World Economic Forum on East Asia
Rethinking Asia’s Leadership Agenda
Ho Chi Minh City, Vietnam 6-7 June 2010
The views expressed in this publication do
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Contents
>> Preface
Page 5
>> Executive Summary
Page 6
>> Asia’s Leadership Agenda
Page 10
>> Global Risks
Page 14
>> Asia’s Green Growth Agenda
Page 28
>> Asia’s Future Growth Agenda
Page 22
>> Acknowledgements
Page 26
>> Contributors
Page 28
4 | World Economic Forum on East Asia
Preface
“Rethinking Asia’s Leadership Agenda”
was the theme of the 2010 World
Economic Forum on East Asia, which was
the first regional meeting of the Forum
ever to be held in Vietnam. As the chair
of ASEAN in 2010 and one of the world’s
fastest-growing economies, Vietnam was
the ideal location to deliberate how leaders
from East Asia and/or those operating
in the region can collaborate towards a
sustainable global economic recovery in
the short term and ensure the region’s
competitiveness in the long term.
East Asia’s lead in the global economic
recovery has been underscored by
increasing regional economic cooperation,
robust domestic consumption and
coordinated government stimulus
measures. Alongside the remarkable
economic momentum and progress of
China and India, ASEAN’s market of 580
million consumers is moving towards
economic integration by 2015. In this
regard, Professor Klaus Schwab, Founder
and Executive Chairman, World Economic
Forum, said: “It is time for ABRIC – the
Association of Southeast Asian Nations
(ASEAN), Brazil, Russia, India and China –
to take centre stage. East Asia should play
a more significant role in global affairs.”
The enthusiasm for this year’s World
Economic Forum on East Asia and the
related initiatives was well reflected in
the record number of participants which
included nearly 400 leaders from 60
different countries as well as six heads
of state and government. On behalf of all
participants, we would like to express our
sincere gratitude to the government and
people of Vietnam for their warm hospitality
and partnership.
The World Economic Forum would
also like to thank the Co-Chairs of the
meeting: Frans W. Muller, Member of the
Management Board, METRO, Germany;
Hemant M. Nerurkar, Managing Director,
Tata Steel, India; and Andrei L. Kostin,
Chairman and Chief Executive Officer, VTB
Bank, Russian Federation.
Sushant Palakurthi Rao
Director, Head of Asia
At the same time, leaders at the
meeting emphasized the danger of
complacency given the complexity and
interconnectedness of pressing global
issues, combined with the vulnerability
to global risks. These realities further
underscore the need for Asia to take a
greater outward approach and leadership
role in global cooperation on the one hand,
but on the other hand to more proactively
address chronic challenges facing the
region such as natural catastrophic risks,
food security and the talent shortage.
World Economic Forum on East Asia | 5
Executive Summary
The holding of the 2010 World Economic
Forum on East Asia in Ho Chi Minh City,
Vietnam, was enormously significant for
two key reasons. First, this was the first
time in the nearly 20 years since this
meeting was initially convened that it
was taking place in one of Asia’s newly
developing economies. Second, Vietnam
is this year’s ASEAN chair and, in this role,
will participate in crucial G20 summits in
Canada and South Korea.
Vietnam was therefore the perfect place for
more than 400 business, government and
civil society leaders from over 60 countries
to consider how to go about “rethinking
Asia’s leadership agenda,” the theme of
the meeting. With East Asia gaining a
bigger voice and wider representation on
the global stage through its participation
in the G20, currently the main forum
for coordinating international economic
cooperation, it is critical for the region
to thoroughly examine its own efforts at
collaboration and integration.
The emerging regional integration
frameworks in East Asia, with ASEAN
at the core, have yet to prove their
effectiveness, but their success is
enormously important if the region is to
merit its heightened leadership in global
governance. The launch in 2015 of the
ASEAN Economic Community as a single
market will be a major test. The central
question is whether South-East Asia is
able to translate its good intentions and
widespread recognition of the need to
“hang together or hang separately” into
real policies and national laws that make
regional integration not just a high-minded
concept but a reality on the ground.
