Prime Minister and Umno president Abdullah Ahmad Badawi today defended his economic policies, saying that more time is needed for his reforms to make an impact.

"We need an economic transformation. This transformation cannot happen overnight. People want quick results and must be made to understand," he said in his opening speech at the Umno general assembly this morning.

Talking to some 2,500 delegates, the party president revisited his 12 pillars to develop the country which he outlined in his maiden speech in the Parliament upon taking over the leadership mantle on Nov 3, 2003.

These include the role of good governance and politics, a responsible democracy, corruption, economic growth and improving the private sector.

However at the same time, he warned Malaysians not to test his government's patience by questioning religious and racially sensitive matters.

Abdullah also told the media that press freedom comes with certain responsibilites and self-imposed limits.

In his 90-minute speech, the Umno president who is also prime minister, said that he understood the sentiments from the grounds on the slow pace of the nation's economic growth.

"I want to make it clear that what I have set out to do is not just to manage the economy. Merely continuing the existing economic model that we have had for the past 20 years will not make Malaysia competitive in the long run," he added.

Reviving the agricultural industry

He said that the system of relying on foreign direct investments (FDI), government contracts and privatisation to boost the economy is over.

"That era has gone. Today, many countries are vying for FDIs. There are fewer government assets to be privatized compared to twenty years ago.

"We want to be more broad-based, we cannot entirely rely on construction and manufacturing."

He added that to move forward, the government had to look into reviving the agricultural and agro-based industries, and at the same time promote financial services.

"We must also look at industries with high value, like financial services. And we must look to the future by creating industries in the new economy like information and communications technologies (ICT) and biotechnology."

Abdullah also defended his policy to revive the agricultural industry.

"It is not a step backwards. In fact, the strength of this sector will give us a competitive edge against our competitors.

"The development of a robust agriculture sector will also help us achieve the national socio-economic objective of reducing income disparities."

"Agriculture is a rural activity, and the majority of the rural population is Bumiputera. Developing agriculture and agro-based industries will increase the incomes and improve the quality of life for farmers and fishermen," he said.

Recently, Abdullah's predecessor Dr Mahathir Mohamad said the government's move to promote the agricultural and ago-based industries was counter-productive.

The former premier is involved in a running battle with Abdullah, accusing his handpicked successor of economic-mismanagement, corruption and nepotism. Abdullah has denied the allegations.

FDI flow

On the complaints that the nation was not getting enough foreign investments, Abdullah admitted that the FDI flow was not as good as it was in the other countries in this region.

"But the reason for this is that we are not as open as the others in opening up of industries to the foreigners."

Malaysia has been slipping behind a number of neighbouring countries in the race for FDI, and was recently overtaken by Indonesia.

"Our neighbours allow foreign companies to take over local businesses. We believe in selective mergers and acquisitions and maintain control of strategic assets because of national interests," he said.

"Of course, we can throw all away and allow for foreigners to take control. But if that happens, you (the delegates) will be the first to criticise me," he added.

The Umno general assembly will continue with debates on a number of resolutions today and tomorrow, to be following by a wrap-up speech by Abdullah late Friday afternoon.

Salient points from Abdullah's speech