Oleh/By		:	DATO' SERI DR. MAHATHIR BIN MOHAMAD 
Tempat/Venue 	: 	REGENT HOTEL, KUALA LUMPUR 
Tarikh/Date 	: 	22/01/92 	
Tajuk/Title  	: 	THE OPENING CEREMONY OF THE TWENTY-
			SEVENTH CONFERENCE OF GOVERNORS OF 
			SOUTH-EAST ASIAN CENTRAL BANKS 




 
    On  behalf of the Government of Malaysia,  I have great
pleasure in extending to you a  very  warm  welcome  to  the
Twenty-seventh  Conference  of Governors of South-East Asian
Central Banks or SEACEN in Kuala Lumpur.   I  am  told  that
this  gathering  of SEACEN Governors is one of the few long-
standing and successful vehicles of regional co-operation of
its kind in the world  and  I  am  proud  that  Bank  Negara
Malaysia  is  an  active  partner closely involved with this
group.  I am a firm believer in regional co-operation,  par-
ticularly among like-minded countries, as a means of promot-
ing  beneficial  exchanges  which contribute to the economic
growth and well-being of member countries.    Your  presence
here for this conference is, I believe, a testimony that you
share  the  same sentiment.   It is my sincere hope that the
SEACEN Governors and their guests,  through  their  deliber-
ations  today  and  in  the  next  two  days,  would further
strengthen the bonds of co-operation  and  friendship  among
their institutions and countries.
2.   In  1991,  we  saw the growth of world output and trade
decelerating for the third consecutive year.  In particular,
economic activity in the industrial  countries  slowed  down
significantly,  with  output  declining and unemployment in-
creasing in many  countries.    Current  prospects  for  any
strong  recovery  in North America and in the United Kingdom
are not encouraging.  Risks of continuing weak economic  ac-
tivity  remain, due largely to the low level of business and
consumer confidence.  Recent policy easing  by  the  Federal
Reserve  Board  offers some hope of a recovery in the United
States this year, but all indications are that it is  likely
to  be  mild.    Economic growth in Japan and Germany is ex-
pected to moderate to more sustainable levels, but  new  un-
certainties  have  since emerged, leading to the possibility
that the slowdown in economic activity may turn  out  to  be
more  severe  than expected, with detrimental effects on the
global economy.  These developments have generated  concerns
for the continued growth of developing countries, since they
are  highly  dependent  on  export markets in the industrial
countries.  They underline the growing  need  of  developing
countries  to  become more self-reliant and reduce their de-
pendence on industrial countries in charting their  economic
future.   It seems to me that developing countries will have
little choice except to accelerate South-South  co-operation
in  the  fields of trade and investment if they wish to con-
tinue to enjoy sustained growth.
3.   Concerns have also been expressed in the past  year  or
so by both developed and developing countries about the pro-
spective  shortage  of global savings.  There will be an in-
creasing demand for world savings, particularly  to  finance
structural  reform  in Eastern Europe, the economic unifica-
tion of Germany, the debt problem of many  developing  coun-
tries,  the post-war reconstruction of Iraq and Kuwait, and,
very likely, prospective reforms in the Commonwealth of  In-
dependent  States.    Developing  countries  also still need
large amounts of funds for development.  These factors,  to-
gether  with  investment  demand in the industrial countries
arising from their need to improve productivity and maintain
or improve their living standards are expected to put upward
pressure on international interest  rates  over  the  longer
run.    This would exacerbate the debt servicing problems of
developing countries and force them to curtail growth.  This
prospect underscores the importance and urgency of arresting
the  decline  of global savings.   It is imperative that the
industrial countries implement policies that  will  increase
savings  so  that  international resources and capital stock
can increase.
4.   The situation in the heavily indebted developing  coun-
tries  remain  extremely difficult, with the prospect of re-
gaining  external  viability   remaining   elusive.      The
persistent  global  debt  problem continues to undermine the
success of the adjustment  programmes  of  developing  coun-
tries,  and  their ability to attract foreign direct invest-
ment and external financing.    Moreover,  the  slowdown  in
global  economic  activity  has led to a weakening of export
markets, with falling commodity  prices  contributing  to  a
further  deterioration in the terms of trade of primary pro-
ducers.  There is a pressing need for  further  debt  relief
for countries willing to undertake economic reform.  Further
progress  in  extending  debt  relief along the Trinidad and
Tobago terms, most certainly merits greater attention.   The
successful  resolution  of  the debt problem also requires a
freer international trading environment to enable developing
countries  to  realise  their  export  potential,  and   the
adoption  by  industrial  countries of appropriate macroeco-
nomic and structural adjustment policies, so  as  to  induce
sustained growth with low inflation, and stable exchange and
interest  rates.    External  financing  flows  in  adequate
amounts and in a timely manner are no less important.
