Wed, 31 Aug 1994

KL committed to achieving sustainable economic growth

As one of the strongest economies in Southeast Asia, Malaysia has enjoyed a buoyant growth over the past six years and, thanks to its natural wealth and favorable location for the conduct of trade between East Asia and the lands further west, it has also played growing roles in both the political and economic fields.

Supported by the strength of its exports and a revival of domestic demand, it achieved a growth of 7.8 percent in 1992 and the national income, on a per capita basis, increased by 10.1 percent to 8,300 Malaysian ringgit in 1993. Also, the rate of inflation which in 1992 hovered around five percent was successfully pushed down to 3.8 percent last year. Unemployment was also down to only three percent of the total labor force from 5.4 percent in 1992, thereby achieving full employment.

Entering its 37 years of independence, Malaysia is committed to continuing to play its roles in the international arena.

Politically, it has undertaken a number of initiatives to forge closer ties with countries in and outside the region.

Prime Minister Mahathir Mohamad's visit to Latin America, Britain, Ireland, Africa and France in the past two years reflected the dynamic foreign policy of the Kuala Lumpur government, not to mention his trips to Vietnam and other visits by high-ranking Malaysian officials to the stabilizing states of Indochina.

Another living proof that makes Malaysia a country which the international community has to reckon with is when Prime Minister Mahathir made a linkage between the environmental issue and the world development.

At the Earth Summit in Rio de Janeiro in June 1992, an important event of the United Nations Conference on Environment and Development, he daringly defended the policies of developing countries to utilize their rain-forests for their timber industries which eventually helped fund the countries' developments.

Malaysia, like Indonesia, has been criticized time and again by industrialized nations for allegedly exploiting its rain- forest to help finance its development programs. During the summit Mahathir challenged the developed countries to "clean their own environments".

Prior to Rio Summit, Malaysia, in fact, had helped frame the Langkawi Declaration in 1989 when the heads of government of the British Commonwealth held a meeting in Kuala Lumpur. The declaration contains many important issues of sustainable development, which later became the key topics in the Earth Summit.

In addition to this, Malaysia's participation in trying to help create peace in war-torn Bosnia by sending its peacekeeping troops to the troubled area obviously reflects the growing roles the Kuala Lumpur government is playing.

Economically, Malaysia -- which constitutes the world's largest producer of palm oil, tin, natural rubber, and a major producer of cocoa, pepper, and timber -- has shown encouraging signs of stability.

The growth rate which Malaysia enjoyed over the past few years, according to a number of economic analysts, was due to the dynamism of the export-oriented manufacturing sector, which has been replacing traditional commodities such as palm oil, tin and rubber as the basis of the expansion.

Growth in the manufacturing, construction and service sectors continued to outpace overall Gross Domestic Product (GDP) growth. The manufacturing sector which expanded by 13 percent last year continued to remain the second largest economic sector, contributing 30.1 percent of GDP growth. Growth in the construction sector stood at 11.5 percent last year compared to 11.2 percent the year before.

Growth in real aggregate domestic demand picked up considerably, expanding at 6.7 percent in 1993, compared with 4.6 percent in 1992. Real public expenditure rose at a higher rate of 9.9 percent in 1993 compared with 7.1 percent in 1992, mainly due to the increase in public consumption, which last year expanded at 7.4 percent against four percent in the previous year.

Last year's growth in private investment remained strong at 9.2 percent compared with 6.6 percent in 1992.

Based on this fact the Malaysian government has predicted a brighter economic prospect for this year, where real GDP growth is projected at 8.4 percent, while maintaining price stability and improving the competitive edge and productive capacity of the country's economy.

The adoption of Malaysia's New Economic Policy (NEP) in 1970, which was designed to encourage the participation of ethnic Malays in commerce as well as to redress the imbalances of wealth distribution among the country's population -- which makes up of 59 percent Malays, 32 percent Chinese and nine percent Indians -- seems to bear fruits after Kuala Lumpur government applied the NEP program for 20 years.