Regional cooperation important to ensure immunity against external shocks, WEF summit hears
Against a backdrop of the financial crisis engulfing the euro zone and the US’ economic woes, the World Economic Forum on East Asia 2012 was dominated by discussion of Asia’s unrivalled strengths, attributed to intra-regional connectivity and lessons learned during the 1997 financial crisis.
Myanmar’s opening up is another factor boosting Asia’s attractiveness. According to a source, the next WEF on East Asia will take place in Myanmar’s capital, Nay Pyi Taw.
Asean leaders at the opening ceremony agreed they must pursue greater connectivity to build up immunity against external shocks and catastrophes.
At the ceremony, Prime Minister Yingluck Shinawatra said connectivity has become more crucial amid challenges from the euro-zone crisis, climate change and others.
“We must continue to promote regional cooperation and integration,” she said. “To support regional connectivity, we need to reinforce connections at home.”
Joining her at the ceremony, Indonesian President Susilo Bambang Yudhoyono said Asean countries showed solid cooperation on greater connectivity, which would be achieved when disparity within the region decreases and regional wealth is increased.
Vietnamese Prime Minister Nguyen Tan Dung said Asean+3 (Asean plus China, Japan and South Korea) and other mechanisms opened up space for discussion on policies to support growth and build up immunity to external shocks.
Nguyen proposed further cooperation on the development of economic corridors, physical infrastructure, regulations, preparation for disasters, efficient use of water resources and solutions to disputes in the South China Sea. Laotian Prime Minister Thongsing Thammavong said his landlocked country had already seen the benefits of greater connectivity.
Connectivity is sought in light of a number of threats to the region, which call for closer cooperation among governments.
At yesterday’s final session, on “Increasing East Asia’s Risk Resilience”, Naoyuki Shinohara, International Monetary Fund deputy managing director, noted that two big threats lie in the euro-zone crisis and oil prices, which remain high despite partial easing.
The euro zone will also pose a medium-term threat, not only because of uncertainties over the euro currency, but also low growth and high unemployment in the zone. Internally, Asia will also need to address income inequality. Fiscal consolidation in the euro zone could hurt global economic growth.
He said that for a cushion, Asean+3 should strengthen its financial facility to help member countries cope with the currency crisis, as well as strengthen domestic demand.
Idris Jala, Malaysia’s minister to the PM’s Office, noted that Asean countries are now more exposed to external risks as they seek external support for growth at home. He admitted that under Malaysia’s plan to become a high-income nation in 2020, exposure would be greater. Malaysia will be in need of a plan to mitigate the impacts from such exposure. At present, he considered Malaysia somewhat resilient given that net foreign trade contributed only 7 per cent of gross domestic product, while 70 per cent of GDP comes from domestic consumption and 22 per cent from investment.
He urged the creation of an agreement among Asean nations on how to respond to financial and non-financial crises effectively.
For greater resilience, Masami Yamamoto, president and representative director of Fujitsu and co-chair of the WEF on East Asia, said two key strategies are being deployed: First, designing a new supply chain following the great disruptions last year due to the tsunami in Japan and floods in Thailand; and second, studying the possible heights of tsunami waves to minimise damages in future crises.