Malaysia's Economic Growth Strategies, Honolulu, Hawaii 19 March 1994
The significance of this meeting is that it enables us to exchange views on our respective experiences in promoting economic growth. However, we must not delude ourselves into thinking that the merits of such an opportunity are the same as attaining a solution to our problems. Often the needed adjustments are clear enough. What prevents us is our lack of courage and perseverance in translating resolutions into actions.
Although East Asia has been insulated from the recession in older industrialised countries, we are not oblivious to the fact that the OECD countries are and will remain a major contributor to the global economy. To the perfomance of these economies is linked the growth prospects of developing countries in other parts of Asia, Africa and Latin America. Even East Asia stands to benefit enormously from a rejuvenation of growth in the older industrialised economies. If we can free ourselves of protectionism and reverse the movement towards the formation of new trading blocs, we can develop a new partnership, one which can operate to disperse growth and prosperity around the globe. There is no miracle agent or quick fix for growth; it is the outcome of hardwork and diligence, continuous investment in human and physical capital and policies that promotes entrepreneurship. This has been the experience of Malaysia, which I am sure, has been shared by others countries in East Asia. We must be wary of the residual mentality of the cold war era and outlook that seeks to exaggerate security issues, and provoke tensions, thus once again diverting our energies from development. Our experience in Asean has taught us that regional stability and productive relations must be earned through years of good neighbourliness and mutual trust.
The productivity and competitiveness of East Asian economies are predominantly the results of our diligent, disciplined, and hard working labour force. Unfortunately, these very qualities - that contribute so much to our prosperity and improved living standards of our people - have earned the contempt of some in the West especially among the labour unions. Some have gone so far as to conjure the absurd nightmare of western civilization being threatened by low wage economies. I must say that no government with a modicum of sense and responsibility would like to see its own people languishing in sweatshops. For a country with full employment like Malaysia, no measures to suppress wages could be successful. The challenge we are engage in is that to remain competitive we have to ensure that wage rises do not outstrip gains in productivity.
For us in Asia, growth through productivity and conpetitiveness is the only path to achieve prosperity. It has liberated millions from the scourge of poverty and destitution. It will liberate millions more in the future. It has enabled our people to enjoy freedom and decent living conditions - an indigenously generated vision of opportunity and betterment that compares favourably with the promised idylls of the divergent package deals offered by various political persuasion.
Our view is that growth cannot and must not be separated from the overall societal objectives. However, wisely crafted and market-friendly policies may be, consideration of the issues of distributive justice and fairness will, eventually, play their part in contributing to growth.
In Malaysia, high growth has been achieved without compromising the concern for an equitable distribution of income. The incidence of poverty has declined steadily from nearly 50% in 1970 to 14% today. At the same time, per capita incomes have increased significantly, from a mere US$250 in 1957 to more than US$3,000 by 1993. Nonetheless, in our desire to promote growth, we must be equally conscious that there is no single route to that one end. We must grant to individual countries the right to determine their destiny, and the freedom to choose appropriate strategies.
We must acknowledge that economic growth is inextricably linked to factors beyond economics. The implementation and the continuity of pro-growth policies and market friendly institutional reforms is only possible within a stable political environment. The quest for stability is not and excuse for suppression and injustices. Nevertheless, any reformist government is confronted with the reality of making hard choices and ensuring a delicate balance between the need to maintain stability and the right of the people towards personal liberty.
To the large extent, Malaysia's success in economic development underscores the importance of political stability, sound macroeconomic management and an open, market-based economy that is largely private sector-driven. The government's multi-year structural adjustment programme in the 1980s downsized the role of the public sector and promoted private initiative as the main engine of growth in the economy. As they say, the rest is history.
Indeed, the year 1993 represented the sixth consecutive year of growth in excess of 8% in Malaysia. Indications are that the economy will strengthen further in 1994 with growth exceeding 8%, making this the most buoyant and longest economic expansion in Malaysia's history. Both the Government financial and balance of payments positions are looking very healthy. Inflation is law, and price stability is expected to continue. And the prospects over the medium term are equally good; the growth target of 8% for the Sixth Malaysia Plan (1991 - 1995) will most probably be surpassed. Nonetheless, we need to continuously focus on relieving infrastructural bottlenecks and skills shortages to enhace competitiveness.
In the final analysis, when confronted with a multitude of challenges and opportunities, each country has to set its own priorities, of which only its own people can decide. As the economy is becoming more globalized, we are increasingly confronted with the reality of multiculturalism. Trade must not infringe on the rights of peoples and nations towards their own values and cultures. If we want the pursuit of growth to be a vehicle to spread out prosperity, rather than becoming an agent for domination, it has to be conducted with full cognizance of the diversity of our world.