It was most telling that several business
leaders at the meeting emphasized that,
in light of the economic crisis and the
mounting global challenges facing the
region including climate change and the
talent shortage, pragmatic approaches
are good but there is also room for bolder
solutions – or at least ones that have true
transformational impact. The political will to
turn rhetoric into reality must be there. Of
special concern to participants were critical
areas on which East Asia urgently needs
to focus: infrastructure development,
inclusive growth to address social and
political instability, education and human
resources, and climate change.
“East Asia should play a greater role
in the global political economy in the
aftermath of the economic crisis.”
Nguyen Tan Dung
Prime Minister of Vietnam; Chair, 2010 ASEAN
The dramatic appearance at the meeting
of Thai Prime Minister Abhisit Vejjajiva, in
his first trip outside his country since the
end of the “Red Shirt” street protests in
Bangkok, underscored the fragility in some
East Asian societies. The region will only
be as stable and competitive as each of
its parts. Each country has to look after its
own economy to make it more efficient,
productive, equitable and sustainable.
Each nation has to focus on the basics
– governance, infrastructure and people
development.
“The World Economic Forum on East
Asia is the most important stage to
address issues on the agenda.”
Frans W. Muller
Member of the Management Board, METRO,
Germany; Co-Chair of the World Economic
Forum on East Asia
6 | World Economic Forum on East Asia
Perhaps it was appropriate that the best
summary of the outlook for East Asia at
this important juncture of global redesign
was made by, David Thai, a Young Global
Leader and entrepreneur from Vietnam.
In a plenary session, Thai remarked: “The
talent is there; the ambitions are there. But
what do we do to unlock that potential?”
The 2010 World Economic Forum on
East Asia was organized under four subthemes: “Asia’s Leadership Agenda”,
“Global Risks”, “Sustainability and Green
Growth”, and “Regional Competitiveness
in a Global Economy”. A summary of some
of the proposals that emerged from the
sessions:
Global Risks
• Regional cooperation – In the face
of mounting global challenges and in
the run-up to the launch of the ASEAN
Economic Community in 2015, East
Asian countries must each take a
pragmatic yet bold approach to turning
commitments to regional cooperation
and integration into real policies and
national laws
• Agriculture – East Asia can put
together a model framework for
regional collaboration for other regions
and can demonstrate the political will
to cooperate in such critical areas as
the Greater Mekong Subregion
“Private investment has yet to return as
the engine of economic growth and
the poor are still suffering.”
Hun Sen
Prime Minister of Cambodia
Asia’s Leadership Agenda
• Global leadership – Asia’s leaders
should play a greater role in world
affairs and make sure issues important
to the region are on the table in G20
meetings and other international
forums
• Forging consensus – The region’s
shared values and existing structures
such as the ASEAN Plus Three
meetings should be tapped to forge
common Asian positions
• Trade and financial architecture
– Asia must work harder to complete
the long-delayed Doha Round of trade
negotiations and resist the rush to
re-regulate banks, pushing instead for
regional harmonization of regulations
• Regional integration – ASEAN
should continue its decades-long
efforts at integration, but should take
note of the current problems in the
European Union and focus on the
economic sphere rather than political
union and a common currency
• Social safety nets – Asia should
strengthen social protection systems
such as pensions and health insurance
through private-sector investment,
improving credit markets and selling
government bonds
• Trade – The ASEAN Plus Three format
– South-East Asia and the three major
economies of North Asia – may be the
minimum grouping with enough power
to be a viable trading bloc
• Financial architecture – As the
region turns from focusing on the
immediate impact of the global financial
and economic crisis, cooperative
work is required to promote long-term
restructuring and reform, such as the
much-recognized need to deepen
domestic bond markets, especially to
promote infrastructure investment
• Twin priorities – East Asian countries
must commit to inclusive growth and
environmental sustainability if they are
to strengthen economic and social
stability and resilience
Sustainability and Green Growth
• Development models – Asian
countries should balance rapid
economic expansion with the need to
protect and preserve the environment
by promoting low-carbon industries
that can become new engines of
growth
• Business models – Green
entrepreneurs should devise new ways
of doing business, including innovative
distribution strategies, to make the
cost of using energy-efficient goods
attractive to consumers
“The measure of our success is not
how much we can accumulate.”
