Malaysia New Zealand Business Council Dinner

Kuala Lumpur, Malaysia

It's good to be here among friends this evening after a busy day at the Leaders' meeting.

We appreciate your hosting this function this evening.

Malaysia and New Zealand are good friends. My time in Kuala Lumpur has made this abundantly clear.

Your Council plays a valued role in promoting trade and investment between Malaysia and New Zealand.

The links between our economies go back a long way and they are truly global in scope - from Antarctica, to the United Nations, from regional security and defence, to the Commonwealth and the World Trade Organisation.

Just next week some Malaysian and New Zealand academics are meeting here in KL to discuss the connections between the Malay peoples and the peoples of the Pacific. This is a fascinating theme for scholars.

Our friendship has endured through times of peace and of crisis.

The personal ties between us give life, durability and vitality to our relations. Over the years, many thousands of Malay students have come to New Zealand to study.

Today, by far the largest number of foreign students in New Zealand are from Malaysia.

I have a large university in my own electorate, at Lincoln, which welcomes many overseas students each year, including those from Malaysia. It is wonderful to see a number of Lincoln alumni here this evening. Your presence is very special.

Malaysian students in New Zealand have a well-earned reputation for hard work, assiduous study, and an ability to enjoy life as well.

The legacy of these direct contacts is a series of friendships, networks, experiences and impressions that are a bedrock for the relationship between our countries.

Our relations are also underpinned by solid economic links.

Malaysia is New Zealand's largest export market in ASEAN and our 11th largest in global terms.

Two-way trade has reached almost $NZ900 million in the year to June, with the balance slightly in your favour. And this was when we were both facing tough times.

I would note, in passing, that your exports to us increased last year by 27 percent - a sign that as a Council you are clearly succeeding in your work!

Our open economy is a win-win solution. New Zealand consumers and manufacturers can buy at world best prices and Malaysia's exporters have the opportunity to compete in our market.

In addition to two-way trade, investment in both directions has enabled you, the business community, to work together to our mutual advantage.

New Zealand welcomes foreign investment. And I am assured that Malaysia does also.

Burton, my husband, was impressed by his visit yesterday to a joint venture investment project in Pahang which has New Zealand, Malaysian and other external investors engaged in a major pulp and paper operation.

Such partnerships between New Zealand and Malaysia involve long term commitment. I know that many Council members here tonight are equally committed in different ways to business partnerships between our economies.

In manufacturing, food processing, fishing, forestry, tourism and technology, to name a few, an extensive range of two-way investments now help bind our economies together.

New Zealand and Malaysia both are global trading nations. We each have a vital interest in the stability and growth of the global economy, and within it the Asia Pacific region.

New Zealand did not expect, when we accepted the Chair of APEC for 1999, that the coming year would be one of economic downturn. APEC, after all, grew out of a period of rapid growth and sustained optimism.

But we should not forget that the swings of economic cycles are nothing new.

I was interested to read comments by Dr Mahathir that "Lagging international demand and weak commodity prices will affect our export earnings considerably. The period will be most challenging."

Prime Minister Mahathir, ladies and gentlemen, was writing in the foreword to the Fifth Malaysia Plan, in March 1986.

We have all faced difficult times before, and no doubt we shall do so again in the future.

But it was entirely right that this year's Leaders' meeting of APEC focused squarely on the downturn that started in Asia last year, and has since spread to affect the global economy.

We agreed on steps to set a course out of the turmoil. Malaysia, as Chair, deserves credit for steering our discussions in sensible directions.

To my mind this year's APEC Leaders' meeting has seen the organisation come of age. Up until now it has been easy-going.

The vision of Bogor, of an Asia Pacific region bound together by free trade and investment and cooperation, was forged in optimism and shaped by expectations of continued growth.

It would have been easy at this Leader's meeting to have stepped backwards, and to have retreated into protectionism.

We did not step backwards.

