Asian leaders look to forge stronger ties

June 7, 1999

Political, business heavyweights exchange views, ponder proposals like adopting common currency

Staff writer

After nearly two years of severe economic depression, Asian political and business leaders came to Nikkei's 5th International Conference on "The Future of Asia" with new signs of hope.

They acknowledged the importance of further self-reform, but their discussions highlighted the point that the process won't necessarily be Western-style. Following are highlights from the June 3 and 4 conference.

--Japanese Prime Minister Keizo Obuchi announced plans to compile by the end of December a comprehensive support plan for Asian countries, to cope with not only economic difficulties but also social problems including unemployment, poverty and environmental degradation. A research group headed by Hiroshi Okuda, chairman of the Japan Federation of Employers' Associations (Nikkeiren), will be dispatched to six Asian countries in August to ensure the plan's maximum effectiveness.

Regional security framework

--Masahiko Komura, Japan's foreign minister, called for a new regional security framework in Northeast Asia by expanding the existing multilateral dialogue among the countries. Regarding the North Korea issue, he said that establishing a new dialogue framework comprising Japan, South Korea and China, or Japan, China and the U.S., would help accelerate the dialogue.

--Joseph Estrada, president of the Philippines, supported a single East Asian currency as a step for economic integration in the region, saying, "I strongly feel the time has come to start thinking seriously and practically about the usefulness of a common East Asian currency."

--Ali Alatas, Indonesian minister for foreign affairs, touched upon the hottest issue for his country - the general elections on June 7. He stressed the importance of the election as a touchstone for restoring political credibility and social stability, which are the basis for further economic development.

--Lee Hun-jai, chairman of the financial supervisory commission of South Korea, emphasized that East Asian countries must not yield to the temptations of protectionism and currency devaluation.

--Mahathir Mohamad, prime minister of Malaysia, declared the end of the worst days of Asian economic turmoil. But at the same time, he stressed the importance of continuing efforts for structural reform. "It is blatantly obvious that we all still have a long way to go to ensure a resumption of the fastest growth run in human history."

--U Win Aung, Myanmar's minister for foreign affairs, talked of his country's hope for more foreign capital and technology to help it take off as an industrialized country. He justified the rule of the military government, saying that threats to national unity are the country's most important and fundamental problems, and are the first obstacle to be overcome.

--Nguyen Tan Dung, first deputy prime minister of Vietnam, supported the idea of strengthening the multilateral framework to prevent another currency crisis. He also said that Vietnam is committed to further liberalization of its domestic market.

--Lee Kuan Yew, Singapore's senior minister, presented a rather suspicious view of the creation of a single currency for Asia. Mentioning the recent slump of the euro, he said that creating the single currency and integrating the diverse Asian economies would take a long time.

--Koichi Kato, a member of Japan's House of Representatives, pointed out, among other things, the lack of appropriate English education in Japan as a factor that has led the country to lag behind in these days of information technology.

Concentrate on manufacturing

--Chumpol NaLamlieng, president of Siam Cement Public Co. in Thailand, was asked whether Asian companies should put their resources into information technology to catch up with U.S. companies. He answered that Asian companies should concentrate on manufacturing - an area in which they have a competitive advantage.

--Kazuo Inamori, founder of Japan's Kyocera Corp., shared Chumpol's view. "Even in the 21st century, Asian companies will have to concentrate on maintaining an excellent manufacturing base," he said.

--Shi Wen Long, chairman of Taiwan's Chi Mei Corp., considered the recent economic turmoil in Asia as an important turning point, not just a crisis. He pointed out that, as a result of recent currency devaluations, the international competitiveness of Asian manufacturers is greatly improved.

--Yusuke Horiguchi, associate director of the Asia and Pacific department of the International Monetary Fund, defended the policy taken by the IMF following the economic turmoil, saying that it is "broadly appropriate." He also said that controlling capital flows can't be a substitute for structural reform.

--Haruhiko Kuroda, director general of the international bureau of Japan's Ministry of Finance, showed a willingness to promote internationalization of the yen. He also stressed the importance of creating a sound Asian bond market to recycle funds within the region.

--Zeti Akhtar Aziz, deputy governor of Malaysia's Bank Negara, the central bank, tackled the contractive measures prescribed by the IMF, by justifying Malaysia's introduction of a fixed-rate currency regime and control of capital flows. Although she said that Malaysia didn't intend to keep that regulatory policy forever, the timing for the country to lift the measures remains uncertain.

--Wang Xuebing, chairman and president of the Bank of China, emphasized China's efforts to deal with massive nonperforming loans at national enterprises. He also denied his country planned to devalue the yuan in the foreseeable future.

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.