Fri, Jun 19, 2009 page11

• Financial power to ‘shift’ to Asia in wake of crisis

  FORUM: Business and government leaders were told that protectionism is one obstacle that has to be overcome if Asia is to fulfill its economic potential

  • AP
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  Asia’s power is likely to grow in the wake of the global financial crisis and the region has the chance to take a position of leadership in the world economy, business and economic leaders said yesterday.

  The comments came at the annual World Economic Forum on East Asia, a gathering of business and government leaders being held this year in Seoul.

  “There is no doubt that the crisis has accelerated the shift in economic power from the West towards Asia,” said Peter Sands, group CEO of Standard Chartered Bank. “And Asia in a sense needs to step up now and play the role that such power brings.”

  Sands said that this entailed taking a much more active role in international institutions such as the IMF and the World Bank, a development he noted was “in progress.”

  Rajat M. Nag, managing director-general of the Asian Development Bank (ADB), said one way Asia can lead is by changing its economic model, which would mean shifting away from being a producer for the world toward being a producer for itself as well.

  “Asia has to start on a very different growth pattern,” he said. “This means that Asia will have to rebalance the sources of its growth more towards the domestic and regional demand without turning its back on globalization.”

  Asia’s role in the Group of 20 major industrialized and developing economies was also a theme of discussion.

  Heizo Takenaka, director of the Global Security Research Institute at Tokyo’s Keio University and a former Japanese internal affairs minister, predicted that the G20 was destined to supplant the Group of Eight nations as the leading global economic grouping.

  Takenaka said he expected this year’s G8 summit in Italy to be “the last one in history.”

  However, Kiat Sittheeamorn, trade representative at the office of Thailand’s prime minister, said that the G20 must live up to its words, especially about protectionism.

  He said that though the G20 has called for countries to resist the temptation to implement protectionist measures, the reality has been different.

  Kiat said that 17 of the 20 members had imposed 47 protectionist steps, including farm measures and export refunds, since summit meetings in November and April.

  “If all countries that participated in that kind of meeting do not walk the talk, do not really do what they preach, then we have a significant problem,” he said.

  Nag said that Asia must address what he called “some of its very serious governance issues,” including corruption, if it is to truly become a global leader.

  “Without that the G20 structure ... is not going to fulfill its potential and Asia will not achieve its destiny at the table of nations,” he said.

  Nag also said that the economic crisis had amounted to a social crisis for Asia.

  The ADB’s projected growth for the region, excluding Japan, Australia and New Zealand, of 3.4 percent this year from last year’s 6.3 percent meant that “about 60 million people — that’s more than the population of [South] Korea — will remain mired in poverty,” he said.

  Still, Nag expressed confidence that Asia would succeed in helping ignite the global economy.

  “Asia will lead the way out for the rest of the world,” he said, citing the ADB’s projection that growth would rebound to about 6 percent next year.
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