reduction in domestic expenditure. The
government has done so, indeed the government has proposed measures that
have cause a lot of unhappiness among the people who work with the
government.

19. We are now being thrashed by our own employees not to impose too heavy
a burden on them. We have no desire to impose a heavy burden on them but
we do have to reduce our expenditure. We have to reduce our expenditure on
development, for example, in order to cut government expenses.

20. But this must have a reflection on the economy of the country. If we
do not spend money it follows that the private sector will not get money
also.

21. For example, if we have a plan to build a road, obviously somebody
will win a contract to build a road, somebody is going to get a job, work
on the road. The suppliers will get some profit for themselves and
everybody will benefit all round including the hawkers who will be selling
the food to the workers. So every time the government spends money
everybody gains from the expenditure. When we say we should cut back on
the government expenditure we are starving the community of the necessary
jobs and contracts and they will feel the pinch, they will have no access
to money, they will suffer and when they suffer, of course, the community
will also suffer.

22. There is, therefore, only a limited amount of cutback we can make. We
have tried our level best to reduce the government's expenditure. For
example, many of the projects that we have planned for this country have
already been shelved or indeed have been cancelled entirely. This will
have a bad effect on the economy itself although this means that the
government needs to collect less taxes. We have to accept the fact if we
want to cut back on the government's expenditure then the private sector
will have to pay a price also.

23. If the private sector and the people of this country are willing to
cut back on their personal expenditure, to live within their means, then
it is quite alright for everybody to cut their domestic expenditure.

24. If we dont's go to the shop to buy luxury goods instead of which we
buy local products then perhaps we will be stimulating the local economy.

25. But, of course, the man who sells the luxury items will suffer,
somebody will have to pay a price. Nevertheless in term of the total
domestic economy such a move to cut down on domestic expenditure would be
beneficial. We should be willing to have a standard of living slightly
lower than we are used to.

26. The per capita income of Malaysia during the prosperous day went up to
US$2,200 27. Now because of the shrinkage of the economy as well as the
depreciation of the Malaysian ringgit, against the American dollar, the
per capita income has gone down to US$1,500 per head, which means that we
have to live as people with that amount of income. We have to cut back on
our normal expenditure, among which of course we need to cut back the
consumption of imported goods as proposed by your Chamber of Commerce.

28. I heartily agree with this approach. I think that would be a very good
thing if we can cut on the expenditure on our purchase on imported goods.

29. One item, I would like to mention in particular is the Malaysian's
urge to travel abroad. Among developing countries, Malaysia has got a very
big quota of Malaysians travelling abroad.

30. Most developing countries do not export their tourist, they are busy
entertaining tourists from other countries in their own country. But
Malaysians travel abroad extensively every year and it cost us a lot of
money, a lot of foreign exchange out flow because of the desire to go
abroad. We should, therefore, be willing to spend our holidays in the
beautiful resorts that we have built in our own country. That way we would
not only be helping our business community but actually be contributing
towards the economic health of this country. So along side our desire to
cut back on the consumption of imported foreign goods, we should also
reduce our travelling abroad.

31. Domestic tourism should be encouraged because in actual fact a lot of
people find Malaysia an extremely interesting country that has all the
amenities. It has some of the best resorts of international standard or
even lesser standards to cater for some people who cannot afford
international standards.

32. There is no reason why we should not expend our money within the
country. In this respect the government would like to see more people from
the Peninsular travel to Sabah and Sarawak dan spend their money here and
more people from Sabah and Sarawak travel to the Peninsular and spend
their money there.

33. That is why the goverment has subsidized the ferry service to the tune
of $6 million a year in order to enable Sabahans, Sarawakians, and as well
as Malaysians from the Peninsular to travel to each other's place.

34. As to greater export, we would like to see this to happen. We entirely
agree with the ACCCIM to improve our export volume. However, we cannot
rely anymore on the export of commodities. We need to export manufactured
goods. We find that for some reasons or other, anything that is Malaysia
costs more.

35. Yet our neighbours, particularly our neighbours just north of us are
able to produce the same goods at almost half the price. May be, it is
because their labour cost are low but I think there are just more than
just labour cost involved when they can export the same product that we
manufacture at half the price.

36. We have to learn from them as to how they manage to cut down on their
cost so as to be very competitive.

37. Whenever we have someone proposing to manufacture anything in
Malaysia, the first thing they ask is for the Goverment's protection.

38. Well, we are not against giving protection but protection has resulted
in continuous inefficiency. For example, there is not attempt made to
become more efficient and to export what we have manufactured.

39. Other countries protect their manufacturers, but they protect their
manufacturers only to the extend of the goods that are sole within the
country. These people are also expected to export their manufactured goods
to other countries so that they will earn foreign exchange. For doing that
their domestic market can be protected.

