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Speeches for the year 2001

Keynote Address Of YB Datuk Raymond Tan Shu Kiah,
Minister Of Community Development And Consumer Affairs
For The Launching Of Bimp-Eaga Convention
0n 8 June 2001 – 8:30 Am
Hotel Renaissance, Sandakan

First of all, I would like to congratulate Sandakan Municipal Council for choosing such an important theme for this convention entitled “BIMP-EAGA –Its Impact On The Business Community In Sabah With Special Reference To AFTA”.

We have much to learn from the development of AFTA. You may recall that most of the ASEAN countries were hit by the Asian financial crisis in 1997 and many predicted that ASEAN has fallen disarray and that AFTA was dead. However, I must emphasized here that it did not happen. In fact at the height of the Asian financial crisis, ASEAN leaders not only reaffirmed their commitment to regional economic integration but called for the deepening and acceleration of AFTA and even agreed to extend trade liberalisation to services and further called for the dismantling of barriers to investment from ASEAN investors, starting with the manufacturing sector. Furthermore, in the 1998 ASEAN Summit held in Hanoi, a collective decision was made to bring forward the formal completion of AFTA from the year 2003 to 2002.

Not only are tariffs going down but AFTA is also going into non-tariff barriers to trade. Indeed, trade will be made easier by the standardization of customs procedures, the harmonization of product standards, the conclusion of mutual recognition arrangements and similar measures. This is not only for trade in goods but also for trade in services. Mutual commitments have been made in the areas of services including air, transport, business services, construction, financial services, maritime transports, telecommunications and tourism.

I was informed that efforts were also made to bring down barriers to investment. Under the ASEAN Investment Area, for instance, ASEAN countries are committed to open their manufacturing sectors to ASEAN investors and extend national treatment to such investments. This effort is to attract more investments into ASEAN. A large integrated market can attract investment much more effectively than small, fragmented ones. With economies of scale made possible by larger markets, new opportunities can be created.

Such development in ASEAN and AFTA in particular will definitely affect the way we trade, strategize and position our economy. There is no doubt AFTA will heighten competition among firms within the region. But we must also be able to see the tremendous regional opportunities that AFTA can bring forth to Malaysian companies. With the inclusion of Vietnam. Loas, Myanmar and Cambodia into ASEAN, Malaysian industries now have a larger regional market of 500 million people with an estimated GDP of US$800 billion. And we need to point out here that we are geographically not far from all these regional capitals which are within three-hour flight accessibility.

The acceleration of AFTA would in fact render ASEAN a dynamic regional entity and should make ASEAN an attractive centre for foreign direct investments and a lucrative market for exports. It is expected that both intra-ASEAN trade and ASEAN trade with the world would increase. AFTA is bound to stimulate greater trade among ASEAN countries, at least to the extent that high-cost domestic production would be replaced by low-cost domestic production. It is expected that AFTA is more trade creating than trade-diverting given the relatively low tariffs in the ASEAN countries.

Greater liberalisation and opportunities are always accompanied by greater challenges. In the context of BIMP-EAGA, the positive development in AFTA should indicate to members of BIMP-EAGA the urgency to expedite the implementation of the various development programmes and initiatives agreed in the numerous BIMP-EAGA Senior Ministerial meetings. On the part of the private sector, there is an urgent need to follow-up all the MOUs signed and to ensure their implementation are carried out smoothly.

At the same time, the business community must be prepared to face stiffer competition from her neighbours and realign their strategies to consider the whole of ASEAN as a domestic market. Complementary industries are encouraged to merge, consolidate and work together to build stronger industries to compete internationally. In the spirit of ASEAN and BIMP-EAGA, economic cooperation is encouraged through resource sharing and specialisation of production among industries in the ASEAN region. With greater regional integration and cooperation, this will foster and strengthen industries within ASEAN and BIMP-EAGA in particular before facing the inevitable competition brought on by globalistion.

We have to quickly further strengthen our business niche, broaden our economic linkages and increase cooperation with other business communities in BIMP-EAGA. The sooner the business community faces up to this challenge, the better we are in facing AFTA.

At this juncture, I would like to commend the setting up of Sandakan-Zamboanga Business Council which is a step towards the right direction. I hope active participation and fullest support are given to ensure the success of this important council. I also hope similar councils would also be set up in other districts with their counterparts in BIMP-EAGA.

The State Government on its part is consistently playing its role to facilitate private sector’s initiatives in generating more economic activities in BIMP-EAGA at the sub-regional level and ASEAN at the region level.  Inputs from the private sector would continue to be sought to improve and enhance the business and investment conditions in the State in the spirit of Sabah Incorporated. The Sabah Business Council, the State Economic Action, BIMP-EAGA Malaysian Business Council and Sabah Industrial Council are consultative platforms to garner inputs from the private sector so as to strategically prepared the State for the challenges of liberalisation and globalisation.

Globalisation is inevitable and regional economic integration is a reality and a strategy to embrace globalisation. This is already happening in the world where more and more trade blocs and economic cooperations are being established. Some examples include North American Free Trade Area (NAFTA), Common Market for Eastern and Southern Africa, European Free Trade Association of non-EU members and increasing efforts to foster closer economic relations between Australia, New Zealand and ASEAN.

To Malaysia and Sabah in particular, the implementation of AFTA is just a foretaste of the challenges and opportunities posed by globalisation. Development in WTO will pose even greater challenges and at the same time create more opportunities for those who are competitive. Competition is the name of the game.

Hence, we do not have much choice but to force ourselves to face the challenges to compete and to be quick to grab opportunities that AFTA offers before facing the inevitable competition and pressures from globalisation.

With these remarks, once again I congratulate Sandakan Municipal Council for organizing such a crucial convention and I now have great pleasure to declare the “BIMP-EAGA Convention” officially open.

Thank you.

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