KL calls for East Asian grouping

KL calls for East Asian grouping

Agence France-Presse, Kuala Lumpur

Malaysian Prime Minister Abdullah Ahmad Badawi renewed a call on Tuesday for the establishment of an East Asian community as he sought closer integration with emerging economic giant China.

Opening a Malaysia-China economic forum here, Abdullah said China's economy was currently the sixth largest in the world and the key consequence of its rapid growth was that the world's center of economic gravity would shift towards East Asia.

He said East Asian integration was vital because the 1997-1998 Asian financial meltdown had clearly shown the region was left very much to fend for itself in times of crisis.

"The East Asian enterprise must weigh heavily in our considerations and deliberations. We should pull out all the stops to get functional cooperation going and let the world know that we are absolutely serious about the direction we are taking," he said.

"We should take note of our differences, particularly our disparate capabilities and interests, but then we should move on rather than keep harping on the reasons why we cannot get together."

Abdullah is carrying forward the mantra of his predecessor, veteran premier Mahathir Mohamad, who mooted the idea of an East Asian Economic Grouping more than a decade ago but saw the idea dropped amid strong opposition from the United States.

Abdullah said bilateral trade with China ballooned from 4.6 billion ringgit (US$1.21 billion) in 1992 to 44.1 billion ringgit in 2002. Last year, Malaysia was China's seventh largest export market while China was Malaysia's fourth, he said.

But Abdullah said China was still unchartered territory for many Malaysian businessmen, and called for more government-to- government engagement with China to increase the opportunities for cooperation.

Referring to pressure on China to revalue its yuan and on Malaysia over its ringgit peg of 3.80 ringgit to the dollar, fixed since 1998, he told a dialogue session later that Malaysia had no plans to review the peg because the country was still benefiting from the fixed rate.

"We are not changing it. We are still benefiting from the current policy at the present exchange rate. It provides stability," he said.

The one-day forum is part of year-long events to mark the 30th anniversary of diplomatic ties with China, officials said.

Jonathan Zhu, managing director of Morgan Stanley Dean Witter Asia, told the conference China's exports could reach $750 billion by 2010 from $326 billion last year, turning it into the world's largest exporter.

In his paper, he said China already dominated consumer electronics manufacturing, and would also soon be a leader in information technology hardware and the automobile industries. China now produces 17 million cars but production is expected to surge to 50 million by 2012, he said.

Some 40 million people in China's workforce have college degrees, and this will rise to 60 million in the next 10 years, spurring the growth of its 300 million "middle class" population which will fuel the next round of economic growth, he said.