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Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : MANILA
Tarikh/Date : 23/11/96
Tajuk/Title : THE CLOSING OF THE APEC
BUSINESS FORUM
1. Let me first thank the APEC Foundation of the Philippines
for giving me the opportunity to address this important
gathering of top Chief Executive Officers (CEOs) from the Asia-
Pacific economies. I am confident the discussions you have
had over the past two days will yield positive business
outcomes in the coming years.
2. On the eve of the APEC Leaders' Meeting in Subic, allow
me to share with you some of my thoughts on APEC, and in
particular the role of the private sector.
3. To begin with, let me say a few words about APEC so that
we have a clear understanding of what it is and what it is
not. There are some key points about APEC which must be borne
in mind.
APEC is:-
* a voluntary process which depends on unilateral
contributions of members;
* it operates on the basis of consensus and
with minimum institutional infrastructure;
* it believes that liberalisation works most
effectively when supported and facilitated by
economic and technological cooperation;
* it is the product of a unique style, where
consultation and moral suasion count for more than
legal contracts and litigation;
* it is founded on open and complementary
interaction within itself and with the rest of the
world; and
* it is an association of countries with great
disparities in sizes and stages of development.
4. Over the past decades, the economies of the Asia Pacific,
especially East Asia although different in terms of stages of
development have registered growth rates higher than other
regions. There are many reasons for this but all believe in
economic development as of prime importance for giving meaning
to their national identity and independence.
5. APEC members have, on the average, been growing at 7.6
per cent per annum; well above the world average. This
average of course means that some are growing much faster.
But since we did not have the same starting point, the growth
in absolute terms cannot really be gauged from the figure I
have mentioned. Economic performance can only be compared on
a basis of Purchasing Power Parity for this reflects more
accurately the true wealth of the nation and the people. This
fact must always be borne in mind.
6. Trade within the region has expanded dramatically by
about 87 percent in the last five years. The region produces
44 percent of the world's exports. Growth in investment has
also been significant. The dynamic growth of Investment has
been influenced by several factors such as the globalisation
strategy of multinationals as well as the unilateral
deregulation and reforms to facilitate capital flows by APEC
countries.
7. Underlying these developments is the significant move
towards liberalisation and market opening measures adopted by
a majority of the member economies. Although varying in speed
and intensity, there has been a broad move towards unilateral
liberalisation across economies, which began sooner in the
developing APEC economies, as well as in Australia and New
Zealand, than in the rest of the world. Unilateral
liberalisation has occurred up to and following the completion
of the Uruguay Round and other sub-regional trading
arrangements in the Asia Pacific region. In fact, dynamic
interaction and synergy have been characteristic of
liberalisation on the unilateral, regional and multilateral
fronts. However, it would not be realistic to expect a
standard rate of liberalisation by all member countries,
regardless of the stages of their development.
8. I have noted that in recent years, APEC's work programmes
have focused more on liberalisation and facilitation of trade
and investment. The Seattle, Bogor and Osaka Declarations
have all been crafted with the single purpose of
liberalisation and facilitation in mind. I have no problems
with trade liberalisation per se. Indeed in Malaysia, we are
committed to liberalisation and deregulation, and are moving
in this direction at a pace that is commensurate with our
level of development. Also, we have always been a very open
market giving access to goods from all countries including
those which discriminate against us. My concern however is
with the manner and pace at which the market liberalisation
measures are being pursued in the APEC process.
9. APEC as I have pointed out comprises economies at
different levels of economic development and income scale. It
has some of the world's most developed members on one side and
the very early developing members on the other, with very wide
income gaps between them, not to mention the size of the
economy due to population size. Under such circumstances, it
would be unrealistic and grossly unfair to coerce particularly
the less advanced member economies to undertake liberalisation
measures at a pace and manner beyond their capacity. While we
recognise the pursuit of liberalisation will be good for all
of us, it should nevertheless be approached carefully so as
not to cause dislocation or disruption to industries which are
at different stages of development. An approach premised on
progressive liberalisation and flexibility will help assure
the sustained growth of these economies, thereby enabling them
to positively contribute towards the liberalisation process.
Further, programmes and projects to enhance the level of
development and redress economic disparities of the less
advanced economies in the region are also crucial. APEC must
never result in poor member countries becoming more and more
dependent on richer members. Indeed APEC must through joint
efforts enrich the poor countries and enable them to
contribute towards the wealth of the Group.
10. With this in mind, I am concerned that development
cooperation which constitutes a very important pillar of
cooperation in APEC has not been given the attention that it
deserves. It has always taken a back seat to market
liberalisation and facilitation of direct wholly-owned FDI.
This is unhealthy and must be corrected. For one thing,
liberalisation alone will not succeed if it is not accompanied
by development cooperation, as the two are interdependent and
mutually reinforcing. In order for the developing economies
to be able to undertake liberalisation on a continuous basis,
it is important for the developed partners to assist the less
advanced members to enhance their economic capability and
capacity; in other words to enable them to enrich themselves
through their own independent efforts.
