1.    I would like to take this early opportunity to thank the organiser for inviting me to launch this year’s INTRADE Malaysia and the Kuala Lumpur International Trade Forum.  

2.    Our meeting here today comes at a pivotal time in economic history.  Many countries over the past 15 months have been humbled by the sub-prime crisis and ensuing uncertainty that has swept governments, companies and households alike.  

3.    The interconnected world in which we live has meant that no nation has been spared the effects of economic downturn.  In many cases, it may take years before we see full-fledged economic expansion again. Malaysia has been fortunate in that we had learned some lessons from the Asian financial crisis in the late 1990s and we were better prepared this time to deal with such calamities. Even so, we were not spared the effects of the crisis on our economy and we have had to act expeditiously to protect our economy. In speaking to you today, I would like to offer some reflections on how Malaysia has responded to the crisis so far and what I think will be necessary for us to move forward.

4.    The question on everyone’s minds these days is how far do we have to go before we know that the Malaysian and global economies have turned a corner and are on a path of sustained recovery?

5.    Based on some key indicators, a growing number of experts now conclude that the world is on the road to recovery.  But I must caution you: the signals are mixed. In the United States, for example, the worst of the crisis in the housing and banking sectors appears to have passed; however, there are no signs of an upturn in the wider economy. Employment has not picked up, bank lending has stalled or consumer demand continues to remain flat. Likening the U.S. economy to a sick patient, its condition has stabilized, but it is still in the hospital.  

6.    On the other side of the globe, a different picture presents itself. China continues to impress everyone. It reacted to the crisis by pursuing a similar stimulus strategy, and it is now widely acknowledged that this strategy has succeeded beyond expectations. The momentum in the Chinese economy has stayed strong and exceptional growth rates continue to be reported in many sectors. A major infrastructure development programme is underway, and the government is seeking to raise the level of domestic demand and reduce reliance on exports to drive growth.  It is our hope and expectation, of course, that all these activities will in turn impact positively on the economies of China’s trading partners, including Malaysia and other countries in ASEAN.

7.    Many experts are now asserting that Asia will lead the world in recovering from the crisis. To be sure, the data coming out of China, Korea, Japan, Taiwan and India point in this direction. But let us not forget that these economies are also closely linked to those of the industrialized West, with a level of interdependence that has deepened over the years. I believe one of the most important lessons that the world’s national governments have learned – and what sets our global economic upturns – is that the very same interdependence that led to the past decade’s growth also served to worsen the effects of our current crisis.  Given the connectedness between nations today, we can expect, that the rise of Asia will be constrained by the lack of demand from the United States and industrial Europe

8.    As you know, Malaysia moved quickly to put in place a stimulus package to protect our economy and prevent it from entering into a free fall. Although we have experienced negative growth in recent quarters, our contrarian strategy is performing as expected and the impact of the crisis has been less severe than it would otherwise have been without the stimulus package. We believe the worst is over for us and that we have moved beyond the bottom of the curve.

9.    The challenge for us now is to ensure that this recovery is sustained. The stimulus package must be allowed to work its way through the system to give the economy the ballast it needs. No doubt there will come a point in time when such support will no longer be needed. We will be monitoring the data on employment, domestic demand, and borrowing and investment levels before a decision is made. If the signs are favourable, the foot will be taken off the pedal. But not before then.

10.    Even as we review our response to the crisis, ladies and gentlemen, we must at the same time look beyond these problems and ponder our future in a post-crisis era. The overriding feature of the global economy today is the interdependence of economies. Our future is linked to that of other nations. It is not just economics that link us together. It is also technology, culture, communication, politics and more - indeed everything that the term globalization connotes. As a result, we benefit more than ever from open markets and streamlined trade, but our economic sovereignty is also more dependent on the actions of other nations, making diversity among trading partners an imperative now more than ever.

11.    Amidst this new global economic paradigm, we must necessarily ask the question:  “How do small countries like Malaysia survive and prosper?  How do we position ourselves to compete with nation-states of unequal strength and superior resources?

Ladies and gentlemen,

12.    This is the overriding challenge of our times. If we do not strategize correctly, if we do not focus unremittingly on getting this right, and marshalling our human resources to fulfill our potential as a nation, our future will be at risk. I am by nature an optimist, and I believe we can convert this challenge into an opportunity if we have a clear idea of what our strengths and weaknesses are, and define for ourselves a niche in the international market place that takes full advantage of our strongest points.

13.    In doing so, we must first define our positioning by recognizing first and foremost who we are and what we are. We are a trading nation. We have been a trading nation for centuries and we remain so today. We survive and prosper because of trade. To trade means to be able to offer something that somebody wants to buy from you. Since many other parties will also be bidding to do the same, to trade successfully means to be able to compete successfully against others.  

