VINACHEM

HCM CITY — Asia needs to increase its ability to share the benefits of growth among the larger population if it is to develop sustainably in the future, WTO director general Pascal Lamy said at the closing session of the 19th World Economic Forum on East Asia yesterday.

He said countries in the continent should also promote multi-lateral co-operation and strengthen their trading capacities.

The WTO official noted that within Asia, many bilateral relationships had been doing well but they had also many limitations.

"Many issues in international trade can be solved through multilateral co-operation," he added.

He stressed the importance of ensuring every citizen benefited from the economic success of a country.

Frans Muller, member of the Management Board of German retailer Metro and Co-Chair of the forum, said that Asia had managed its economic growth well and "effectively dealt with the global financial crisis."

He said that the Asian market was very large and carried huge potential for foreign investors, but the situation would be further improved if governments, private sector and non-government organisations could work together for a common goal.

Hermant Nerukar, managing director of India giant Tata Steel who co-chaired the forum, said he had no doubts that Asia would emerge as a very wealthy region.

However, he also warned that as consumption gets stronger without commensurate increases in income, "It would lead to a moral decline."

Green models

Asia needs a new business model that preserves natural resources and ensures inclusive growth, participants at the forum said.

"Green growth is not just an option," South Korean Deputy Minister of Environment Yoon Jong-Soo said at the session titled Partnership for Sustainability: Year of the Green Tigers on the second day of the forum. "It is the new paradigm that the world must be committed to."

South Korea made the shift in 2008 when it placed the environment at the centre of economic development and made green industries its new engine of growth. The country will allocate 2 per cent of GDP every year on research and development and incentives for businesses and consumers.

His country would spend US$83.6 billion on its green growth policy with the goal of cutting 30 per cent of CO2 emissions by 2020, Jong-Soo said.

New models with a focus on green development would help the country to find glory days again as its GDP growth has over the last two decades dropped from 8 to around 4 per cent, he said.

Viet Nam is one of five countries considered most vulnerable to the effects of climate change, according to Nguyen Thai Lai, Deputy Minister of the Natural Resources and Environment.

To cope with the climate change, Lai said:"We have short-term and long-term action plans and three high-level committees to implement the plans," he said. The initiatives include the reforestation of 5 million hectares of land, stopping illegal logging, working with neighbouring countries to protect the Mekong River and supporting the environment protection activities of business enterprises.

The country was upgrading its sea and river dyke systems, increasing public awareness, carrying out reforestation on five million hectares, stopping illegal logging, working with neighbouring countries to protect the Mekong River and supporting the environment protection activities of business enterprises, he said.

Viet Nam has also set up an environment protection fund of US$200 million, Lai added.

He said many more actions were needed because the fight against climate change and environmental destruction was difficult.

Social safety nets needed

The benefits of ample investment flowing into Asia and economic growth are not reaching everyone, because of an inadequate social safety net, experts have said.

"If Asian countries had good social welfare policies, the money from the fund would help them increase investment and indirectly boost the economy," Dave Senay, president and chief executive officer of Fleishman-Hillard said.

At present, investment in the social safety network in Asia is only 1–1.5 per cent of GDP, while it should be around 5 per cent.

"There is a fact that in Asia – the proportion of saving is very high, but it doesn't make good sense that the capital flow is from Asian developing countries to developed ones," said Ajay Chhibber, United Nations Assistant Secretary-General.

Richard Samans, Managing Director of WEF pointed out that corruption was another hindrance to establishing a social safety network.

Social safety networks played a very important role in maintaining social order and security regardless of global change. It was a good foundation for a country to have, so problems and crises could be overcome while social stability was maintained, Donald Kanak, chairman of Prudential Corporation Asia said.

Connectivity

The connectivity among East Asian countries is not on a par with the expansion of trade ties, and this can hamper regional integration, experts have said.

They said at a WEF session on ‘The Connectivity Conundrum' yesterday that closing this gap was an urgent task.

"Time is against us," said Hans Hickler, chief executive officer of Hong Kong-based logistics provider Agility, urging ASEAN countries to facilitate trade between borders.

"Regional trade will grow tremendously in the time to come," he said, adding slow infrastructure development in some ASEAN countries would become a stumbling block.

Some local governments, like those of Singapore, Malaysia and Thailand, had made strong investment in infrastructure, he said.

While Viet Nam and Indonesia needed to increase their infrastructure investments, countries like Cambodia and Myanmar had a long way to go, he added.

"A lot of air freight from Cambodia moves out of HCM City because air freight transportation in Cambodia is not good."

Pointing to the movement of goods between Thailand and Viet Nam as an example, he said the costs could be reduced by around 30 per cent if ‘we got it right' in terms of land, air and ocean transportation.

Amadou Diallo, CEO of Singapore-based DHL Global Forwarding in South Asia Pacific and Angola, observed the need for a a good network to link Ha Noi's airport with African markets, given that the latter continue to buy good-quality rice from Viet Nam.

"Over 15 per cent of Asian trade in the next 30 years will be with Africa," he noted.

Diallo said he felt the PPP (Public Private Partnership) model should be encouraged to to develop local infrastructure.

Viet Nam had deepened connectivity with its Asian neighbours over the years, with more investors from Japan, South Korea and Taiwan moving their factories to the country, said Pham Ngoc Minh, president and CEO of national carrier Vietnam Airlines.

(Source: VNS)