SPEECH
BY
THE HON DATO SERI DR MAHATHIR BIN MOHAMAD
PRIME MINISTER OF MALAYSIA
AT THE SEMINAR ON 20TH ANNIVERSARY OF
THE LOOK EAST POLICY
IN TOKYO, JAPAN
ON THURSDAY, 12 DECEMBER 2002
-----------------------
“ Look East Policy – The Challenges for Japan
in a Globalised World”
I
would like to thank the organisers for inviting me to speak at this 20th
Anniversary of the Look East Policy.
I have chosen to speak on “Look East Policy – The Challenges for Japan
in a Globalised World.”
2. The
people of East-Asia had been Looking East long before Malaysia adopted the Look
East Policy. When Japan started
modernising during the Meiji Restoration, East Asians who were then faced with
aggressive European and American free traders to open their countries for
trade, looked at Japan’s handling of this problem.
3. The
assumption by China that its culture was superior and the foreigners were
barbarians could not be sustained in the face of Western successes in forcing
open the country. Elsewhere
in the East the Europeans simply occupied the countries in order to gain access
to their products. By the
middle of the 19th century only Thailand and Japan remained
free. China had many ports
converted as European trading stations.
4. Japan
was able to ward off European and American hegemony by adopting the
administrative systems and the commercialisation of the economy. Large numbers
of Japanese were sent to Europe in order to acquire industrial technology. Very quickly Japan became as much an
industrial and commercial power as the Europeans. Any idea that the Europeans had of colonising or dominating
Japan was shattered when in 1905 a modern Japanese Navy defeated the Russians
decisively. From then on Japan was
looked up to by East Asians.
5. Attempts
were made by East Asians to emulate Japan’s modernisation. Siam, now Thailand being independent
followed in Japan’s footsteps.
Looking East is therefore not a new thing. The people of East Asia had been Looking East at Japan even
when they looked up to the West.
Japan’s success in modernising gave them hope. They believed they could become as good as Japan.
6. The
success of the Japanese Army in the early days of the Pacific war finally broke
the spell cast by the Europeans regarding their invincibility. East Asians were able to see that their
European overlords could be defeated.
Their yearning for independence gained strength.
7. True,
Japan was eventually defeated by superior Western arms, including the atom
bomb. But the post-war years saw
yet another demonstration of Japan’s capability. From almost total destruction, Japan rose to become the
second most powerful economy in the world.
8. East
Asians cannot help but look more and more eastward, at Japan, as a model for
their countries. Malaysia is
perhaps less bashful and announced loudly that it intended to look East, to
look at Japan mainly for inspiration and guidance.
9. Malaysia
identified what we believed to be the factors which contributed towards Japan’s
success. They are the patriotism,
discipline, good work ethics, competent management system and above all the
close cooperation between the Government and the private sector. And so we tried to adopt these practices
and instill these cultures in our people.
And everyone now acknowledges that Malaysia has made better progress
than most other developing countries.
The fastest pace of Malaysia’s progress and development took place in
the last two decades coinciding with Malaysia’s Look East policy.
10. For a
country with a population of just over 20 million, Malaysia’s position as the
18th biggest trading nation in the world is something that
Malaysians are proud of. More than
most countries Malaysia is dependent on foreign trade. Malaysia’s trade is almost two times as
big as its Gross Domestic Product (GDP). Japan, which is a very big trader, has a trade that is
less than 30 percent of its GDP.
11. The extent
to which Malaysia is trade dependent is dangerous. We are very open.
Foreign goods enter Malaysia freely although some discriminatory import
duties are imposed to protect local products. Malaysia, like Japan, believes in trade as a basis for
growth. We are more open than
Japan though.
12. Until 1997
we were comfortable with the
status quo. We were in complete
control of our economy and we could formulate tax policies and incentives for
investments to benefit from capital flows from outside, while maintaining the
competitiveness of the commodities and products we produce. We saw no necessity for a change in our
system. Even the
economic disparities between the different races in Malaysia were being tackled
effectively through our own affirmative action program.
13. Free trade
had always been the war cry of the Europeans. In the 19th century they used threats and force
of arms to open up the countries of East Asia for trade. They objected strongly when they were
not allowed to use opium to pay for the goods of Asian countries. They set up fortified trading stations
in many of the countries of East Asia.
With superior arms they began to infiltrate the hinterlands to secure
their supply of local products. In
the end they occupied and colonised many of the countries they were trading
with.