11. The `APEC community' that is envisioned will only come
about if members could display willingness and readiness to
enhance development cooperation. The diversity of the APEC
region indicates the need for care and ingenuity to achieve
substantial development cooperation. Opening up the market of
the rich to the poor is meaningless, if the poor has nothing
to sell. But on the other hand, opening up the market of the
poor to the rich, small though the market may be, is
economically more meaningful. Direct foreign investments
which can help enrich a developing country should therefore
precede market opening and the giving of national status to
foreign companies. Only when the poorer economies have
developed into exporters of services and goods and
beneficiated raw materials can they be considered ready to
liberalise their markets.
12. As with liberalisation where we have individual and
collective action plans, in development cooperation too, we
need to have a detailed blue print outlining concrete action
plans. In this blue-print, we would need to spell out action
plans for development cooperation encompassing small and
medium enterprises, science and technology, financial flows
and infrastructure, telecommunications, and Human Resources
Development (HRD). If these action plans for development
cooperation could be effected in the same manner and with the
same zeal as the action plans for market and investment
liberalisation, we could create in the not too distant future,
an `APEC community' that is not only prosperous but where the
distribution of wealth is more equitable.
13. The role of the business sector in sustaining the
region's economic dynamism is long recognised. The APEC
leaders, at their meeting in Osaka last November had
established the APEC Business Advisory Council (ABAC) as a
permanent and integral part of the APEC process. Its role is
to advise the leaders and to provide inputs into the APEC
process.
14. It is understandable that business executives from APEC
economies are becoming impatient with the slow rate of
progress in liberalisation, harmonisation, and cooperation,
and want political leaders to share their sense of urgency.
15. Still business leaders must understand that political
leaders must do what is best for their respective economies as
a whole. While business and economics are vitally important,
social and political realities must always be borne in mind by
political leaders. Given the different levels of economic and
political development in APEC member economies, it is not
inconceivable that the pace of liberalisation and deregulation
within each APEC member country, particularly in the
developing members, will depend on these realities. Political
leaders do understand, however, that domestic policies need
to be reviewed to facilitate cross-border trade and
investment.
16. As with Government, the business sector too has an
important role to assume in redressing the economic
disparities prevailing among the APEC members. It too has an
important role to play in the creation of an `APEC community'
that has been mentioned earlier. Members need to remember
that they have not only to discharge their corporate
responsibility, but also to consider their own long-term
interest and well-being. And their own long term interest
calls for their contribution towards the stability and growth
of their host countries.
17. Under the aegis of development cooperation, the business
sector in APEC can enter into strategic alliances among
themselves to develop the region's vast potentials. For
example, the least developed among the developing economies of
APEC can be targeted and the resources of the public and
private sector mobilised for infrastructural development and
manpower utilisation. The objective is to speed up economic
development for the least developed member countries of APEC.
While this may be a new approach for APEC, it is not an alien
thing altogether in other regional groupings. In ASEM for
example, the governments of the EU and Asian countries have
entered into a partnership to develop the Mekong Basin area in
terms of infrastructure and industries. The mere investment
by countries and business in the infrastructure will speed up
the development of this basin and its peoples.
18. APEC provides the opportunity for APEC governments to
work together with each other as well as with the private
sector to provide the regional public goods needed to support
private sector enterprise and vigour. Some of these public
goods include:
* joint initiatives to enhance the efficiency and
compatibility of transport and communications
infrastructure;
* the mutual recognition of a wide range of
product standards, regulations, and administrative
procedures, including streamlining customs
regulations and business travel requirements;
* working towards facilitation and
standardisation as well as reduction of border
restrictions on goods and services compatible with
the stage of development of the respective economy;
and
* cooperation in energy infrastructure, small and
medium-sized enterprises, and technology transfer.
19. APEC has been fortunate in being able to draw on the
experience of ASEAN. ASEAN has undergone a process of
learning from each other's mistakes as well as successful
strategies. ASEAN's experience provides confidence that APEC
itself can continue to evolve rapidly without elaborate or
legalistic structures. The experience of ASEAN shows that any
successful cooperation in the Asia Pacific needs to be based
on the guiding principles of openness, equality, and
evolution. Any attempt to use current economic strength or
political influence, or even the power of a majority to ride
roughshod over genuine, justified reservations would spell
doom for any serious effort to build a cohesive Asia Pacific
open economic `community'.
20. Business leaders from the developed APEC economies must
understand these reservations, and should not lobby their
Governments to use their clout to remove actual or perceived
barriers to the business operations of their firms in other
countries, especially in the developing APEC economies. APEC
is not an ideological grouping of nations. Its main concern
is the economic well-being of its members. If there are
social and political spin-offs from the APEC process, that
should be regarded as bonus. I have no doubt that there will
be. The greatest challenge facing APEC business leaders, and
some Governments too, is to have enough patience to nurture
the region's immense potential for cooperation and for
development.
21. In conclusion, I would like to reiterate that the
building of an Asia Pacific open community cannot be the
responsibility of bureaucrats and Governments only. The
business sector also has an important role to play; a role
that is no less crucial than the meetings of heads of
Government.
22. I am confident that by working together we can all
benefit from this Pacific dynamism. Asia and Latin America
must, through the APEC process be brought up to the level of
Europe and North America, not just in terms of democratisation
but also in terms of wealth and stature. And businessmen by
their transnational activities can help do this.
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