MAIN PAGE | EVENTS & PROGRAMS | 2001 | IGM | SPEECHES | JOHN LOH
PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | EVENTS & PROGRAMS | 2001 | IGM | SPEECHES | JOHN LOH
Regional Vitality in the 21st Century
April 6-10, 2001 — Tokyo, Japan
Mr. John Loh
Thank you very much Jose. Fellow members of the panel and fellow members of PBEC, good afternoon. When I was asked to speak on this subject, I was wondering what is it that I can contribute because there is not very much that I know about cross border trade because I am very much "landed" on the ground. But I think the suggestion I suppose was because perhaps I could contribute some ideas particularly in terms of Malaysia where the government of Malaysia has been very active in the last few years to promote relationships between the Latin American countries and Malaysia. What I will be doing will be just to run through a few of these slides and there is also some promotional materials about Malaysia. If you don't like it, I will just run through very quickly. I think the objective of this is that if only we know a lot more about each other, if only we know a lot more about Mexico, about Colombia, about Brazil, about Chile, I think then we will be able to do more business. I hope that there could be CD ROMs that can be promoted or distributed among PBEC members so that that way you can know a lot more about the countries and you can also distinguish between fact and fiction especially that is drummed up by the media. The question put before us I am told is how can investment and joint ventures between Asia and Latin America be encouraged and facilitated? Which industry sectors are best positioned for fruitful interchange? Rather than just talk about Asia for which I think my Japanese colleague, Mr. Matsumura-san, is well prepared for that, I think we will talk about ASEAN and then why Malaysia. By the same token, you think why Chile, why Mexico, that way I think we can have a relationship, or why Singapore. And how can a greater sense of community within the Pacific Basin be fostered? I think I don't need to go through the population figures but you can see that within Asia we have 3.6 billion and that comprises of Southeast Asia, East Asia and Central Asia and Latin America is about half a billion population. And Asia accounts for 60 percent of the world's population while Latin America is 9 percent. There are 10 countries in ASEAN and these 10 countries together have also about half a billion, 527 million population and that accounts for 14 percent of the Asian population and 9 percent of the total world population. So if you look at ASEAN and Latin America, I think they are about equal in terms of population. So how can investment be encouraged and facilitated? Of course we have got organizations like PBEC, APEC, ABAC and PECC and there could be of course a lot of consultations between these various organizations. Why we cannot have a greater involvement, why we cannot have establish more connections, I think it's left to the leaders perhaps. But I think at our level, in terms of businesses and those involved, I think we can do more by our own little private initiatives, our little connections. So we can actually set up a Latin America and Asia Business Council, we can have a Chile and Malaysia Business Council and similarly with Mexico and to develop businesses where you can have interchange every year. One year, somebody comes over to Malaysia and somebody goes to Brazil, for example. And there could also be government to government exchange. You already heard about all these currency swaps, I'm sure in terms of trade, we can also have some of these other instruments. Of course entry of markets, if you make it difficult, people will say it's too far away, it's too difficult, let's do something else, let's not waste time. So this is the problem. So I think if you make it easier for entry of markets, I think that will be one of the ways we can look at it. Of course, there are many areas where we can work together. I have had the benefit of having some friends from Latin American countries and I know your countries are also quite advanced in different areas, your education standards are also very high except that many people do not know about that and they think that other than hearing all the news about debts and so on, we don't hear very much more. So there are many areas that you can work together, not only infrastructure, e-commerce has been mentioned, food and services. I think most of the Latin American countries are also very good producers of food, real estate development, leisure, I think along your coast line you've got one of the most beautiful natural areas for enjoyment. And of course there is a lot of oil and gas. Why ASEAN? If you look at the industrial production, you will find that while the ASEAN countries have got some growth, the countries in Latin America has been down in terms of growth. Then we say why Malaysia? If you translate the word why Malaysia and just think why not Singapore, why not Chile, why not Mexico, then I think you will be able to see how we can work together. And I think this should be a brainstorming session, we shouldn't be the people telling you but rather perhaps just motivate some discussion. In Malaysia, we have a recovery of the stock market, full employment almost, wages are quite low, there is a question of affordability, easy access to finance, economic growth has been high and of course representation of foreign missions and infrastructure. If you look at the Kuala Lumpur Stock Exchange, it has been in 1997 and now March 28 it's 647 and last week it went down below 600 again. So it has been on this basis for some time so that means there are still opportunities for development and growth. Stock market comparison, if you look at the comparison of the different markets, you will find that the markets in Singapore, Hong Kong are actually more stable than some other countries. So if you look at the period from Feb 28, 2000 to 2001, you can see from the graph how the Nikkei has gone down and whereas in terms of the other countries over the last month, it has been quite stable in spite of all the difficult environment. Here again, this is another chart which shows the extents year to year, and then the other one is for the month of March. You find that generally they are quite stable in that sense because although there has been a downturn, the downturn is not in terms of very high percentages. Malaysia's full employment, generally speaking, per capita income Malaysia is only US$3600 and if you compare that with Latin American Caribbean, it's about the same, a little bit lower. Why Malaysia? According to CB Richard Ellis which my company is associated with, quoted on the New York Stock Exchange, they have done a comparison of cost of doing business in the various