THE CONFERENCE : RUNNING WITH THE DRAGONS : JOHOR, MALAYSIA AND ASEAN IN A WORLD OF DYNAMIC CHANGE AT JOHOR BARU, JUNE 15, 1992
Let me begin by congratulating the Johore State Government for its boldness and imagination in organizing this conference in conjunction with the Industrial Exhibition : Johore Year 2005. Of all the Malaysian states, Johore must be the one feeling the most the heat of the dragons' breath down its neck. And therefore : run it must. Your vision of Johore as a technopolis by the year 2005 reflects your clear perception of the role of the state in the dynamic evolution of the East Asian community. As a nation, we must always be alive to the new realities of the 21st century, and continuously invent new approaches.
For us, there are at least three significant developments that necessitate fresh thinking. First, the rise of the East Asian region as an economic power. Already, in 1991, East Asian economies accounted for one-quarter of world merchandise trade, up from a mere 10 per cent three decades ago. While global trade slowed to three per cent last year, the expansion of trade and output remained very strong in developing East Asia. Indeed, East Asia is already the world's biggest market, and it will be the largest economic region by the end of this decade with a combined gross domestic product of US$15,000 billion. The ramification of this reality will certainly go beyond economics.
Parallel to the emergence of East Asia as an economic power is the growth of trade blocs and protectionist tendencies in industrialized countries. It is indeed ironic that powers which in the past forced the opening of Asian doors to Western traders should now withdraw into their fortresses to avoid competition. What is the scramble for Africa and the colonization of Asia in the 18th and 19th centuries if not for the expansion of trade and the opening of markets? Wasn't the prosperity of Europe and North America built upon the continued expansion of markets and free trade? We, East Asians, too understand the value of free trade and open markets. Rising from the ashes of the Second World War, we rebuilt our economies upon the export of primary commodities and manufactured goods. Our continued prosperity is contingent upon a liberal global trade regime. But some countries deem it a threat to their prosperity if we were allowed freer access to their domestic markets. As such we are left with no choice but to go for greater regional self-reliance.
And the third development to which we have to respond now is the dire threat to the global environment arising from the feverish consumption of the earth's natural resources during the last 100 years or so. Today, in Rio, the leaders of the world are concluding their historic summit. Our voice in Rio expresses our concern for the future of this earth, facing destruction from not only the greed and rapaciousness of the world's richest but also the desperation and burning needs of the world's poorest. Our commitment is to the greening of the earth and to preserve the earth for future generations. We must grow and develop not only to increase our prosperity but to relieve the burden of the poor. I believe we can achieve prosperity for everyone without at the same time subjecting the earth to ruin. In this context, we need to temper our enthusiasm for growth and prosperity with concern for the welfare on the entire global community. For this, our actions must be guided not merely by the pursuit of wealth and profitability but also by the sense of justice, fairness and commitment to ethical values.
Ladies and Gentlemen,
It is imperative that we transcend the confines of national boundaries in approaching these new realities. We cannot act alone in the face of the world which is increasingly being dragged into blocs and groupings. Continued prosperity of this region requires a new pattern of economic relationships and linkages. Until now, individual East Asian countries are situated more or less at the periphery of the global economic and political system while the major industrial economies occupy the dominant centre. This situation in no longer tenable. The withdrawal of the industrial countries behind protectionist walls means that we must act to secure our legitimate interests. Where else do we look for partnership but among our immediate neighbours? This is a matter of common sense. But the more compelling reason for deeper integration, at this point of time, within the region through intra-regional multilateral trade and investment is that it make good economic sense. Our region today has attained a state of economic maturity, where the differentiation, diversity and sophistication of activities exist, to make the proposition an attractive and viable one, one which would generate immense wealth for its members. We will aggressively pursue this course and we are confident to reap its benefit in the years to come.
