MAIN PAGE | EVENTS & PROGRAMS | 2001 | IGM | SPEECHES | RAFIDAH AZIZ
PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | EVENTS & PROGRAMS | 2001 | IGM | SPEECHES | RAFIDAH AZIZ
Regional Vitality in the 21st Century
April 6-10, 2001 — Tokyo, Japan
Dato Seri' Rafidah Aziz
Strategic Regional Issues in the 21st Century Mr. Kosaku Inaba - PBEC Chairman, Mr. Jiro Hirano - Moderator, Excellencies, Members of the Panel, Mr. Minoru Murofushi - Conference Chairman, Ladies and Gentlemen: Thank PBEC for inviting me to speak at this first PBEC Conference for the first decade of the first Century in the new millenium, with the focus on Strategic Regional Issues in the 21st Century. Certainly it would be difficult to predict and forecast what will eventually evolve a hundred years from now, but perhaps the 21st Century can be viewed from the near term and longer-term perspectives. It is inevitable that major issues faced by the region within these initial years of this decade itself will directly determine how the region will evolve in many respects in the latter decades. One important yet unresolved issue that will have a bearing on the future of regional and global economic environments is the further refinement of the rules-based multilateral trading system governed by the WTO, which new multilateral trade negotiations aim to achieve. Already, there are distinctly diverse positions on key issues, that have resulted in an impasse on the formulation of a balanced agenda that can satisfactorily take into account the interests and concerns of both developing and developed countries and economies. Even within the Pacific Basin region itself, there is still no consensus amongst countries on what the agenda might constitute. Often, politics drive negotiating strategies and determine positions, and major economies tend to prevail, and the smaller nations find themselves sidelined. Surely, for world trade in the 21st Century to continue to be premised upon universally acceptable and applicable rules that provide equitable benefits to all members, and not to be effectively driven by economic might of the few majors, then, issues of trade cannot be linked to extraneous issues that only serve the often protectionist domestic constituency interests of a few. A comprehensive and balanced WTO agenda for any new round of negotiations, that all member countries can subscribe to, can lay a strong foundation for the growth of world trade for this century, from which the region can derive benefits with minimal opportunity costs. Another strategic issue that is of near-term in nature, but with longer-term repercussions and consequences is the need for the reform of the international financial architecture. In its present form, the system is ill-equipped to deal effectively with new and complex problems and challenges of globalization. Clearly, the East Asian financial crisis had highlighted the flaws in the system, and it is clear that the existing architecture cannot deal with the dislocations and distortions that occur, as a result of unregulated cross border and global speculative capital flows. The international financial architecture of the 21st Century must be relevant to the needs of the 21st Century global economic environment, and countries of the region must proactively work together to shape that new financial architecture, failing which the less resilient countries will continue to be vulnerable. Ladies and Gentlemen, Beyond these issues of immediate concern, there are other developments that would have clear impact on the region in particular, and the world at large. Already, these issues have begun to be important factors that interest every nation. The China factor is one major development that will surely affect decision making in many areas within the region and outside of it, and influence future strategies of many countries. The emergence of the New China in the global economic and trade environment has already set in motion changes and new developments in the region and elsewhere. China will increasingly evolve into a major international player, in both the political and economic spheres, and will become a new reference point, not only for the region, but for the world. China will, in this Century, influence decision making in the region, in many fields, and China is already a new factor in the equation. The breaking down of the Berlin Wall undoubtedly impacted upon Europe in a significant way, but had garnered little interest in this part of the world. But, the emergence of the New China is hardly a local East Asian phenomenon. It has caused the world to react and respond. In fact the New China has sharpened the focus of others on the region, and heightened economic interest amongst those who see the Chinese economic potential. It can be expected that the initial decades of the 21st Century will witness not only the on-going and accelerated economic transformation of China, but, more importantly, the integration of China into the political and economic fabric of the region. With such integration, and with China taking on active roles in regional affairs and fora, countries of the region will find themselves having to decide as to how they should relate to China. Should China be regarded as a competitor? Or should they strike partnerships with China? China is already giving strong emphasis to the region, and, in time, will be able to provide that strong push for and on behalf of the region. Undoubtedly, China is still on the transformation mode, and is still a developing nation. But the learning curve for China, as also for other newly emerging market economies, should be far shorter, and China can benefit from lessons learnt of the experience of others. Today, the region is witnessing the defacto regional leader, Japan, grappling with major domestic economic issues. The rigidities within the Japanese economic system and culture have not enabled Japan to be flexible enough to change and adapt, and these will continue to have repercussions on the region. Japan, up to now, have displayed stronger orientation towards the exclusive grouping of the developed countries, and, apart from the strong benefactor - beneficiary relationships with some countries of the region, Japan has tended to assume roles that are more global in nature, than regional. Over the longer term, an economically weak Japan will be hampered in assuming a leadership role to provide the