14. Japan had
its share. The black ships forced
Japan to abandon its isolationist policy.
The Portuguese established their trading stations in Nagasaki and
forthwith began converting the Japanese to Christianity.
15. All these
were done in the name of free trade.
How it could be called free trade when force of arms were used and
partner countries were occupied and colonised is difficult to understand. But today we are again assailed by the
same demand for free trade.
16. Some
countries are subjected to sanctions, i.e. they were not allowed to trade
freely unless they accept the terms and conditions proposed for them. If they have to accept then can it be
said that their trade is free? Trade under terms imposed by the
traders surely cannot be free trade.
17. But other
countries are also being subjected to all kinds of conditions if they wish to
trade. The World Trade
Organisation (WTO) has been set up in order to ensure rule-based trading. But more than that the administration
and practice of business within the country must be made to conform to certain
systems set by the powerful countries through the WTO.
18. Tremendous
pressure is brought to bear on these countries to conform. Institutions including the media
controlled by the rich and the powerful examine and investigate every aspect of
a country’s administration, including its politics in order to enforce
conformity. These institutions
publish their findings which often affect adversely the economy and politics of
the countries concerned. In this
way the countries are forced to conform or more correctly, to obey. Yet no
matter how they try to conform they are invariably found wanting. They can do nothing right.
19. The
gunboats have disappeared but the economic and political pressures exerted are
no less threatening, no less effective.
An army of occupation cannot colonise more effectively than the economic
and political arm-twisting used by the Western countries.
20. Witness
the operation of the free market in currencies. Upon allowing the currencies to be floated, the so-called
free traders traded not in goods but in currencies. The currency of a country is treated as a commodity which is
not only bought and sold but is speculated in. From speculation the traders graduated to manipulation,
selling huge quantities of currencies in order to force down its value and then
buying at the depressed prices in order to deliver to their buyers. Short selling has been taken to the
ultimate level.
21. It is fine
if they trade in physical currency.
But no real currency is involved.
They sell currency they do not have, huge sums of these currencies, to
buyers who are members of their own circle of traders. The buyers in turn sell these
fictitious currency to others.
When the price of the currencies is depressed enough, they would go
through the motion of buying and delivering to their earlier buyers. And they would make huge profits and
become hugely rich. Their banks
would be holding huge sums of their money, not physically of course, but merely
in figures credited to their accounts.
22. The trade
in currency is very many times bigger than total world trade. The profits are equally huge. This huge sums must be lent out or the
banks would not be able to pay out the interests. And so we hear of huge corporations being bought and sold
with unbelievable amounts of money.
Still there is a lot of money sloshing around in the vaults of the
banks, or so we are told. One
hedge fund was able to borrow more than one trillion dollars, something no
Government in the world has done.
Its operation was so big that when it failed it threatened to destroy
the financial standing of a very rich country and the world even.
23. But what is
of concern to the small countries is that the free trade in currencies could
destroy their economies overnight.
Suddenly countries which were doing well, which were regarded as tiger
economies; suddenly they became insolvent. The “international” institutions then moved in to advise and
to offer to lend money to pay off foreign debts.
24. The advice
they give would only worsen the situation. And if their money is borrowed then economic colonisation by
them would begin. They would
determine not just how the finances of the country should be managed, but they
would also insist on imposing their political creed. The money borrowed is not disbursed unless certain “reforms”
are carried out. But even if the
money is given it is to be used to pay debts to foreign banks. In effect the country is just changing
the creditors, becoming borrowers of the international institutions instead of
the foreign banks. The burden of
debts remains, sometimes permanently.
25. In the
meantime every aspect of the administration of the country is put under the
control of the international institutions, which in effect means being
controlled by the rich countries which control the institutions. It means colonisation and nothing
less. As before when gunships were
used to open up countries for trade, now the international institutions are used
to open up the countries for the so-called “free trade”.
26. Once the
countries are opened up the big corporations and banks would move in. Will there be fair competition between
the enormous foreign banks and corporations and the tiny local banks and
companies? Of course not. The locals will be swallowed up, one
way or another.
27. The
Government will not be in a position to control the big foreign banks and
corporations. In any case they
will claim that free trade means no Government interference. They should be allowed to do anything
they like in the interest of their profits. The social problems of the country are not their concern.
