MAIN PAGE | SPEECHES & EDITORIALS | 1999 | PBEC IN A CHANGING WORLD
PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | SPEECHES & EDITORIALS | 1999 | PBEC IN A CHANGING WORLD
PBEC in a Changing WorldDr. Helmut SohmenChairman, Pacific Basin Economic Council Chairman and President, World-Wide Shipping Group Ltd. Monday, May 17, 1999 The Challenges of the Next Century for the Pacific Basin
Excellencies, Distinguished Guests, Members and Friends of PBEC, Ladies and Gentlemen, Good morning. Since I am also based here in Hong Kong, let me add my warm welcome to that of John Strickland especially to those of you who have come from overseas to this 32nd International General Meeting of the Pacific Basin Economic Council. We are truly delighted to see you here, and I would like to thank you all for your interest in PBEC and for your forthcoming participation in what I trust will be a memorable event. I am naturally happy also to see our local members and their guests assembled in such a large number here this morning. Straight off, let me thank all those of our local members who have given so generously of their time and money in helping to organise the event and to ensure that you are made comfortable. The organising committee and the steering committee have worked very hard indeed. Let me also express PBEC's appreciation to the many prominent speakers and moderators we have in this forum during these three days who have agreed to be with us and allow us to share in their insights and in their expertise. Hong Kong was officially admitted into PBEC exactly ten years ago, when I personally had the honour, then as chairman of the local committee, to bring our team into the fold. So this event is very much a milestone for Hong Kong and for me personally. I will not pre-empt the Chief Executive of the Hong Kong Special Administrative Region, whom I will be introducing to you shortly, in what he will say about Hong Kong, and about the Region's achievements and problems. But you probably have already seen for yourself after arriving at our brilliant new airport what an outstanding place Hong Kong continues to be: vibrant, efficient, challenging, and forward-looking. Perhaps also still a little bit expensive: but you usually get what you pay for. Of course, Hong Kong has not been unaffected by the regional economic crisis. But you have to remember that the crisis was not of Hong Kong's own making but that we imported it. For that reason, it is also a bit more difficult and will take a bit longer to apply effective remedies. But Hong Kong's foundations are essentially sound. Hong Kong continues with the important economic role it plays in the development of the whole nation, as I am sure State Councillor Madame Wu Yi will confirm when she addresses us at the Gala Dinner. Hong Kong as one of the world's leading economies participates actively and responsibly in efforts to try and come up with constructive solutions for a number of international economic and financial issues. No doubt Mr. Camdessus of the International Monetary Fund will remind us of this later in the morning. I have already mentioned the regional economic crisis. Naturally, many of the PBEC members from the concerned economies have been adversely affected by the downturn and by the short-term negative prospects for their individual businesses. Most of us were as shocked by developments after July 1997, and in particular by the speed in the loss of general confidence throughout East Asia, as was the rest of the world. A number of reasons have since been identified why the economies in East Asia were literally stopped dead in their tracks, after a remarkably long period of strong and sustained growth. Some of the policy mistakes look obvious in retrospect, as now do some of the proscribed medicines. It has been admitted that some of the immediate responses were also ill-advised or too drastic: but as I like to remind all my friends, when the house is burning one first calls the fire brigade and not the lawyers. Without the various rescue actions by the IMF and concerned governments, catastrophic collapses might well have occurred. In the midst of the crisis, PBEC organised a well-attended conference in Los Angeles on the financial crisis, bringing together people from the World Bank, the IMF, the bond rating agencies, and corporate lenders. I am also happy to say that even in these difficult times our commitment to the environment has not faltered. Last September we co-sponsored a Roundtable Discussion with the World Bank in Hong Kong, and later this morning I shall be presenting our first Environmental Award. Applying remedies, even where they are fully accepted as necessary, does usually take time, especially when they involve changes in tradition or in social and political institutions. But quick fixes are in any event normally not the answer, although they may appear politically opportune during periods of surprise, anger, and anxiety. In such times it comes naturally to governments to take interventionist action, often disregarding or abandoning long-established policies. It is of course easier to shoot the messenger than to accept the bad news and reflect on, or react to, the causes of weaknesses or of debacles. PBEC, as an organisation committed to free and open markets, and to less rather than more government interference in all aspects of economic behaviour, naturally does not underwrite official actions that seem to be in the nature of a move back to protectionism and/or forward towards more extensive regulation. We businessmen continue to believe in the remedial power of the market forces acting within a competitive framework and in the longer-term effectiveness of entrepreneurial rather than bureaucratic solutions. Media reports have quoted me as calling for the scrapping of the Asia Pacific Economic Cooperation (APEC) process. I would not dare to be so radical, nor so naive as to believe this would in fact be feasible. All I have suggested is that while governments spend considerable time in debate (and collectively a lot of money) on how to liberalise markets, how to further stimulate trade and foreign investment, and how to make it easier to do business by certain deadlines, the PBEC membership is not waiting for this to happen but gets on with the job of taking risks, seeking profit, and creating wealth for our respective communities on a daily basis. Of course PBEC welcomes APEC efforts to lower tariffs, ensure free market access, provide stronger capital markets, and work on the elimination of administrative barriers