40. We find that in Malaysia some people manufacture for the domestic
market and never made any attempt to export what they produce. Of course,
what they produce for export is exempted from excise duty which should
enable them to sell their goods cheaper abroad but some how or other they
have not been able to achieve the kind of prices that will make their
products competitive against products from other countries.

41. We would like of course to review import duties on certain items but
there is not much that we can do to tax our Malaysian consumers.

42. We cannot penalise our Malaysian consumers because our industries are
inefficient.

43. If you want to be protected, you must make every attempt to reduce
your cost as quickly as impossible so that no protection would be
necessary, so that the goods that we produce here would be cheaper than
the goods imported.

44. But we cannot expect Malaysian produced goods to be protected
forever. This is not fair to the consumers because every time we protect,
the manufacturers for the domestic market, it means that the consumers
will have to pay a higher price for what they buy.

45. They are the victims of any attempt made by us to provide protection
for our own domestic producers.

46. I do hope that while on one hand you ask the Government to review the
import duty in order to give protection whether by industry or on
individual basis we do hope that attempts would be made to become more
efficient so as to do away with protection.

47. If over the years, no attempt is made to reduce costs then you do not
deserve really to have the protection. Cost can be reduced not only
through lowering or through reducing labour cost but management too must
be very responsible and try to reduce their costs.

48. We find that management sometime make no attempts to reduce their own
costs and to improve their techniques or technology to enable their
products to be competitive.

49. This is not something the Government desires or wish to see. We would
like our industries to gradually improve their efficiency so that they can
reduce their costs since cost has very direct relationship with
volume. The only way you can obtain a very big volume is to try and
export.

50. Initially you may lose money, but once you have built up a market with
sufficient volume, then you may be able to reduce your cost. Therefore, if
you ask the Government to review import duty, you must also demonstrate
that you are capable of reducing your own cost.

51. When you do that and you are able to export some of what you produce,
then you really deserve to be protected. We will of course contribute
towards improving the economy of this country.

52. As I said just now, we have no wish to regulate the economy of this
country. We would like to deregulate.

53. Your are asking us not to be rigid. That is easier said than done. We
would like to be flexible but who is going to exercise flexibility? A
Government officer cannot be flexible. The reason is that if he is
flexible, then he may be accused of doing something that is not right,
that he may be subjected to corrupt influences or corrupt practices.

54. Why does he gives to someone some leeway to do something which are not
provided for under the regulation? Therefore, Government officers tend to
be rigid.

55. It is only when they exceed what they are supposed to do that we can
correct them. If they do exactly what is expected of them and this may be
regarded as rigid by some quarters, it is very difficult for us to stop
them from doing so.

56. In addition, of course, we may appeal to the higher authorities, we
may even appeal to the politicians. But politicians are also equally wary
of making flexible decision because they too might be accused of
corruption. So the situation is a very difficult one.

57. It is not easy for someone to be flexible because he may subject
himself to all kinds of accusations about his own honesty.

58. So you would have to bear with this. But you would have to improve
your own performance in order to overcome whatever regulations there may
be.

59. With regard to Malaysia incorporated, as you know, I have discussions
with you committee and we have listened to the views and suggestions.

60. The Government is taking a serious revision of ideas with regard to
how we handle our relation with the private sector. We would like to see
greater cooperation between the private sector and the Government and this
will certainly be done as much as we can, accomodate whatever specific
proposals that you may make.

61. I would like to thank you very much for giving me this opportunity to
speak my mind to a group that is very important to the economy of this
country. We have the NEP. I am glad to hear that you support the NEP. Of
course the NEP is based on an attempt to help all the different races
develop equally.

62. But sometimes we have to give some stimulus to some of the people who
are left behind.

63. That must be accepted. I would like to see greater attempts by the
people who are much more capable in the field, greater attempts on their
part to help their colleagues and the help must be genuine.

64. We find far too often that in order to fit in with the NEP, names are
used of people who will not do anything at all other than lending their
names. This is not helping the NEP.

65. We would like genuine co-operation between the races. As you may know,
I have suggested that the Chinese Chamber of Commerce and the Malay
Chamber of Commerce get together.

66. The suggestion was made by me several years ago. I am sorry that up to
now we have not really seen anything concrete. I am serious about this and
I hope that there will be serious attempts on your part as well as the
Malay Chamber of Commerce to come together and work together. I do hope
that one day it would not be necessary for us to have chambers of commerce
based on race. Once we have a chamber of commerce no longer based on race,
then, of course, there will be no need to talk about racial aspects of the
economy since everybody will be represented in one single chamber.

67. At the moment we have co-operation through the national chamber of
commerce, but that co-operation is still very much in the early stages.

68. We would like to see all the chambers of commerce downgrade their own
activities and upgrade the activities of the national chamber of
commerce. We hope to hear from you various ideas in order that the
Government will be able to help stimulate the economy once again. We have
our own plan and own ideas, but all the best plan in the world will not
succeed unless we apply ourselves to implementing the plan properly.