countries and you find that where Malaysia and Kuala Lumpur is concerned, it's way down the line in terms of costs. Similarly when you compare with Latin American countries, of course, again Malaysia's cost of doing business is much lower than most of the other cities in South America. So we actually have very low cost so you have opportunities for you to make some money there. Again you look at the rental for office space and executive housing, the rates are also very low. Here the big 10 in Malaysia, these are the local banks on one side and on the other side, you have foreign banks in Malaysia. Recently, we just had Bank of China opened up so there are many foreign banks but I have yet to see the name of a Latin American bank. This is direction for the landing and then you look at the economic growth, in 1998, quite a number of countries have been on the negative except for Singapore and if you look at the growth, we are quite outstanding in this area. So is Latin America as a whole, we didn't have the Mexico figure so that's why we excluded Mexico. Malaysia is well represented by Latin American missions, you can notice that all these various countries have been represented and I think your Ambassadors have been doing a great job especially Chile has been exporting a lot of red wine. Mr. Matsumura mentioned about ports, well, we've got very good ports, highways and then of course we have the Kuala Lumpur International Airport which is a must see. If you're looking at the survey and my company does property consultancy and we do some surveys among the expatriates to see what is their interest in property market and they say they are interested in investing in condominiums and offices and industrial which is different from what it was before so it is an indication that things have changed. I have taken this opportunity to show you some pictures about some of the nice buildings, these are some of the offices. I think I don't need to go through that because you can actually get some more info on the web. Just to let you know that contrary to what people say, vacancy rates in the central area, central business district is quite good because it is about 75 percent in spite of the oversupply situation. The oversupply is actually in all the new outline areas probably because they are not well located. Foreign investments are welcome and they are easily approved. Recently, the Citibank has bought up a building which you'd notice is taller than the twin towers which is on the extreme left but that's not true, it's only an optical illusion. And of course, the government of Singapore real estate has also bought up another building and to show their confidence, I think they are going to invest and upgrade and furnish this building. This is another beautiful building which is cascading downwards. And of course I think all of you must have seen or heard about the twin towers and the bridges so building bridges between the two towers. This one block is built with a consortium with Japanese and the other one a consortium with Korea and actually the project management is actually U.S. and design is U.S. engineers and architects and of course the materials are also from U.S. These are some of the buildings you can see and these are some of the best buildings. I understand that some of the South American countries and cities have also very beautiful buildings and so I think we are not alone. They are now redeveloping a new central station for railway hub to improve the transport situation in the country. In the past, they've been building roads and highways, now they are looking at rail links. And of course there is this multi-media super corridor about IT development and so on. Here for the diplomats I think they are starting a new area for diplomatic enclave where they can have easy access to the foreign service. And looking at the hospitality industry in Malaysia, you will find that there is about 10 million arrivals and this actually from the point of view of Asia, the third largest number of arrivals after China and Hong Kong and if you discount the number that goes from Hong Kong to China, then we are actually number two. Hotels in Kuala Lumpur, there are a number of them, the numbers are enough rooms I think to hold another PBEC conference. The surprising thing is this, look at rates, what are we paying in Tokyo and what are we paying there. For Mandarin Oriental, a five star hotel, you only pay something like well less than US$100. Here these are the average which goes to around less than US$70. So basically the hotel rates are very low and the reason is because they are quoted in Ringgit. They are quoted in Ringgit when the exchange rate was affected, they still quoted in Ringgit so you still have the benefit. I think here you can see that the hotel occupancy rates have improved so indicating an upward growth. Some of the hotels in Kuala Lumpur, Shangri-La, I understand the PBEC Mid-term Meeting is going to held in Shanghai in Shangri-La. This is Malacca, Malacca is a historical area where I think the Dutch, the British, the Arabs, the Japanese have all had their share in influencing the culture there. And of course we have this beautiful island of Langkawi with the Datai and in Borneo a lot of resorts and of course Sipadan, supposed to be the most beautiful diving spot in the world. So how can a greater sense of community within the Pacific Basin be fostered? I think we can start with twinning up cities, if different cities can start to twin then they can have an exchange, that is one suggestion. This is not new, some countries have already done that but why not start now. Youth exchanges, why don't we have Malaysians learning Spanish for a change and vice versa and after all they like all the Spanish singers. Educational opportunities, I think various universities, there can be a lot of exchange in this area, university tie-up and setting up of joint foundations. So I think what I have just presented here can be replicated with the similar presentation by your country, and if you can let us have enough copies and we can give you enough copies, you can distribute and I think a lot of people will know. If you say that here is the web site address, please access, I think probably only about 5 percent will go and look into it. But if they are given something in the hand, they will probably want to take a look at it. I think this is the situation where you are talking about marketing our product so to speak and I think all of you are Ambassadors of your own countries in your own way. So I think all of you should be the best medium for interchange and when there is more interchange, I think you will have more opportunities to do business. So, with that Mr. Chairman, I'd like to end my presentation. Thank you very much. |
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