28. During the
colonial days there was no concern for the social problems of the
colonies. To facilitate exploitation
of the wealth of the colonies, huge numbers of foreign workers from other
colonies were brought in. The
demography was changed. When the
colonies became independent they were saddled with the problem of multi-racial
and multi-religious population, whose economic development were different. Calmly and coolly the ex-colonist would
condemn the newly independent
countries for not being fair to the foreigners they had brought in. They easily forget that they were not
fair to these people before.
29. The foreign
corporations will do the same.
They would want free entry of their employees from wherever. They would claim that the locals are
incompetent or there are not enough of them. There would be other things that they would do in the
interest of more profits which would ignore the problems that the countries
will face, problems, when caused by their own people being unemployed or
employed in lower pay jobs while foreigners lord it over them, earning handsome
pay.
30. We are all
for globalisation. But
globalisation should not be in the interest of the rich free traders only. It should take into consideration the
interest of the countries as well.
It should not create social and political problems for the host
country. Unfortunately at the moment
the interest of the small countries are not being given due consideration by
the WTO and other fora.
31. Japan has
been having a bad time for more than a decade now. The people who are looking East are not getting any guidance
from Japan. It seems that Japan is
somehow unable to pull itself out of the economic quagmire that it is in.
32. Many people
have advised Japan on what it should do.
And Japan had tried many of the ways suggested without any results.
33. As a
foreigner from a small country, it is not for me to tell Japan what it should
do in order to again become a model for us. But with apologies, I would like to put in my penny worth of
comments.
34. No one can
dispute that Japan achieved a miracle when it rebuilt itself after the war. How did it do it? It did it by not being advised by other
people. It did it in its own
way. The only advice it accepted
was to produce high quality goods, goods of world standards, so as to be
accepted by the world markets. The
rest was entirely Japanese.
35. Japan had
always favoured big corporations.
The zaibatsu were dismantled by the victors but the broken pieces grew
into new zaibatsu’s. Matsushita, Toshiba, Mitsui, Mitsubishi, Hitachi etc all
grew again to become huge corporations.
New ones like Sony also became big.
36. These
Japanese corporations had their own banks. Perhaps they borrowed more money than the banks had. But when the American banks lent
hundreds of billions of dollars to the hedge funds like LTCM did they actually
have the money. We doubt these
banks have the huge sums that they lent for the acquisition of the huge
corporations by other corporations.
We doubt they can pay back, certainly not from the profits. To pay back they have to boost the
share prices and sell them. We
doubt they can pay back now with the share prices so depressed. United Airlines, Sabena, Swissair
are good illustrations.
37. So it was
not unusual for the banks to lend more money than they had for the expansion of
Japanese companies. In any case
the stock market was bullish and the value of the Japanese companies was
high. The banks felt secure
because the collaterals they held were adequate, and they were lending to
companies which were worth more and more all the time because their shares were
appreciating to astronomical heights.
The companies were certainly better propositions than the hedge funds
whose value is not known, and as we have seen can suddenly be worth nothing. The Japanese companies could have gone
on expanding. But Japan decided to
Westernise its business practices.
38. Japan has
been censured for the close cooperation between the government and the
corporations. Japan Incorporated
was regarded as some kind of cronyism involving the government and the private
sector. Malaysia sees nothing
wrong in the close collaboration between government and the private
sector. The government should help
the private sector to succeed because a large chunk of the profits made by the
private sector belongs to the government.
In helping the private sector the government is actually helping
itself. This happens in the West
also. When LTCM failed, the
government moved in to bail it out.
We in Malaysia believe that it is right for the government to help the
private sector, not to cheat of course, but to overcome bureaucratic
bottlenecks which often result in unnecessary losses by the businesses.
39. Japanese
businesses believe in life-time employment. It is a social obligation that relieves the government and
therefore the public from having to bear the burden of unemployment and old-age
care. In the West the first thing
that businesses do when faced with downturns is to lay-off workers. The workers then go to the government
to collect unemployment benefits.
In some countries the benefits are so good that workers prefer not to
work. The unemployment rates in
Europe and America are usually high, and this is a burden on the working
public.
40. The
Japanese have a different culture.
When they are laid off they have such a feeling of shame that they
refuse to go back to their families.
They prefer to put up plastic huts in the cities and eke out a miserable
living there. It is shameful that
in a wealthy country there should be so many poor people. The Japanese corporations should go back
to life-time employment.
41. It is said
that one of the reasons for Japan not being able to recover is because the
Japanese public refuses to spend money.
