Global oil prices are rising and Malaysians are facing tough times with the increase in price of goods, but former premier Dr Mahathir Mohamad is not unduly worried.

He expressed confidence in the government's ability to handle the problems and to weather the economic storm.

Mahathir pointed out that being an oil-producing country, Malaysia will benefit from escalating fuel costs as it has an oil surplus and can sell at the higher price now.

"Countries make adjustments to oil crises. It will not be too bad for Malaysia," he told a question-and-answer session after delivering a speech on globalisation at the two-day Global Leadership Forum in Kuala Lumpur today.

Pressed by moderator Lorraine Hahn on how the country will cope with stagnant wages as the cost of living rises, Mahathir answered in typical fashion: "Don't worry, the government knows what to do."

He said he was optimistic about Malaysia's future, particularly with regard to income from alternative fuel sources such as palm oil, but noted that this would strongly depend on "the management of it all".

Speaking to reporters later, Mahathir stressed that Malaysia will regain its footing in the long term, but warned that price increases should not involve inappropriate hikes in food prices.

"Food prices should not be increased more than 10 percent," he said.

Globalisation and Proton

Mahathir, who is advisor to national car-maker Proton and national oil corporation Petronas, was also asked to comment on his current relationship with members of Proton's board of directors, following the termination of the contract of its CEO Tengku Mahaleel Ariff ( photo ).

"I have no contact with them," he said adding that his future relationship with the company and its management can only be determined by them.

He acknowledged that Malaysians will have problems with the national car but, in his speech earlier, indicated that in playing to the rules of globalisation, Malaysia would have to stop production of the national car.

"It would probably be more rational and profitable to close down an inefficient local industry and let the giant foreign corporations supply the needs of the people," he said.

"In Malaysia, Proton cars should be replaced with the cars of the giants so that the cost of development, etc, could be saved; but would Malaysians be happy losing the Malaysian identity to become citizens of the world? I suspect they would not."

The conference, which ends today, attracted hundreds of local and foreign business people. Also among the speakers were the first man on the moon Neil Armstrong, Air Asia CEO Tony Fernandes and Bill Rancic, winner of the business reality-television series The Apprentice .

Globalisation slammed

Meanwhile according to an AFP report, Mahathir warned of the impact of globalisation on home-grown industries and called for close trade with China and India instead of just the United States.

"Globalisation is obviously a challenge because the globalisation that is taking place is defined and interpreted by the rich and powerful countries.

"These countries see a lot of opportunities for them and their giant corporations to exploit countries like Malaysia," said Mahathir.

Mahathir, known for his anti-western vitriol, said the agenda of huge corporations was to acquire all the industries and banks in poor countries to make them more profitable but in the process the national interest of the countries would be sacrificed.

At the same time, Mahathir said Malaysia had to accept globalisation because rich nations could threaten to close their markets to Malaysian goods.

To overcome any economic effects arising from such an action, Malaysia needed to increase trade with other Asian nations, he said.

"We need to grow our trade with northeast Asia, with Southeast Asia and with India. Within a short span of time China and India will become the world's economic powers. They will become not just the industrial centers of the world but also the biggest market in the world," he added.