Oleh/By		:	DATO' SERI DR. 
			MAHATHIR BIN MOHAMAD 
Tempat/Venue 	: 	BANGKOK, THAILAND 
Tarikh/Date 	: 	12/02/2000 
Tajuk/Title  	: 	THE PLENARY SESSION OF THE TENTH 
			UNITED NATIONS CONFERENCE
			ON TRADE AND 
			DEVELOPMENT (UNCTAD X) 




I  would  like to thank UNCTAD for inviting  me  to
  address  this distinguished gathering.  This  conference
  is  timely in the light of recent developments impacting
  the   global   economy,   particularly   of   developing
  countries.
  
  2.    This Conference provides an excellent occasion for
  us  to take stock of the lessons and experiences of  the
  past;  and  to  look  forward  to  new  ideas  and   new
  programmes, to meet the developmental needs of the  21st
  century.    The   theme  of  the  Conference   is   most
  appropriate  as  we  all  want to  see  the  benefit  of
  globalisation   being  shared  by  all   including   the
  developing countries.
  
  3.    Looking back at the last few decades, I cannot but
  acknowledge  that  it  has been a  time  of  significant
  changes  for  developing countries.   For  many  of  us,
  managing  our  own destiny is new.  Our experience  with
  development  therefore, has been comparatively  limited.
  A  number of us have achieved some measure of success in
   economic development; but there are many which have  yet
  to achieve any significant progress.
  
  4.     Many   of   us   have  on  our   own   undertaken
  liberalisation measures by opening our markets to  trade
  and   investment,   evolving   our   institutional   and
  regulatory   systems,  orientating  our   economies   to
  external    challenges    and    eventually    welcoming
  globalisation,  in  the  hope  of  benefiting  from  the
  opportunities afforded by this process.
  
  5.     These   developments  have  occurred  against   a
  backdrop  of changes over which we have little  control.
  Political   stability,  natural  and  human   resources,
  capital  and  investment, were once the only ingredients
  in    the   formula   for   development.    But    today
  technological advances, borderless flows of capital  and
  the   advent   of   a   knowledge-based   economy   have
  complicated  the  development  equation.   We  are   not
  certain  we  can deal with this new complex  environment
   which  changes even as we try to adjust  to  them.   And
  because  we are not so competent in dealing with  these,
  our   development  have  been  and  will   be   affected
  adversely.
  
  6.    What  we  do know is that the path to  development
  has  never been easy even at the best of times.  Despite
  our  efforts we see rising inequality between  developed
  and developing countries, with continued high levels  of
  poverty  and  unequal  and  inequitable  benefits   from
  globalisation.   We  see increasing uncertainty  of  the
  global    economic   environment.    We   see    greater
  marginalisation   as  a  result  of  the   globalisation
  process.  And  we  see  growing  inadequacy  of   global
  institutions to deal with developmental problems.
  7.    Income  inequity is growing.   There  are  growing
  divergences between the incomes of the richer  group  of
  countries   and   the  poorest.   The  major   developed
  countries  have GDP per capita over 25,000  U.S.  Dollar
   while  the  poorest have as little as 100  U.S.  Dollar.
  It  seems  that the benefits of international trade  and
  investments have been unequally shared among  countries.
  The   current  belief  by  the  global  community,  that
  countries  must embrace liberalisation and adopt  global
  rules  and development would then follow, have not  been
  proven   correct.   It  would  seem  that  the   current
  practices  in trade and investments are not  capable  of
  distributing wealth equitably.
  
  8.    The instability in the global financial system has
  also  adversely  affected us.  Just  two  years  ago,  a
  number of East Asian economies were badly affected by  a
  severe  financial  crisis.  Although there  is  recovery
  now  but  the  global financial system continues  to  be
  characterised  by volatile capital flows  and  excessive
  speculative  activities of the hedge  funds  and  highly
  leveraged  institutions  (HLIs).   Developing  countries
  continue  to remain vulnerable to another crisis  unless
   reforms  to  the  international  financial  system   are
  undertaken.
  