14.    The most basic requirement for survival and success in the international economy today is thus the ability to compete.  Some nations are endowed with natural resources which give them an edge in this respect.  Some others are not so fortunate and have to be creative and be more industrious to be able to compete.  We have had the good fortune of belonging to that first category of nations, but it is an advantage that is circumscribed by two caveats.

15.    The first is that some of our resources are depleting assets, like tin in earlier days, and now oil and gas. So we cannot rely on them forever. The second caveat is that competition in the global market place often means competing at a level higher up the value chain. The more value you can add to your product, the more competitive you are likely to be. Increasingly, competitiveness comes not from the possession of raw materials, but the ability to add value to it. Value adding is a function of brainpower, of creativity and inventiveness. Competitiveness, therefore, ultimately depends on people, on their ability to create and to market products and services that people want.

Ladies and gentlemen,

16.     I have taken some effort to spell out from first principles what we need to do as a people to compete as a nation. To do this, we need the resources and the contribution of all our people. Our diversity is our strength, as embodied in our 1Malaysia principle, and we value the resources of all our people, regardless of their ethnic origin as we strive to become a more competitive nation.
 
17.    In pursuit of this objective, the government has also taken the position that the private sector will lead this drive. The government’s role is to be supportive, to provide the facilities and the infrastructure to help make it happen. The government has recently increased opportunities for the private sector to participate in the economy by liberalizing equity participation in 27 services sub-sectors. We have also relaxed regulations governing the participation of foreign investors in our capital and financial markets.

18.    To raise our overall level of competitiveness, the government will continue to allocate resources to train knowledge workers, improve skills, intensify R&D activities and promote innovation and creativity – all factors that will increase our competitiveness and help us make the transition from a middle-income to a high-income country.

19.    The government is also very supportive of realizing the potential of another private sector domain: the SMEs. In a modern economy, SMEs play a key role by creating and innovating products, by providing employment, and by serving as important linkages between various players in the value chain.  SME development is a priority for this government, therefore, and we have put in place programmes covering skills training, technology acquisition, marketing, and quality improvement to raise the level of competitiveness of our SMEs. 

20.    There is one final element to becoming competitive that I would like to touch on - and that is the cost of doing business in this country.  If we want to be competitive, we have to keep the cost of doing business low.  We must continuously strive to make the government machinery more efficient, introduce performance targets, reduce red tape and eliminate unnecessary layers of bureaucracy and decision making.  Efficiency is also achieved by promoting transparency and higher standards of governance at all levels of government. Greater clarity and improved integrity in the conduct of our affairs helps as it will increase confidence in the government, facilitate decision-making, and ultimately reduce the cost of doing business.

Ladies and gentlemen,

21.     I began this discussion by focusing on what we need to do at home to become a more competitive nation. Let me now turn to what we need to do in our dealings with the world beyond our borders. The key issue that trading nations have to contend with overseas is access to markets. When the global economic crisis broke out, the first reaction of many countries was to contemplate introducing protectionist measures to insulate their economies. Such measures, as we all know, are a double-edged sword because, ultimately, nations need to trade freely with one another if international trade and investment flows are to be revived.

22.    Malaysia’s position on this question is clear.  We are opposed to the imposition of protectionist measures, and will work to ensure that the global trading environment remains as open as possible.  We are committed to the existing multi-lateral trading system and support the World Trade Organisation in its efforts to bring order and equity to the market place.  As part of our efforts to integrate into the world economy and position ourselves as a leading global trading nation, we will also engage in negotiations to conclude regional and bilateral free trade agreements (FTAs) with our major trading partners.

23.    We also recognize that regional cooperation is a prerequisite for the development of markets. There continues to be much discussion at APEC and other regional fora about what form such cooperation should take.  ASEAN, however, remains the most concrete manifestation in our part of the world of what regional cooperation can achieve.  This is a vibrant and growing market with a population of 587 million people and a combined GDP of over US$1.4 trillion. The region is strongly connected to other global production networks and markets.  Today, ASEAN has concluded FTAs with China, Korea, Japan, India, Australia and New Zealand. 

24.    Next year, the ASEAN Free Trade Area becomes a reality and tariffs will no longer be an issue.  And by 2015, the ASEAN Economic Community will be established. It will allow for the free flow of goods, services, and investment within the region, and significantly reduce existing restrictions on the flow of capital and skilled workers.

Ladies and gentlemen,

25.    The opportunities to do business in Malaysia and in the ASEAN region are tremendous.  We welcome you all to Kuala Lumpur, and hope you will find your stay here useful and enjoyable. It gives me great pleasure, ladies and gentlemen, to declare INTRADE Malaysia 2009 and KLITF 2009 open. 

Thank you.