and on the introduction of greater transparency and accountability in both government and business dealings. We have been and are making contributions to these goals, based on the working-level expertise of an organisation with some 1,100 members from around the Pacific Rim who, after all, are self-selected and actively operate across all economic sectors. With that background, PBEC has sponsored or co-sponsored business summits in conjunction with APEC leaders meetings in Jakarta, Osaka, Vancouver, and Kuala Lumpur. And I am pleased to be able to announce that we have reached agreement to co-sponsor the APEC-CEO Summit in Auckland, New Zealand, this coming September, while New Zealand is chairing the APEC process. PBEC's working committee studies; our participation in seminars and conferences organised by ABAC, the World Bank, the Asian Development Bank, or the WTO; our liaison with other regional or global organisations; training programmes sponsored by our Japan Committee; as well as the regular contacts our national committees and individual members maintain with government officials in the various member economies: all these activities are designed to educate and stimulate decisionmakers. They also help to ensure that policy formulation is based on a pragmatic assessment of the real needs of entrepreneurs. PBEC would like to see a more consistent progression in the implementation of APEC's stated goals, and above all, we would like to see more of a conscious effort among governments -- all around the world, not just in the Pacific -- to reduce the extent of their involvement in economic activity. "Privatising governments" should be the catchword for the early part of the new millennium, and guide both multilateral negotiations as well as national programmes intended to create a market-oriented environment where the private sector can truly flourish. One of the Roundtable discussions this afternoon will hopefully shed more light rather than heat on this particular issue. The programme for this year's International General Meeting was purposely designed to address the wider issues that are likely to confront us in the next one or two decades, not specifically sectoral concerns that we debated regularly in previous annual meetings. We will focus on the significant role information plays in today's world as the newest factor of production, the power of the media, and the enhancements to productivity made possible by technical and organisational innovation. We will have contributors, including PBEC's Vice Chair Mr. Inaba, deal with the effects of advancing technology and automation, and their social consequences on job numbers and job security another one of today's critical issues. I cannot name them all, but we have several prominent business personalities giving us their views on economic globalisation and its impact on emerging markets, on the international financial system, and on the way that all our daily lives are affected. I am particularly pleased that we have a prominent speaker representing the academic world with us at the meeting: Professor Jagdish Bhagwati from Columbia University. And we shall hear from the political benches: next to State Councillor Wu Yi from Beijing we welcome President Estrada from the Philippines, Trade Minister Ramirez from Colombia, Treasurer Costello from Australia, Finance Minister Lee from Korea, and Hong Kong's own Information Technology Secretary K.C. Kwong. Special emphasis will be placed on recent economic developments in China, and on environmental issues affecting economic growth. While I cannot guarantee that at the end of the meeting we will have found ready answers to all the questions raised, I can assure you that there will be some serious discussion on all items of our ambitious agenda. And I trust you will leave Hong Kong richer in experience, and deeper in thought. We live in a funny world. Last week the finance minister of the world's biggest economy announced his departure and hardly anyone blinked. The Prime Minister of the world's former second superpower was dismissed, and the President himself is under threat of impeachment, while the country's economy continues to weaken. To our surprise and dismay we discovered that the world's most advanced military machine cannot correctly read street maps. Internal strife continues to plague the Balkans, various parts of the Middle East and Africa, and Indonesia and Sri Lanka. Recent peace efforts in other places seem to be unraveling or are not really progressing. In Hong Kong we worry about a major wave of migration from the mainland. The WTO has trouble agreeing on a successor for its Director General, and negotiations regarding China's admission to this body seem to be driven more by rumour than by fact. The political situation in the world's second most populous country is confused. The restructuring processes in the economies of Japan, China, and Korea are proving to be painful and are certainly not completed. And yet we have recently seen a resurgence in equity markets around the world, not least in the Far East, which is astounding the analysts and baffles the economists. Corporate results, financial reforms, growth expectations, unemployment figures, spare productive capacity, consumer spending are all not yet seen as really on the mend. But money is flowing back into the markets probably because, as the Far Eastern Economic Review economics correspondent recently put it: "Financial markets, for all the pretensions of market participants, simply don't work very well, largely because the average market participant is a highly strung, emotional creature with the attention span of a mosquito". I would say: never mind. Confidence is a strange animal, often difficult to generate and even more difficult to maintain: but a very powerful force once it is in place. East Asia lost its nerve after July 1997, and many of the subsequent events were due to the sudden and wide-spread loss of confidence. If there is a change in mood, however tenuous it may be, it will be a change for the better. As I prophesized at the conclusion of last year's PBEC meeting in Santiago, Chile, the Asian economies will bounce back, perhaps with a vengeance. We may not be fully there yet, but it is always better to be an optimist than a pessimist, and to see the opportunities rather than the obstacles. That in fact sums up PBEC's credo, and the ambition of our membership. Once again, thank you for participating. I wish you all a very stimulating few days, and our visitors a most enjoyable stay in Hong Kong. |