  9.     Meanwhile   the  affected  economies,   including
  Malaysia,  have undertaken strong economic measures  and
  instituted financial reforms to address weaknesses  that
  have  emerged and to restore confidence in the  economy.
  Although  in  the  initial  stages  Malaysia  found   it
  necessary  to follow the advice of the IMF,  we  had  to
  abandon  the  IMF  prescription because things  actually
  got  worse faster.  We noticed that the IMF approach  of
  high  interest  rates  and  tight  liquidity,  far  from
  reviving confidence, led to a severe contraction of  the
  real economy and an overhang of debts.
  
  10.   We  were  thus  compelled to adopt  and  implement
  measures  consistent with our domestic circumstances  in
  order  to  address  the  issues  of  economic  recovery.
  These  measures although unorthodox, have helped to  put
  the  economy  on a path to recovery.  We relaxed  fiscal
   policy,  reduced  interest rates and  imposed  selective
  exchange  controls to eliminate the internationalisation
  of   the   Ringgit  and  regulate  volatile   short-term
  portfolio  flows. No controls were imposed  on  movement
  of   funds  for  international  trade  settlements   and
  Foreign  Direct  Investment (FDI).  These  are  free  to
  come  in  and  leave  the  country  at  any  time.   The
  controls   brought  about  sustained   stability   which
  enabled  us to take various measures to bring about  the
  on-going broad-based economic recovery.
  
  11.   As  a  recalcitrant and heretic I  would  like  to
  insist  that  the affected economies of East  Asia  were
  practising  the right economic policies,  which  enabled
  them  to  enjoy  high rates of growth.  Current  account
  deficits  and  bank borrowings which were  on  the  high
  side,  are to be expected, given the openness  of  these
  economies and their high rate of economic growth.   Some
  believe  that periodic financial crises may be  a  small
   price   to  pay  for  the  development  resulting   from
  liberalisation  and globalisation.   But  is  it  really
  necessary  to have financial crisis every now and  then,
  especially  the  severe kinds which  affected  the  East
  Asian    tigers   and   dragons?    Cannot    we    have
  liberalisation  and globalisation with  less  disruption
  for  economies  which are as yet not too  resilient?   I
  think  we  can  if we are not too rigid in our  thinking
  about   globalisation   and   liberalisation   and   our
  tolerance of abuses of the system.
  
  12.    It   is   disappointing  that  the  international
  community  cannot  think of any other  solution  to  the
  crisis  in East Asia except to call for improvements  in
  transparency and governance.  The argument is that  lack
  of  transparency and accountability makes  it  difficult
  for  markets to function well.  And when the players  in
  the  market  feel  uncomfortable  they  just  pull  out,
  regardless  of  the consequences to the countries  which
   had  in the past given them good returns.  Cannot  there
  be  other  ways  of  responding to the  discomfort?   It
  seems  that  the  international community  is  now  more
  concerned  to  avoid  periodic crisis  and  has  set  up
  various  committees and working groups  to  study  these
  and  to suggest a new architecture for the international
  monetary  system.  This include the setting  up  of  the
  Financial Stability Forum and the G-20.
  
  13.   But  Malaysia remains pessimistic on the  outcome.
  The  membership  of the G-20 seems to  make  it  heavily
  influenced  by  the  views of developed  countries.   We
  hope  the  G-20 agenda will not be limited to  promoting
  information  exchange and co-ordination  among  national
  authorities,     international     institutions      and
  international  regulatory or relevant expert  groupings.
  In  our  view,  central to the issue of  reform  of  the
  international  financial system is the need  to  address
  the  volatility  of capital flows, particularly  through
   direct  regulation of hedge funds and  highly  leveraged
  institutions.
  
  14.    We   are   also  concerned  that  although   much
  discussion  has  taken place, and agreement  reached  on
  certain  specific  issues, implementation  details  have
  yet  to  emerge.   We recognise that some  progress  has
  been  made  to  address the issue  of  transparency  and
  disclosure  as  well  as indirect regulation  of  market
  players.   But  even in these areas we are  yet  to  see
  concrete  measures.   Until  and  unless  there   is   a
  reshaping  of  the international financial architecture,
  we  can  expect  the global economic  system  to  remain
  inherently  unstable and this would not be conducive  to
  further  development, particularly  for  the  developing
  economies.
  