impetus for regional economic growth. The 21st Century will, in all probability, see China taking over the leadership mantle from Japan, and wield influence in the region. After all, the coming decades of the 21st Century will bring forth new generations of Chinese leaders, bureaucrats and entrepreneurs, who are essentially the products of the New China, and who already have a global perspective, and to whom China of the 21st Century is just another chapter in their history books. Changes in ideology and political philosophies will inevitably occur as China continues to transform and integrate with the rest of the world economic and trading community. China in the latter decades of the 21st Century can be expected to be proactively involved in regional as well as global issues. Therefore, the region must embrace China as a new partner and work together with China for regional benefit. Ladies and gentlemen, The process of globalization that began in the last decade of the past century will continue to provide challenges and opportunities to the region's economies. Much have been said about globalization and its ramifications. What is important is that the countries in the region seriously work together to manage the process and impact of globalization, at both the public and private sector levels. By effectively managing the process of globalization, the region's economies can benefit from it, while avoiding any undue distortions and dislocations to any domestic economy. Working together can enable the region to be the prime movers of globalization, rather than face the costs of being individually unprepared and ill-equipped. Such regional collaboration is necessary to provide strong inputs into the shaping and formulation of any global-level rules and disciplines, so that no country need to surrender or submit their sovereign rights to decision-making to any global authority. Already pressures are being put in multilateral trading fora, to evolve such global-level rules that clearly will undermine the rights of individual governments to implement policies that are entirely relevant to domestic requirements and dictates. The recent financial and economic crisis itself has resulted in the erosion of such rights and the ability of governments to make decisions, because circumstances such as resort to IMF assistance have forced some governments to implement policies and measures that are clearly untenable. Hence for now and the future countries of the region must address this issue together. The region cannot allow the continued functioning of any system that eventually subject governments to defer to others to decide their economic policies. In this context, the collaboration at the regional level should also focus on capacity building, so that individual economies can effectively integrate and dovetail their domestic policies and economic governance into the global framework. Ladies and gentlemen, The rapid development in Information and Communication Technology is a major catalyst in the process of globalization, and in effecting economic growth and development. Within the region, the economic and socieconomic disparities is being further aggravated by the ramifications of the Digital Divide. It is important that, over time, these disparities be narrowed, so that no economy or country in the region is marginalized from the mainstream of developments in IT and ICT, and thereby be deprived of what such technology can bring in terms of benefits. It cannot be denied that a region with such inequities amongst constituent members cannot be a cohesive one, and it would not make for a region with a strong voice in the global arena. Thus, a strategic issue to contend with in this century is the formulation and implementation of regional initiatives which can generate economic growth and development, and resilience in the lesser developed countries in the region. Such initiatives must come under the broad ambit of Capacity Building. There is the need to identify new modes of cooperation, beyond the traditional benefactor-beneficiary relationships and that emphasizes partnership. The region's diverse resource endowments, and collective pool of human resource capabilities and talents must be mobilized and deployed for the region's benefit, through regional collaborative program. Ladies and gentlemen, All told, the future of the region will hinge upon the generations of the future. How the region fares for the rest of the 21st Century will depend upon how well prepared the young of today are to take over the leadership roles in society, politics and economy. This, in turn, will depend upon the values they subscribe to, and what good they derive, for the region's societies from the various developments and advancements in ICT and other spheres. Much will depend upon how the future generation connects to one another regionally and globally and to what extent they place a premium on elusive targets such as peace, stability and understanding, mutual respect and care for the environment. The 21st Century will witness challenges that nations face to survive in environments that can range from keenly competitive to hostile. Surviving in such circumstances in an increasingly globalized environment will require that the region's constituents learn to work together for mutual benefit, and optimize whatever opportunities the regional environment can offer. Today's leaders and managers must continue to send the right signals and give the right messages to the young who will lead and manage the region's tomorrow. It is clear that there is much of unfinished business of the 20th Century that is being carried forward to the 21st Century. The new millenium still has to carry the excess baggage of the last one. Within the region itself, there is still much to be done to find common ground for collective action. Planning for the region's future is still hampered by individual economies still grappling with domestic issues and problems. And yet, it cannot be denied that the dynamism of the region is function of the collective strength of its constituents. Perhaps the most important issues to ponder and act upon, is how regional cooperation in every viable sphere, can lead to the strengthening of the individual economies, and thereby enabling them to be more resilient and prepared for the challenges of the 21st Century. |
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