Dr. Mahathir’s thoughts on competitiveness in the ASEAN region

Dr. Mahathir was the Prime Minister of Malaysia from 1981 to 2003, a period spanning five terms. He has the record of the longest serving Prime Minister of Malaysia. During his term, Malaysia experienced rapid growth and poverty was practically eradicated.

He was a staunch supporter of the ideals of ASEAN during his time and this is considered one of the pillars of the organization.

Last Friday, October 13, he was the keynote speaker at the culmination of Finex Week with the theme: “Breaking Barriers to Competitiveness in the ASEAN Financial Sector.”

Dr. Mahathir’s first point was that when countries that are less developed trade with more developed countries, they are trading with a handicap.

Ways must be found to compensate for the handicap or else the less developed country will not fully benefit from the trade relationship.

The alignment of less developed countries as a trading bloc like the way that ASEAN developed was one way to make up for the handicap of the members for being less developed countries.

They benefitted from a bigger internal market among the members and together had a stronger bargaining position in trade with other countries.

Dr. Mahathir also shared his experiences in taxation and economic development.

He said that the right rate of taxation must be determined and adapted to the specific circumstance.

Sometimes, a lower taxation rate leads to greater investments and economic growth such that eventually, even tax revenues actually grow faster.

He gave a specific example of how his government brought down drastically the taxes on luxury goods. As a result, tourists from around the region came to shop and this created jobs and income.

Income tax collections on the businesses and individuals participating in this industry ultimately ended up being much greater than the revenues lost by bringing down the tax rates on luxury goods.

Dr. Mahathir was well known for being a strong proponent of investments in infrastructure.

He talked about the highway that his government had built from Singapore to Thailand a distance of over one thousand miles.

He said that while he let the private sector build and operate the highway, he realized that if they charged toll rates that were too high, many people may not be able to afford to use it and the positive impact on the economy would not be as desired. So he arranged for the government to grant low interest financing for the project proponents of the highway so that the toll rates would be lower.

The highway turned out to be a big success with businesses going up and thriving along the highway and property prices going up along the areas where the highway passed.

Dr. Mahathir believed in technology and industrialization. He said that he pushed the Proton car project as a Malaysian car not so much to compete with the car manufacturers of the advanced countries but more to develop the industrial base of Malaysia.

Finex members and its guests were most fortunate to hear Dr. Mahathir share his views on ASEAN and his experiences on economic policy making with candor and openness. Based on news reports, Dr. Mahathir will still be active in politics in Malaysia and with his youthful energy and intellect, we can certainly expect to be seeing more of him in the Malaysian and ASEAN news.

***** The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of FINEX. You may email Mr. Araneta at vaaraneta@yahoo. com