5.   Given the outward orientation of our economies, the ma-
jor challenge facing us in the 1990s will be to ensure  that
international  trade  is  carried out in an open and compet-
itive system.   Protectionist measures have  increased  sub-
stantially  and  are  a  major  threat to the future trading
environment.   Increased protectionism has  also  tended  to
discourage  investment  in export sectors and reduce the re-
sponsiveness of trade flows to prices.   Of growing  concern
also  is  a discernible trend towards the linking of totally
unconnected issues, such as human rights  and  environmental
matters,  with  trade.    There  is a belief among developed
countries that by forcing the poor to  become  poorer,  they
will show more respect for human rights and spend more money
on  the environment.   In fact it is poverty which brings on
repressive and insensitive Governments.   A  freer  interna-
tional trade environment will enable developing countries to
expand  their  exports  and, thereby, increase their incomes
and standards of living.  They can then afford  to  be  more
liberal  and  to care for their environment.  The successful
conclusion of the Uruguay Round of multilateral trade  nego-
tiations are therefore very urgent.
6.   Turning closer to home, I must highlight the fact that,
generally,   the   strong   outward   orientation,  external
competitiveness and relatively low level of indebtedness  of
the SEACEN region have contributed to its economic dynamism.
Moreover,  our  region  is blessed with abundant natural re-
sources and a  hard-working  workforce  motivated  by  aspi-
rations  to  achieve  a  much higher standard of living than
previous generations.  Given the growing  economic  interde-
pendence, it is rational that we move toward pooling our re-
sources and sharing regional markets.  Regional co-operation
in our part of the world, therefore, holds vast potential to
further  enhance the dynamism of our economies.  First, sus-
tained economic expansion in the region will insulate us  at
least  partially  from the vagaries of the external environ-
ment.  Second, greater trade among ourselves will enable  us
to  reap  the  advantages  of large-scale production, create
greater mutual interdependence and accelerate  the  pace  of
industrialisation.
7.   As  a  government,  the  ultimate objective of economic
growth must be to eliminate  poverty  and  to  raise  living
standards.    Unfortunately,  we live in an imperfect world,
and the art of economics, even though many in the profession
still prefer to call it a science, has not yet been able  to
find a satisfactory way to measure the standard of living of
nations, especially across countries.  Often, the income per
capita  denominated  in  United  States dollars is used as a
convenient proxy -- indeed, to the extent that many, includ-
ing politicians and professionals who  should  know  better,
regard them as synonymous.  The use of per capita income for
any  purpose is fraught with limitations.  What is perfectly
clear is that it is a poor approximation  of  domestic  pur-
chasing power.  We all know that the same McDonald "Big Mac"
hamburger  in  Kuala Lumpur is about 3 times cheaper than in
the U.S. and 5 times cheaper than in London.    Furthermore,
per  capita  income pays no attention to improvements in the
quality of life, arising  from  improved  health  care,  re-
duction  in  income inequality, increased access to housing,
education and other social amenities, higher life expectancy
and lower infant mortality, and a cleaner environment.    On
each of these, we have made rapid progress.
8.   The  American dollar is not a stable currency.  When it
appreciates against the ringgit, our per capita  goes  down.
When  it  depreciates our per capita goes up.  To complicate
matters the dollar may depreciate against  the  ringgit  but
the  yen might appreciate.  Then as a country which does 25%
of its trade with Japan, we will find our per capita  higher
but  we will have to spend more money to buy Japanese goods.
With fluctuating exchange rates which in many instances  are
totally unrelated to economic performance, per capita income
in U.S. dollars really measure nothing.
9.   For  Malaysia, our living standard needs to be assessed
beyond just the per capita number.  We intend to  make  fur-
ther  progress to become a developed nation by the year 2020
in the broadest sense of the  term,  that  is,  politically,
economically, socially, spiritually and culturally.  That is
to  say, we want to be considered beyond sheer economic num-
bers -- our record will reflect the maintenance of political
stability, progress in social justice,  enhancement  in  the
quality  of life, and the strengthening of ethical and moral
values.
10.  Perhaps, Governors present may want  to  pick  up  this
challenge  to  develop  for  SEACEN a sensible yet practical
measure of living standards across countries, so that we are
in a better position to evaluate our  own  achievements  and
weaknesses, and others, too, will be better placed to assess
our  progress  and performance in the world community of na-
tions.  To the extent that you succeed, you would have  made
a  positive contributions to how the world can better under-
stand national aspirations and, for  that  matter,  how  the
world  should  look  at  itself,  thereby  ensuring that the
fruits of economic progress are always measured in terms  of
the economic and social welfare of the peoples of nations.
11.  Honourable  Governors,  distinguished guests, delegates
and observers, I hope your deliberations would  be  able  to
bring about a better understanding of the complex issues and
challenges  facing  our  world and help you to find sensible
solutions to the problems that  plague  the  world  economic
system.  Although you have a sizeable agenda to cover in the
next  few days, I am pleased to note from the programme that
you will have some time to visit Langkawi and Penang in  the
northern  part  of the country.   I hope you will enjoy your
stay in Malaysia and come back again.
12.  Finally, in the spirit of the true co-operation, under-
standing and friendship among the South-East Asian  nations,
I  take  great pleasure in declaring open the Twenty-seventh
Conference of Governors of South-East Asian Central Banks.