The move by the ASEAN six progressively to dismantle trade barriers within the grouping is a concrete manifestation of our firm committment towards making East Asia a centre unto itself. The Asean Free Trade Area (AFTA) is a challenge to the political will of ASEAN members. We will proceed together with courage to realize our immense collective potential. There will be, I believe pressure from narrow sectional interests, rallying behind nationalistic sentiments, to frustrate or slow down the realization of AFTA. Over the years, with the growth and prosperity of the region, we have witnessed the mushrooming of private ventures and enterprises. Some have emerged as giant corporations exercising considerable monopolistic influence within their national boundaries. These entities are generally not too enthusiastic about our goal of freeing intra-regional competition. At the same time, there are also small and medium-sized enterprises which, until now, have enjoyed tariff and non-tariff protection. They are bound to feel insecure in the new liberalised environment. But responsible leaders of Asean must rise above these narrow considerations to favour the well being of the nation as a whole. We appreciate the fact that the various member countries are at different levels of maturity and efficiency. If the pain of adjustment is the issue, I am sure we can collectively device mechanisms to lessen the burden.
We are justifiably proud of the prosperity of the region, but we must be equally concerned that poverty and lack of opportunity is a fact of life in its less developed and remote corners and even in the heart of some of our metropolis. With the dismal failure of the socialist dream, laissez faire economics has regained prestige. But here I must sound a word of caution. While we believe in free markets and free enterprise, we in Malaysia also believe in the necessity of judicious intervention to ensure fair play and prevent market manipulation. At the same time, we will continue to pursue our policy of affirmative action because, although wealth may trickle down, the pace may be too slow and the distribution uneven.
It should therefore be perfectly clear why we insist on the dimension of social responsibility of the private sector. In the relocation of industries to maximize profits and minimize costs within the region, let not the lesser developed areas be targeted for conversion into sweat-shops or be turned into dumping grounds for environmentally harmful industries.
In order to keep pace with the growth of East Asia during the next decade our financial and services industry must acquire a new dynamism. There will be plenty of opportunities, and the industry must rise to the challenge of new competition. We must not merely survive but excel. We are already in the top league in the region as a financial and services centre. Our goal, however, is to emerge as number one well before the year 2020. Nothing can foil our ambition except ourselves, if we do not have the self-confidence and the courage and the determination. In banking, deregulation and liberalization has already had a positive impact on the system. Banking and other financial institutions are already competing on a level field, and the growing popularity of securitization will further shake the complacency of the conventional banking sector. Our stock market is the biggest in ASEAN and at the moment is next after Hong Kong. We are confident our capital market will grow year by year in stature in terms not only of trading volume and capitalization but also in respectability. We will take all necessary measures to promote transparency and fairness in our capital market. This objective I am sure is shared by all the players. But nevertheless, I am puzzled that the market acted in panic as if Doomsday had befallen us when we moved against the culprits. Our stock market will not gain any respectability if the players trade more on rumours than on fundamentals.
With the progress of privatization, more and more government-owned business entities will join the big league on the Kuala Lumpur Stock Exchange list. In anticipation of further growth, we plan to beef up the Capital Issues Committee in terms of capability and efficiency to facilitate and expedite the processing of listing applications. While the government can do so much in this regard, the private sector must contribute its fair share in increasing the confidence of investors in our market. We are aware of those who, by casting doubt on the prospects of our economy, undermine investor confidence. For instance, they deliberately whip up the bogey of inflation, whereas we have been able to contain inflationary pressures at rates below those of three of the dragons.
I have earlier stated that the ramifications of the emergence of East Asia as a global economic power are beyond economics. Power must be wielded with responsibility. We are witnessing the growing dissatisfaction among developing countries in the structure of power and management on international agencies. The enormous power wielded by the victorious nations at the end of the Second World War has been used to perpetuate their interests sometimes at the expense of others. What we criticize of others we must not repeat. Perhaps the time is now ripe for us to begin to reflect on the greater goals of the East Asian community and its relations with other regions of the world.
The Second World War has long ended, and the ensuing Cold War has passed away. The mindset and perceptions created by these wars must be left behind. The dragons of the 21st century must be prepared to run in a new arena. The demise of the Cold War has opened opportunities for the creation of a global partnership of nations based on the principle of equality and mutual respect. It is in this context that we in Malaysia, and Johore specifically, must perceive our role in decades to come.
We will progress together with our neighbours. I think it is important that we rise above pettiness in our dealings with them. Of course, we may, every now and then, meet with some difficulties, real or perceived. As responsible leaders, we must never try to make political mileage over such issues. Real problems with our partners must be resolved in the spirit of genuine cooperation. We have ready channels in place for that. We have come a long way from the paranoia and mutual suspicion of the past. This new confidence in ourselves, among all the ASEAN members, is the very root of our optimism in the future of the region.