Podium: The whole nation is a corporation

From a speech by the Prime Minister of Malaysia to a Conference on Corporate Governance

THESE ARE changing times for companies in east Asia. The impact of currency speculations which started as a ripple has created a "tsunami" effect in our economies, destroying in its wake decades of socioeconomic achievements that were the result of the blood, sweat and tears of a nation's populace. Our cherished institutions are being severely tested while critics have paraded their usual generalisations and pronouncements. They say that we lack credibility. They insist that we have been lackadaisical in our enforcement of laws and regulations. They raised concerns about cronyism and say that our attempts to moderate the impact of bankruptcies are bail-outs. Above all these critics who themselves operate in absolute secrecy condemn us for our alleged lack of transparency.

It is amazing that the same self-appointed critics were applauding our east Asian miracle not too long ago. Everything that we did then was right and should be emulated by everyone. They urged their clients to move their capital to our capitals. Prudence in lending to companies was thrown out of the window. We were persuaded to lower our barriers and admit their capital and practices into our countries with promises of rapid wealth creation. There were talks of a world without borders, a globalised world in which the wealth of the rich would flow to poor countries.

Then, overnight, we are told we are no longer attractive. Capital flight becomes the order of the day. When we try to protect our economic sovereignty we are severely punished by further impoverishment through devaluation of our currency and emasculation of our stock-markets. We admit that there are weaknesses and unacceptable practices in the management of our economies. But they are no worse than the weaknesses and malpractices of the developed countries when they were growing. Their rampant capitalism was so oppressive that the working classes revolted and gave rise to the socialist and Communist ideologies. As we all know, the conflicts that followed cost millions of lives, a hot and a cold war that sapped the wealth of the whole world.

Unlike many newly independent countries, Malaysia did not discard the market economy in favour of socialism and Communism. But we made the market an instrument for social engineering in order to achieve justice and fairness to all in our multiracial society. The ways of Robin Hood were avoided. The rich were not robbed in order to give to the poor. Instead the rich, through their capital and their entrepreneurial skills, were made to generate wealth for everyone. Upward mobility for the population was made possible by generous provision of educational facilities.

The government adopted privatisation as a strategy for economic growth. In Malaysia the necessity for an anti-monopolies law or anti-trust law as found in some Western countries does not arise. No monopoly has been given to any company, certainly not on a nationwide basis. Where there is a need to avoid duplication of costly infrastructure, the country is divided into regions and each region is given to one company on a competitive bid basis.

In Malaysia we have decided that the private sector has a big role to play in the development of the nation. They create wealth and jobs and they pay taxes. Since what they do is important for the nation, the government should in fact facilitate the smooth functioning of private enterprise. This requires continuous feedback and support by the government. And so the concept of Malaysia Incorporated was adopted, a concept that regards the whole nation as one large corporation in which the government and the private sector together with the workers should contribute towards its success.

Through privatisation and the Malaysia Incorporated strategy the country was set to grow, so that by 2020 we would become a developed country. Unfortunately we are now seeing the return of rampant capitalism. The old capitalists were confined to their own countries. Modern technology and the ease with which huge funds can be accumulated and managed has given the new- capitalists tremendous powers. With billions and even trillions at their disposal, they can now challenge whole governments. The free flow that should bring wealth to the poor countries of the world has now brought about their impoverishment. Although government practices and lack of openness may be blamed, there can be no doubt that the loss of control over exchange rates and the cross-border flow of capital are responsible for the financial turmoil now assailing the countries of east Asia.