Under Malaysia's Chair we instead took a further step towards achieving the goals of APEC.

The outcomes achieved on trade liberalisation were not easy.

Nor are they perfect. But Governments chose not to let perfection stand in the way of progress.

The pace of trade liberalisation will be accelerated through the early voluntary sectoral liberalisation programme.

We are going to cut the costs of business, increase export returns, and give greater choice to consumers.

Most APEC economies agreed on the immediate commencement of reduction of tariffs across nine important sectors of economic activity. All APEC economies have undertaken to take the EVSL package into the World Trade Organisation and thereby seek to broaden coverage to include the balance of the WTO membership.

Asia Pacific economies, representing over half of world trade, have signalled their commitment to reducing and removing import tariffs across billions of dollars of trade.

If that's not progress then I'm not sure what is. APEC has shown its ability, in difficult times, to forge a liberalisation package that is all the more credible because of the difficulty we had in reaching it.

Helpful as the trade outcome was, the key focus of this year's meeting was undoubtedly on the current economic downturn. Here again, APEC's worth was tested and here again, to my mind, was strengthened.

Our focus was not to dwell, with nostalgia or dismay, on why our decades of growth have suddenly stopped.

We know the underlying reasons for the economic shocks and loss of confidence.

We know that the causes lie both in the architecture of the international financial system and the character of domestic economic plans and institutions.

In Kuala Lumpur this week our focus has been, as it should be, on remedies rather than rhetoric.

We agreed that the major challenge is to find policies that will support early recovery and sustainable growth in the region.

APEC has a major role to play in this area.

Through APEC, we can explore ideas on what policies have worked, and have not worked, in pursuing growth and confidence, and learn some lessons on what policies may reduce vulnerability to capital and exchange rate shocks.

No one has a monopoly on wisdom. But we can all contribute to a "toolbox" of policy ideas that can help others in building strong transparent domestic financial systems that inspire investor confidence.

And we can contribute to reviewing the architecture of the international financial system where this is warranted. To my mind, we do not need to rebuild the Bretton Woods system. But there is a case for closer surveillance of the nature of capital flows so that we can understand them better, harness the gains, and manage the risks inherent in a globalised economy.

APEC Finance Ministers and Leaders have agreed to do just that.

We will not be rebuilding the structures of Bretton Woods. But we will have a better wiring diagram to help avoid and manage shocks in the future.

Trade and investment facilitation received a strong boost from Kuala Lumpur.

This is all about cutting through the red tape and reducing the costs of trade between our economies.

For every dollar added to the region's economy through APEC's liberalisation plans, a further two dollars will come from reductions in business costs through achieving APEC's facilitation objectives.

This year useful progress has been made towards reforming customs procedures, increasing mutual recognition of standards and simplifying travel by business people.

Such work is of particular benefit to small and medium enterprises which provide the bulk of the jobs in our economies.

Dialogue with business will be a key theme of New Zealand's chairing of APEC in 1999. A number of business events are in prospect.

These include business sessions around the Small and Medium Enterprises Ministerial Meeting in April; a Women's Leaders' Network Meeting and a Business Symposium in June, and a private sector CEO Summit in Auckland in September at the time of the APEC Leaders' Meeting.

We'll also be pleased to engage you in new trade and investment opportunities in New Zealand. We hope, at the same time, you can catch the excitement of our defence of the America's Cup in yachting, and preparations for the new Millennium.

I hope many of you will take the opportunity to visit us.

We want to see next year:

further substantive progress towards trade and investment liberalisation and facilitation;
a credible APEC response to the economic crisis;
reinforcement of the capacity of institutions and human resources in the region to deal with the economic challenges we all face, and
the building of broader support for APEC among the wider communities of which we are part.
I look forward to working with you as we undertake these tasks, successfully, in the coming year.

I also look forward to welcoming you to our country, where the New Zealand people are keen to share with you our enthusiasm about the future and where you will have the opportunity to discover New Zealand for yourselves.