Surin Pitsuwan
Secretary-General, ASEAN (Association of
Southeast Asian Nations), Jakarta
World Economic Forum on East Asia | 7
“People have a right to good
education, healthcare and insurance
in old age. We will open up the
political space more, especially in the
rural areas where people may feel
too much power is concentrated in
the capital. We are going to push this
agenda forward.”
Abhisit Vejjajiva
Prime Minister of Thailand
• Partnerships – Government should
provide low-cost financing and R&D
incentives to green businesses, devise
supportive regulatory and policy
frameworks, and partner with the
private sector to build master-planned
satellite cities
• Procurement – Governments and
businesses should buy goods and
services that promote long-term
sustainability to support the growth of
low-carbon industries
• International cooperation –
Governments should harmonize their
approval processes for green goods
and services to cut “green tape” and
bring new products to market faster,
and should avoid protectionist policies
that hamper the flow of green goods
• Subsidies – Subsidizing the cost of
fossil fuels to make energy affordable
to the poor should be stopped; the
money saved should be used to help
the disadvantaged in other ways, such
as education, livelihood skills and
capacity building
“Everyone is hoping to learn from
Asian dynamism.”
Wang Zhizhen
Vice-Chairwoman, National Committee of the
Chinese People’s Political Consultative Conference
(CPPCCC), People’s Republic of China
8 | World Economic Forum on East Asia
• Changing mindsets – Promoting
green awareness and environmentallyfriendly practices among employees,
children, consumers and regulators
must be given high priority
Regional Competitiveness in a Global
Economy
• Education – As in the rest of the
world, East Asian countries need to
address educational deficiencies to
shift from by-rote schooling to produce
more critical thinkers, innovators and
entrepreneurs
• Values – The reform of education
systems must aim to inculcate values
to ensure that social responsibility
and sustainability become guiding
principles for young people
• Public-private partnership – If East
Asia is to develop its human resources
to effectively boost its competitiveness,
business must work together with
educational institutions and national
governments to shape curricula and
learning strategies
• Connectivity – Governments must
take more of a big picture strategy –
not a ministry-by-ministry silo approach
– to enhancing the hardware and the
software needed to boost connectivity
across the region
• Harmonization – Efforts to increase
East Asia’s connectivity should focus
on creating a common set of rules from
customs regulations to visa procedures
to facilitate the legitimate movement of
people
World Economic Forum on East Asia | 9
Asia’s Leadership Agenda
10 | World Economic Forum on East Asia
Proposals
the hands of the G20, which includes six
members from the Asia Pacific – Australia,
China, India, Indonesia, Japan and Korea
– the region should be far more influential.
With Vietnam representing ASEAN at this
year’s G20 summits and Korea in the chair,
Asia Pacific voices will account for more
than one-third of the G20 membership.
• Global leadership – Asia’s leaders
should play a greater role in world
affairs and make sure issues important
to the region are on the table in G20
meetings and other international
forums
• Forging consensus – The region’s
shared values and existing structures
such as the ASEAN Plus Three
meetings should be tapped to forge
common Asian positions
At the World Economic Forum on East
Asia, business, government and civil
society leaders recognized that the
economic centre of gravity is shifting
from the West to Asia. Participants called
on the region’s leaders to take a greater
role in global governance. At the same
time, Asia’s leadership should continue
to prioritize regional economic integration
and cooperation and, equally important,
inclusive and sustainable domestic growth.