  15.   While  some countries have adjusted and  benefited
  from  the liberalisation and globalisation process, many
  because  of  their  low  level of development  have  not
  managed   to   get   a   share  in   the   benefits   of
   globalisation.   In   the   context   of   the   present
  environment,  capital  flows  have  been  channelled  to
  where the returns are highest, and not where capital  is
  most   urgently   needed  to   uplift   the   level   of
  development.   Considering that we place such  faith  in
  market forces, this is only to be expected.
  
  16.   Further,  the benefits resulting from  the  rules-
  based  multilateral trading system as  embodied  in  the
  WTO,  have  not  been  equally  distributed  among   all
  countries.   Tariff   reductions   in   industrial   and
  agricultural  products,  as  well  as  improved  trading
  rules  are of little consequence to these countries,  if
  the  products of export interest to them are not granted
  market access.  Commodity exports, the mainstay of  many
  developing  economies,  continue  to  experience  severe
  declines in their terms of trade.
  
  17.     Existing    international   infrastructure    is
  inadequate  to  deal effectively with the  developmental
   problems  and  crises.  The international  institutional
  machinery,  comprising the United Nations, the  IMF  and
  the  World  Bank, have not been able to  cope  with  the
  challenges confronting the developing world.  The  Asian
  financial crisis has clearly shown the inability of  the
  developed  world  and the international institutions  to
  respond to crises and the effects of contagion.
  
  
  18.   Poverty  and unequal distribution of  wealth  have
  resulted in security and social problems.  And they  are
  likely  to  continue  to  do so  in  particular  in  the
  developing  countries.  We must be sincere  and  earnest
  in  finding  solutions, solutions that can  realise  the
  full economic potential of developing economies, and  to
  reduce  significantly the problems of  poverty,  hunger,
  ill health, aids, illiteracy and gender discrimination.
  
  19.    The  responsibility  to  address  the  issue   of
  development  is  a collective one.  Developed  countries
  must   play   an  active  role  in  assisting  countries
   affected   by   these  problems.   However,   developing
  countries must accept that we too have to do our bit  to
  ensure  that  sustainable growth and prosperity  can  be
  attained.
  
  20.   Firstly,  developing countries  must  continue  to
  enhance  domestic  resilience  and  capacity.   We  must
  continue to invest in human resource development, to  be
  equipped  with the skills and knowledge to cope  with  a
  rapidly   changing  world  dominated  by   technological
  innovations and advances.  Investment in education  with
  emphasis  on  science  and  technology  must  be   given
  priority.   Attention  must be  given  to  strengthening
  domestic  institutions and the framework of laws,  rules
  and  regulations to ensure resilience  in  the  face  of
  challenges posed by globalisation.
  
  21.   Secondly,  apart  from the efforts  of  developing
  countries,  industrial countries  also  have  a  special
  responsibility to facilitate this process, by  assisting
  developing  countries gain access  to  knowledge,  ideas
   and  inventions,  which  must be  made  available  at  a
  reasonable   price.   Intellectual  property   must   be
  protected  but consideration must be given to the  needs
  of  the poor.  By all means profit from the intellectual
  rights  but  make those who can afford  pay  more  while
  reducing the profit from the poor.
  
  22.   The new millennium will continue to witness  rapid
  advances  in  information technology,  which  will  have
  wide-ranging implications on developing countries.   The
  Internet  has  become  a force of tremendous  potential.
  Those  who can see the usage it can be put to will  gain
  tremendously.  Those who are still dazed by the ease  of
  access  to  information, to the market and to people  in
  general  will  just  stare at  the  screen  while  their
  little  businesses get pulverized by  the  amazing  dot-
  coms   companies.   By  the  time  they  awake  to   the
  potential it may be too late.  UNCTAD could undertake  a
  set  of  programmes to promote better understanding  and
   capacity building in this area.
  
