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7.
The world is witnessing, among others, trends in the
mergers of large conglomerates that now challenge the
traditional ways of conducting and managing
businesses. The advent of the
knowledge-based
economy or K-economy is now a reality and threatens
the conventional concept of comparative advantage. The
global technological revolution and the use of
information and communications technology (ICT) have
opened up prospects and business opportunities in
various new fields. We accept globalisation. We only
need to be cautious and vigilant in facing all the
challenges and impediments whilst preparing to seize
the tremendous opportunities that are emerging.
II. ECONOMIC CHALLENGES
8.
The nation’s economic recovery has been impressive.
It has been a ‘V-shaped’ recovery with GDP
rebounding from a contraction of 7.4 per cent in 1998
to a growth of 5.8 per cent in 1999. GDP is expected
to expand by 7.5 per cent this year, far exceeding the
earlier forecast of 5.8 per cent. We take even greater
pride in the fact that this growth was achieved in an
environment of low inflation. Income per capita
continued to increase to 12,883 ringgit, exceeding
that prevailing in the pre-crisis period. The
purchasing
power parity of rakyat has also risen to 7,716 US
dollars. The balance of payments continues to
strengthen with the current account surplus totalling
29.8 billion ringgit or 9.9 per cent of
Gross
National Product (GNP). The external reserves as at 23
October 2000, amounted to 32.3 billion US dollars,
sufficient to finance 5.1 months of retained imports.
The Kuala Lumpur Composite Index is now at 796.22
points, indicating a recovery of 14.1 per cent
compared with the lowest level of 697.80 points
registered during this year.
9.
Inflows of foreign direct investment (FDI) have
increased. Investment applications in the
manufacturing sector to the Malaysian Industrial
Development Authority (MIDA), increased significantly
by 67.6 per cent valued at 17.5 billion ringgit in the
first seven months of 2000. In the 2000 Budget, I
announced the Pre-Packaged Incentives to encourage
investment and business activities. To date, the
Government has approved a total of seven projects
valued at 11.25 billion ringgit. In addition,
investments in high technology projects in MSC
totalled 2.8 billion ringgit.
10.
Although our economic performance has been remarkable
and the strong growth momentum is expected to be
sustained, there still exist risks and uncertainties
in the economic and business environment both from
within and without that can threaten our sustained
growth. Among the major challenges are to:
i.
increase inflows of FDI;
ii.
improve the nation’s competitiveness;
iii.
sustain the surplus in the balance of payments
and
contain inflationary pressures;
iv.
improve the efficiency of the services sector;
v.
diversify exports and export markets; and
vi.
ensure that wage increases are commensurate
with
productivity improvements.
11.
As such, we need to redouble our efforts, mobilise our
resources and move in concert to face the challenges
before us. We need to be more resourceful and vigilant
in order to ensure
accelerated
economic growth. We have to review and update the
implementation of our development plans to take into
account the new realities. We also need to intensify
our determination,
strengthen
our resolve and confidence in our ability to continue
to progress.
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