Remarks by Steve Dorfman
Hughes Electronics Corporation

Thank you for the kind introduction. It's a pleasure to be on this panel to discuss business solutions for the Asian financial crisis.

Like most of you here, Hughes Electronics has a large stake in what happens to Asian economies in these turbulent times. We've been in Asia for the last 35 years helping countries develop modern telecommunications systems with our satellites, VSATs, fixed wireless telephones, and cellular systems.

It has been distressing to witness the troubles of our partners, our customers, and our friends who invested so heavily to build world-class telecommunications systems. We look forward to serving them for decades to come. And we stand by them today.

We're ready to help Asian nations on our own and as advocates for economic policies that will help Asians grow their way out of trouble. Acting alone, companies like Hughes can have only a limited impact — but collectively, companies represented by this Council can have a greater one.

Whatever we do, it is absolutely critical that all of us stay involved, no matter how tempting it may be to withdraw to the more certain sales and earnings of North American and European markets. That would help neither our companies nor our Asian customers and partners. I'll take the next few minutes to explain.

First, Hughes is ready to work with our Asian customers to help them struggle against this economic turmoil. For example, Indonesia has been a solid customer of ours for over 20 years. Just because they have to postpone buying new telecommunications products at this time will not mean that we turn our backs on them.

We are still committed to helping Indonesia build a universal telephone system earlier planned to connect even its 30,000 remote villages by the year 2000. We are also continuing plans to deploy even more advanced telecommunications systems, such as Hughes's DTH digital television and our new interactive broadband system.

I'm proud of the fact that Hughes from the beginning regarded Indonesia as a partner, and not just a customer. A decade ago, we agreed to a co-development and training strategy that involves Indonesian engineers at every phase of satellite design, manufacturing, and testing.

In fact, we plan to explore ways to get the most from the equipment they already have, to help them plan for their future needs, and to continue to train their young high-potential employees. Much of what they have is top-quality, leading-edge technology, and we can help them make the most of it until their economy improves.

I cite this example because it demonstrates what companies like Hughes can do to continue serving the needs of troubled Asian nations in ways that improve their long-term strength.

That leads me to my second point — that it is critical to everyone involved in Asia to continue improving that region's infrastructure.

Let me emphasize this — new investments in telecommunications infrastructure — satellites, fixed wireless telephony, cellular systems, fiber-optic networks, and so forth — are indispensable to the recovery of Asian economies.

Much wealth has been lost in the current turmoil. But the factors that created that wealth, and the economic miracle of Asia's Tigers, are still in place — competitive wages, abundant raw materials, and worker productivity.

However, to capitalize on these strengths, Asian nations will require a modern telecommunications infrastructure. It will do little good to produce goods and services in Asia and not be able to instantly communicate internally and with worldwide markets.

Completing the many ambitious undertakings begun during boom times — but now faltering because of the economic turmoil -will require prudent new foreign direct investments. These telecommunications systems are planned and started. Many of satellites are already in place, the banking and data networks are there, and many of the ground facilities are built. In many cases, it will require relatively modest investments to complete world-class telecommunications systems in Asia

There's no better time than now. The crisis today provides myriad opportunities to restructure along the lines of real market valuations. At these newly realistic levels of value — and absence of overheated speculation -the opportunities are great to invest further and move vital new projects forward.

Third and finally, we need to bolster the commitment of Asia to open markets, and free trade and investment flows. Now is not the time to retreat into closed markets.

We can — and must — advocate International Monetary Fund policies and government aid that help stabilize Asian economies. There are country-by-country economic reforms that are also essential, especially among banking institutions. There is probably even a role for temporary currency controls — I emphasis the word temporary.

But the only way for Asian economies to recover — and grow again — is to remain open to foreign direct investment. That is the only source of capital diverse and large enough to fund the huge investment needs of developing Asian economies.

One specific need is to reduce trade barriers in telecommunications by multilateral talks in the next negotiating round of the World Trade Organization's Agreement on Telecommunications Services.

We must begin again to combine the investment deficit of developing nations with the capital surplus of the world's developed nations. In the United States, the investable assets of pension funds and mutual funds alone total more than $12 trillion.

That will take confidence-building measures by Asian nations in such areas as transparency, privatization, political stability, the rule of law, and open markets to attract long-term investment capital needed for recovery. It is painfully obvious, but bears repeating, that a nation — like a business — cannot simply economize its way to recovery. It must grow its way to recovery- and that means foreign direct investment.

In short, now is not the time for businesses to turn away from the promising future that still exists for Asia. Businesses alone, of course, are only part of the solution. But acting individually and collectively we hold one of the keys to a renewal of prosperity and growth.

I look forward to hearing from participants at this conference about how we can do our part.

Thank you.