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Asia Roundtable 2005

Tilting the global balance: the strategic implications of Asia's growth
28-29 April 2005, Singapore

Asia’s growth continues to transfix analysts and investors around the world and to alter business strategies. The Asia Roundtable provided participants with an in-depth understanding of the most important regional developments and their strategic implications.

Read the Summit Report (PDF; 16 pgs; 325k)

 EU Trade Commissioner Mandelson urges Europe to embrace rise of Asia
 Asia's race to improve competitiveness
 Singapore's Lee Kuan-Yew closes Asia Roundtable
 Revaluing the renminbi
 Corporate Social Responsibility is a long term investment
 China leads Asia's growth race but "India more sustainable"
 Global centre of economic gravity shifts to Asia
 Natural resources security could prove Asia's Achilles heel
 Middle East seeks to emulate Asia's economic success
 Asia's next business hubs

April 29
Left to right: Kim Hyun-Chong, Minister of Trade of Republic of Korea; Klaus Schwab, World Economic Forum; Peter Mandelson, Commissioner, Trade, European Commission, Brussels; Lim Hng-Kiang, Minister for Trade and Industry, SingaporeEU Trade Commissioner Mandelson urges Europe to embrace rise of Asia Peter Mandelson in a speech to trade, business and political leaders at the Asia Roundtable in Singapore urged Europe to view the emergence of Asia as an opportunity and not a threat, and offered to help Europe cope with the shifting trade balance.

"The predominant mindset in Europe today is defensive," Mandelson said. "In Europe there is a lot of sensitivity about surging Chinese textile exports," he continued, but in his view, China is entitled to the prize of its World Trade Organization membership, its liberalization in this sector and resulting generous growth in exports.

"What we have to do is understand the insecurities and fears such change sparks and support people and industry in the transition from one era to another," he told participants.
Full speech I Press release

Lee Kuan-Yew, Minister Mentor, SingaporeSingapore's Lee Kuan-Yew closes Asia Roundtable "The present growth of Asia signals the restoration of the bulk of Asia to its previous position," Singapore's founding father, Minister Mentor Lee Kuan-Yew, told participants at the close of the Asia Roundtable.

In a conversation with business, political and civil society leaders, Minister Mentor Lee Kuan-Yew listed energy shortages - especially as India and China expand - as an issue of major concern in the short-term.

The situation in the Taiwan Straits "has stabilised for a while", Lee said, while in North Korea the situation is "festering but not exploding".

Turning to recent tensions between Japan and China, he commented that "if Japan and China don't sit down to work out how to put that past to rest, we will have more eruptions that are bad for business and the region. It's not a closed issue and this is troublesome."

World Economic Forum Founder and Executive Chairman, Klaus Schwab, thanked Singapore for hosting this year's Asia Roundtable and announced that next year's meeting would be held in Japan.

Heizo Takenaka, Minister of State for Economic and Fiscal Policy and for Privatization of the Postal Services, JapanAsia's race to improve competitiveness Japan might be the world's largest economy after the US, but it is aware of the need to increase its competitiveness as new players emerge, according to Heizo Takenaka, Minister of State for Economic and Fiscal Policy and for Privatization of the Postal Services. The trade ministers of South Korea and Singapore agreed on market liberalization as a key ingredient for sharpened competitiveness.

To "create a virtuous circle between rising productivity and growing income" and "make the most of globalization, realizing the potential for prosperity," were Takenaka's two-pronged approach to ensure Japan remains competitive despite an ageing population.

Kim Hyun-Chong, Minister of Trade of the Republic of Korea, noted that the population needs to be educated about the benefits of liberalization - "Seventy percent of GDP is dependent on trade," he said.
Press release

Jiang Jianqing, Chairman, President, Industrial and Commercial Bank of China

Revaluing the renminbi Analysts and officials at the Asia Roundtable agreed that China's currency is under pressure and will be revalued. Exactly when and by how much it will be revalued, or what the implications will be, are questions that remain unanswered.

The Chinese government has taken steps to prepare for currency revaluation including reforming its financial sector and opening up to foreign investors. Beijing is now weighing the implications of such a move, irrespective of whether there is a revaluation of between 3-5% or 20-30%.

Potential implications include squeezed margins for businesses, rising Asian currencies and purchasing power, as well as impacting markets further afield.

Michael Hawker, CEO and Managing Director, Insurance Australia GroupCorporate Social Responsibility is a long term investment Businesses that develop Corporate Social Responsibility (CSR) are investing in their long-term health and profitability. "I do not believe that you can increase shareholder value over time if you are not concerned about all the different stakeholders who may be affected," said Michael Hawker, CEO and Managing Director of Insurance Australia Group, at the Asia Roundtable.

"Any sort of philanthropic contribution to the community is unsustainable if it doesn't have an economic outcome," he told participants, "and the only way you're likely to get an economic outcome is if that philanthropy is in line with what your company does".

Kakutaro Kitashiro, Chairman of Keizai Doyukai, Japan, noted that consumers punish companies that are found to be ignoring the public interest. markets further afield.

April 28
Sriram Venkataraman, Vice-President, Infosys Technologies, JapanChina leads Asia's growth race but "India more sustainable" China is outstripping India in the economic growth stakes, agreed participants at a session examining the impact of 'New Asia' on other economies and businesses in the region.

