IT focus of forum on Asia's future

June 12, 2000

Leaders call for greater cooperation to boost growth, reduce gap between technological haves and have-nots

Special to The Nikkei Weekly

Information technology and the expansion of related industries hold the key to speeding up the recovery and self-sustained growth of the Asian economy. That was the consensus of government and business leaders and prominent academics from 14 countries and territories in the Asia-Pacific region who gathered at an international conference held by Nihon Keizai Shimbun Inc. last week in Tokyo.

Participants in the 6th international conference on "The Future of Asia," held on June 8 and 9, also called for greater cooperation within the region and the deepening of individual countries' structural reforms, to guard against the recurrence of economic crises in the future.

To help promote the ongoing IT revolution to benefit of all of Asia, Prime Minister Yoshiro Mori, in his June 8 speech at a banquet for the conference, unveiled a new initiative in which Japan will provide support for developing IT policies and systems, assistance on IT training, education and infrastructure development, and promotion of IT use. Details of the package will be announced at the Group of Eight summit in Okinawa next month, Mori said.

On strengthening regional cooperation, Indonesian President Abdurrahman Wahid urged Asian countries to "work together in a collective way" and to "establish a common Asian identity."

"I believe this kind of common identity between Asians will be the main factor behind economic recovery of the whole area," Wahid said.

The growing influence of the IT industry was one of the dominant issues of the Nikkei conference. Choi Woo-sock, president of South Korea's Samsung Economic Research Institute, said the boom of venture companies with advanced technology has vitalized the Korean economy. As of the end of 1999, the number of registered venture companies exceeded 4,900, a 17-fold increase during a year-and-a-half period.

Despite the optimistic note on IT development, some warned that the gap in economic growth between Asian countries would widen because of differing levels of technological development.

"I see a very different resumption of growth between countries that can make use of the Internet and IT and those not yet capable of maximizing their use," said Lee Kuan Yew, senior minister of Singapore.

Lee predicted that Japan, South Korea, Taiwan, Hong Kong and possibly China would become East Asia's winners in the IT revolution, whereas Indonesia, the Philippines and Thailand would fall behind Singapore and Malaysia in Southeast Asia.

On ways to promote regional economic cooperation, Malaysian Prime Minister Mahathir Mohamad suggested that Asia should assert itself and work with the European Union and the North American Free Trade Agreement as equal partners.

"Asians should begin with the international financial regime. If they don't like our suggestions on reform, then throw the whole thing back at them," he said.

"Since they have ganged up on us, we should at least form our own forum, the East Asian Economic Caucus (EAEC), so that we may at least discuss how to protect ourselves," Mahathir said.

The notion of establishing an ASEAN Free Trade Area and regional currency monitoring facilities such as an Asian Monetary Fund was widely supported by conference participants.

Domingo Siazon Jr., the Philippines' secretary of foreign affairs, supported the Chiang Mai Initiative created at the Asian Development Bank meeting last month. "The envisaged network of bilateral currency swap-and-repurchase arrangements and pooled reserves that central banks could draw upon when currencies come under attack by speculators, as well as the regional surveillance scheme, are steps in the right direction," Siazon said.

Supachai Panitchpakdi, Thailand's deputy prime minister and minister of commerce, called 2000 a real watershed for "ASEAN plus three" (China, Japan and South Korea), because Asian leaders were resolved to cooperate on all fronts.

Supachai, who is also director general-designate of the World Trade Organization, suggested the creation of a broader free trade zone encompassing ASEAN countries, Japan, China, South Korea, Australia and New Zealand.

The urgency of establishing a Southeast Asian free-trade zone was reiterated by Lee, who believed China's expected entry into the World Trade Organization would intensify competition in the region.

"With China in the World Trade Organization, other countries will find it increasingly difficult to get direct foreign investment because they (China) can offer everything cheaper," Lee said. "Unless Southeast Asia gets a free trade area going that can offer more opportunities and tick the competitiveness more in favor of Southeast Asia, I see growth being not as robust as before the crisis."

Although the currency crisis is behind most Asian countries and some have recorded strong economic growth in 1999, government officials at the conference generally agreed that Asian recovery was only partly complete and many structural problems had yet to be solved.

"The danger of a fast recovery is that quite a few of these economies have not got rid of their problems, especially nonperforming loans at the banks, bankruptcy laws and financial regulations,"Lee said. "There are latent problems which may again be put to the test by some subsequent crisis."

Supachai warned that Asian governments must cut down deficit financing which has fueled Asian countries' growth in the past two years so that Asia would not be importing new problems in the area of excessive public sectors' borrowing - a resemblance to the excessive private sector borrowing which was the major cause of 1997 currency crisis.

(The Nikkei Weekly June 12 Issue)

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