Even when the savings earn them nothing, even if their currency would
depreciate they would still not spend.
I find this difficult to believe.
In Malaysia we increased the GDP by paying bonus to government servants
and controlling the prices, especially near festive seasons and the people
flocked to shopping complexes. The
Japanese people cannot be so different that they would keep their money if
prices are reduced and there is a possibility that the Yen would be devalued radically.
42. We
understand the desire of the Japanese to Westernise its system. But when systems are suddenly changed,
even if it is for the better, there will be severe disruptions. It is far better to stick to the system
which worked. And the Japanese
system had worked very well for the Japanese. It enabled Japan to recover rapidly from the destruction
wrought by the war and it made Japan the second most powerful economy in the
world. It may not be the Western
way but it cannot be all wrong if it can achieve so much. If you must change, then change slowly
to avoid too much disruptions.
43. Asians are
looking East at Japan. Yes we can
learn from your mistake, but we would rather learn from your success. The Japanese people as a whole must
wake up and appreciate that the disaster that you face now is of your own
making. Just as your post-war
recovery was through your own way, you can recover now by your own way.
44. Changing
government every two years is not the best way of managing a recovery. It is not even the best way in managing
a normal situation. A government
needs time to understand the problem, to plan and to execute the plan. In two years no planning can be done,
certainly the plans cannot be properly executed, the mistakes corrected and
success achieved.
45. I am not
trying to advise you. But these
are critical times. Globalisation
need to be handled properly. So
far there is little input from the East Asian Countries. If there is, the world does not take
heed. The East Asians are not
working together. They need to
work together and they need leadership.
46. And the
challenge for Japan is to take on the leadership role. Japan has the size, the wealth and
world class technologies. Military
might is still important but today’s war is more economic than military. Japan has shown how it could resurrect
itself after the most devastating war ever. It was a feat that reflects the character of the Japanese
people. Prosperity has no doubt
sapped some of this character, but not completely.
47. East Asia
and indeed the world needs Japan, its dynamism and its single minded
dedication. Today’s world is in shambles. The abuses of the free trading system,
the unlimited greed of a considerable number of speculators, the fumbling and
incompetence in the handling of problems has resulted in the world losing its way.
48. We live in
an age of fear, we are afraid of terrorists and being frightened, we react
blindly. We try to fight
terrorists as if we are fighting a conventional war. We erect barriers around us, we invent new security
measures, we break our own codes of behavior, we do not respect borders, we assassinate
and kidnap, we detain our enemies without trial and put them to death. We are getting more and more angry and
in our anger we have become irrational.
We are back in the stone age when might is right.
49. We need to
do business. We have all these
great technologies which promise to enrich the world but we are not able to
exploit them. We urge our people
not to travel, not to fly, not to go to this country and that country. What is the good of free trade if we
cannot travel the world to do business.
How long can we sustain the travel advisories?
History has shown that terrorism never dies, at least not until the
causes of terrorism are eliminated.
The exploitation of the workers and the serfs lead to bombings and
assassinations. Suppression of
the colonial peoples resulted in
terror attacks and random killings.
The French, Russian revolution and the struggles for independence had
more than their quota of terrorism.
Only when the causes were remedied was terrorism stopped. People struggling for their rights
cannot be expected to be rational, to follow the conventions of war.
50. The
capitalist countries escaped the horrors of revolutions before because very
quickly they moved to accommodate, to curb their own excesses, to grant the
workers their rights.
51. Today it is
not a class struggle. It is
nevertheless the struggle of the oppressed against their oppressors. More oppression is not going to stop
the struggle. Terrorists are not
representatives of countries which can be defeated and the war ended. Terrorists can be anywhere, even in our
own backyard. It took but one
person to hold a whole city in a state of terror. An army threatening a city can be attacked and
defeated. But one man cannot be
attacked in the same way. Yes,
eventually he was captured. But
like suicide bombers, there can be others.
52. The world
has truly lost its way. The anger
of the terrorist is there and will remain there. But we can control our anger, we can be rational. Only rationality can win us the battle
against the terrorists.
53. Japan is
not the target. It need not be
filled with anger. It can help
bring the world back to its senses.
It can help revive the world’s economy. It can do many things if it decides not to follow but to
lead. This then is the challenge
for Japan in a globalised world, to lead and not to be lead.
******
Prime
Minister’s Office
PUTRAJAYA
Prime
Minister’s Website:
http://www.smpke.jpm.my