  23.   Thirdly,  all  countries  must  work  together  to
  manage   the   globalisation  process  for  our   mutual
  benefit.   The  trading regime under the WTO  can  bring
  both  benefits and challenges.  In the context of  trade
  liberalisation,  greater flexibility must  be  given  to
  developing  countries for a wide variety of options  and
  responses  to deal with the complexities of  development
  and nation building.
  
  24.    This   aspect  and  the  special   situation   of
  developing  countries are often not given  adequate  and
  appropriate    treatment   in    trade    liberalisation
  negotiations.   Developing countries cannot  and  should
  not  be  expected  to undertake obligations  at  similar
  levels  as developed countries.  Market opening measures
  expected  of  developing countries must be  commensurate
  with  the  level  of  development.   The  principle   of
  progressive liberalisation must not only be an  integral
   element of any WTO trade liberalisation initiative,  but
  must be fully recognised by all.
  
  25.   Fourthly,  to  be  able to  manage  the  pace  and
  direction    of    liberalisation   and   globalisation,
  developing  countries  must be  allowed  to  effectively
  participate  in  the  decision  making  process  in  all
  international institutions.  International  institutions
  must  have the mechanisms to allow the views of  all  to
  be   heard.   The  decision  making  process   must   be
  transparent and must reflect not just the views  of  big
  business   and   big  Governments  but  those   of   the
  threatened  small  business  and  small  Governments  as
  well.   The recent WTO Ministerial Conference in Seattle
  clearly demonstrated the need to involve even the  NGO's
  in  the  decision making process.  It is time  that  the
  relevant  NGO's  be given a proper forum  to  air  their
  views.   Street  demos can serve as a wake-up  call  but
  their usefulness is quite limited.
   
  26.   Frankly  speaking I am worried and  frightened  at
  the  preparations being made by corporations in  certain
  industries  and  business activities in  order  to  take
  advantage  of  liberalisation and globalisation.   I  am
  referring  to  the  mergers and acquisitions  which  are
  making big corporations even bigger.  Now many of  these
  corporations are financially more powerful  than  medium
  sized  countries.  While we welcome their  collaboration
  with  our  local  companies, we fear that  if  they  are
  allowed  into  our  countries unconditionally  they  may
  swallow up all our businesses.
  
  27.   A  situation of worldwide oligopoly seems  already
  to  be emerging.  If market forces are allowed free play
  then  oligopolies may end up as monopolies.   I  believe
  that  the  general  consensus  is  that  monopolies  are
  unhealthy.   Can  it be possible that a  corporation  is
  not  a  monopoly  in  its  country  of  domicile  but  a
  monopoly  in  the rest of the world?   In  such  a  case
   whose  laws  will apply?  And if we restrain them  would
  we  be  accused of not subscribing to globalisation  and
  liberalisation?
  
  28.   Clearly UNCTAD 10 has a big agenda before it.   If
  you  want  to make globalisation an effective instrument
  for  the development of all countries and people, it  is
  imperative  that you take serious notice  of  the  fears
  felt   by   the  developing  countries  about  what   is
  happening  to the world's economy, the world's financial
  system    in    this   era   of   interdependence    and
  globalisation.   You  have also to  let  the  developing
  countries  have a say in the interpretation and  shaping
  of  the  new  forces  that  are  being  unleashed  by  a
  globalised world where policies and practices are to  be
  standardized so as to facilitate trade and investments.
  
  29.   We  must not forget that UNCTAD is not just  about
  trade.   It  is  also  very much about  development  and
  development   is  the  particular  need  of   developing
   countries.    Other   fora   are   already   exclusively
  concerned  with  trade.   UNCTAD  is  one  of  the   few
  concerned  with development and because of  that  it  is
  extremely important to the developing countries.
  
  30.   I am confident that the deliberations during  this
  Conference  will result in concrete outcomes  that  will
  set  a new direction for development, in terms of a  new
  development strategy that embodies elements  that  would
  enable  in particular, developing countries to meet  the
  challenges  of the 21st century.  UNCTAD must  assume  a
  leading role in achieving this objective.