However, India could win out in the long-term given its demographic profile which indicates a lower dependency ratio and a larger working population, argued Sriram Venkataraman, Vice-President, Infosys Technologies, Japan.

Medium-sized economies in the region can best respond to India and China's rapid rise by "complimenting" the two giants such as with increased exports; "competing" with India and China in areas like labour costs; and by "creating critical mass" through regional integration.

Global centre of economic gravity shifts to AsiaFrom left to right : Nik Gowing of BBC, Mohamed A.Alabbar of UAE, Raymond Lim of Singapore, Claude R. Begle of Germany, Ichiro Aisawa of Japan, Jiang Jianqing of China, Michael Hawker of AustraliaThe centre of gravity for the world's economy is shifting to Asia, agreed business and political leaders at the World Economic Forum's Asia Roundtable. "Asia is going to underpin global growth for the next 30 years," said Co-Chair Michael Hawker, CEO and Managing Director of Insurance Australia Group at the opening of the two-day meeting.

"The Asian economy is the engine for world economic growth," said Co-Chair Jiang Jianqing, Chairman and President of the Industrial and Commercial Bank of China. However the two must expand "harmoniously".

Recent tensions between China and Japan illustrated the need to address the imbalances between regional economic and political integration, noted Claude Béglé, CEO, GeoPost International Management & Development Holding, Germany.

Participants voiced their concern about the risks of Asia's rapid expansion, for example mounting pressure on energy supplies and natural resources.

Co-Chair Koh Boon-Hwee, Chairman of Singapore Airlines, voiced his concern about the impact of weaker United States growth. "If the US economy slows, we are possibly going to have some risk and credit problems in Asia and I am not sure we are thinking about this."
Press release

Stephen Gerlach, Chairman, Santos, AustraliaNatural resources security could prove Asia's Achilles heelPressure on the natural resources Asia requires to fuel its growth is a major concern for political and business leaders. In an Asia Roundtable session dedicated to the issue, calls were made for greater investments in alternative sources of energy to secure supply.

"We don't see a lot of traction in national and regional energy policies. Unless industry and governments start to talk about what those policies should be, we'll end up getting caught out," and continue wasting energy and resources, warned Stephen Gerlach, Chairman of Santos in Australia.

Ichiro Aisawa, Senior Vice-Minister for Foreign Affairs of Japan, agreed that especially being a resource-poor nation, it is essential to invest in developing new, alternative sources of energy.

Cross-border cooperation mechanisms, participants agreed, are another vital tool to managing natural resources in an efficient, fair manner.

Corporations too were urged to ensure competitive prices for natural resources. For example, the way iron ore is supplied to global markets seems to be dominated by three or four major companies, said one participant. While this might not be a direct reason for the price increase, "if the structure of the industry was one that promotes fairer competition, that might present a more desirable picture."

His Majesty King Abdullah II of JordanMiddle East seeks to emulate Asia's economic success— The Middle East can learn from Asia's success in creating a platform for growth, His Majesty King Abdullah II of Jordan told participants at the Asia Roundtable in Singapore. He urged private-sector leaders in the two regions to work together and lead development efforts.

"I believe my region can learn from Singapore - its achievement in harnessing human resources; its use of ICT to streamline government procedures. We can learn from Malaysia, which has achieved a balance between modernization and Islamic heritage. We can learn from South Korea, which has risen from war to build its economy and democracy," King Abdullah told hundreds of business, political and other leaders of society.

The World Economic Forum in Jordan meeting next month (20-22 May) is an opportunity to forge partnerships between the two regions, he said.

Full speech

Asia's next business hubs The sprouting of business hubs across Asia is a "natural and necessary" process, agreed panellists at the Asia Roundtable. Business hubs facilitate economic integration and allow countries to benefit from globalization more quickly. In a world where technology has increased the proximity of people, companies and goods, hubs will become more, rather than less important.

Despite consensus on the necessity of business hubs, panellists differed on how regions that aspire to be hubs could best achieve this. One panellist said that Korea's efforts to grow Seoul into a hub for Northeast Asia may come to naught because it is unclear whether the region needs a hub, even though Singapore serves Southeast Asia in much the same way.

Another panellist pointed to Dubai's success at creating opportunity from disadvantage. In an oil-rich region, Dubai earns only 7 percent of its revenue from energy by fashioning itself as a business hub of the Middle East, despite the fact that when it developed its economic model, there was no consensus on need.

Mohamed Alabbar, Chairman, Emaar Properties, United Arab Emirates
Jiang Jianqing, Chairman and President, Industrial and Commercial Bank of China, People's Republic of China
John Chen, Chairman, Chief Executive Officer and President, Sybase, USA
Michael Hawker, Chief Executive Officer and Managing Director, Insurance Australia Group (IAG), Australia
Koh Boon-Hwee, Chairman, Singapore Airlines Limited, Singapore

Summit Reports
Asia Roundtable 2005 (PDF; 16 pgs; 325k)
Read the full list of Summit Reports: https://www.weforum.org/summitreports

Contact Information
For more information about the Asia Roundtable, please contact asiaroundtable@weforum.org

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Last updated: 6 April 2006
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