KUALA LUMPUR, 4 August 2004 — Malaysian Prime Minister Abdullah Ahmad Badawi yesterday urged the 10-member Association of Southeast Asian Nations (ASEAN) to speed up economic integration to better compete with China and India.
Abdullah said it was crucial for the region to pool its resources and create a mass market of half a billion people to “position ourself in competing with China and India, the two giants of Asia that are coming up very, very quickly.”
He told a two-day economics conference here that Malaysia did not view China as a threat but more of an opportunity due to its huge consumer market and as a challenge for the country to improve its competitiveness.
“A big economy like China is certainly an opportunity for us if we do not do the same thing that China does in producing goods cheaply because of the advantage of cheap labor cost,” said Abdullah, who is also finance minister.
“We can find a niche for ourselves by producing quality goods using high technology. We need to be competitive.”
UBS head of Asia-Pacific economics Jonathan Anderson told the conference that Asia has rebounded strongly after the 1997-98 regional financial crisis but economic integration remained a huge challenge. “It is clear that Asia is back on its feet but ASEAN today remains a distressingly fragmented place. ASEAN needs to compete as a whole rather than individual states,” he said.
The regional grouping hopes to have its own free trade area beginning 2010 and a European-style single market 10 years later. It is negotiating with China to create the world’s biggest trade zone and similar plans are in the works with South Korea and India.
Meanwhile, imports to Malaysia hit a record monthly high in June with the country on track to surpass its full-year gross domestic product (GDP) growth target for 2004, Badawi said yesterday.
Data from the Trade Ministry showed that imports in June surged 38.4 percent year-on-year and were up 9.6 percent from May to hit a record 34.66 billion ringgit ($9.12 billion).
The rise came as the country bought more capital and intermediate goods to “sustain manufacturing activities to meet external demand,” the ministry said.
Increased purchases of intermediate goods is usually reflected in a pickup in exports two or three months later.
Exports in June rose 22.2 percent year-on-year and were up 3.2 percent from May to reach 39.75 billion ringgit. The increase was fueled by rising demand for electrical and electronic products, wood products, and optical and scientific equipment, the ministry said in a statement.
June’s trade surplus reached 5.09 billion ringgit, down from a revised 6.9 billion in May but up from 7.48 billion ringgit a year ago, the ministry said. It marked the 80th consecutive monthly trade surplus since November 1997.
For the first half of the year, Malaysia’s trade surplus dipped 9.4 percent from a year earlier to 37.46 billion ringgit.
Badawi said the Malaysian economy has become more resilient and competitive after recording its strongest GDP growth in more than three years in the three months to March. “Growth in the first quarter of this year was 7.6 percent and the latest indicators suggest that we stand a good chance of achieving, if not surpassing growth forecasts for 2004,” he said.
The government is projecting the economy to grow between 6.0 to 6.5 percent in 2004.
Analysts said June quarter GDP data, which would be released on Aug. 25, was expected to show the economy growing above seven percent on an annualized basis.