The consequences of failing to address
social disparities were on full display at a
special session with Thai Prime Minister
Abhisit Vejjajiva, who spoke about the
violent protests that recently roiled his
country.
• Trade and financial architecture
– Asia must work harder to complete
the long-delayed Doha Round of trade
negotiations and resist the rush to
re-regulate banks, pushing instead for
regional harmonization of regulations
• Regional integration – ASEAN
should continue its decades-long
efforts at integration, but should take
note of the current problems in the
European Union and focus on the
economic sphere rather than political
union and a common currency
“We talk about the shift of economic
gravity towards Asia, but with greater
economic reputation should come
greater responsibility.”
Mari Elka Pangestu
Minister of Trade of Indonesia
The region’s leaders should make sure that
the issues important to Asia are on the
table at G20 meetings and other global
forums. One key area is trade. Asia must
push harder for free trade and work to
complete the long-delayed Doha Round of
trade negotiations. Bilateral and regional
agreements have their virtues, but the
multilateral route is the only way to tackle
trade-distorting agriculture subsidies or
agree on policies to avert overfishing in
international waters.
• Social safety nets – Asia should
strengthen social protection systems
such as pensions and health insurance
through private-sector investment,
improving credit markets and selling
government bonds
When the G8 countries ran the global
economy, Japan was the only voice from
Asia. Now that the task of coordinating
international economic cooperation is in
The combined ASEAN economy is comparable
to a 5th BRIC economy
ASEAN v. BRIC economies
14
“Chinese companies cannot buy
US banks today. During the Asian
financial crisis, three major financial
institutions in Korea were bought by
US-led private equity funds. Drastic
difference. I think these things need to
be addressed.”
12
10
8
6
0
Brazil
Russia
2014F
2
2010F
4
2003
GDP (current international dollar, PPP, billions)
$16
ASEAN
Hobart Lee Epstein
India
China
Deputy Chief Executive, Tong Yang Securities,
Republic of Korea
Source: IMF World Economic Outlook (April 2010)
World Economic Forum on East Asia | 11
“Who is the ASEAN leader?
Normally it should be Indonesia but
Indonesia is insufficiently developed
yet for it. Looking over the course of
next 15, 20 years…I see ASEAN-PlusOne as the real engine.”
Jean-Pierre Lehmann
Asia should also be actively involved
in the redesign of the global financial
architecture, resisting the international rush
to re-regulate banks and instead pushing
for regional harmonization of regulations
and broader deregulation of Asia’s capital
markets. It should work to increase its
influence in multilateral bodies such as the
World Bank and the International Monetary
Fund in terms of getting more significant
voting rights and having Asians occupy
key leadership posts.
Participants acknowledged that it is not
easy for Asia’s various governments to
forge common positions. The existence
of “Asian values” was debated, with
some doubting that such a distinct set
of principles existed because of the wide
diversity of the region’s political systems,
economic development, cultures, religions,
ethnicity and languages. Yet participants
agreed that there are enough shared
values on which to build consensus,
including the pursuit of prosperity and
pragmatism, the importance of family and
extended family ties, and the high priority
on education.
Existing regional structures can be tapped
to forge a united front. For example, the
ASEAN Plus Three meetings bring together
the leaders of the 10-member Association
of Southeast Asian Nations (ASEAN) and
those of China, Japan and Korea. The
ASEAN Regional Forum, which has these
three East Asian nations as members, also
includes Australia, Bangladesh, India, New
Professor of International Political Economy, IMD,
Switzerland
The values of Asia-Pacific citizens vary by locale
Secular values
Mapping of world values
Americas
A
W
Western Europe
Central
C
and Eastern Europe
A
Africa
and Middle East
JJapan
Korea
S. K
China
a
Taiwan
Taiw
T
New
Zealand
Z
Zea
“Everybody is watching what’s going
to happen in Asia as it has become
the major driver of economic growth.”
Traditional values
Vietnam
etnam
India
IIn
ndi
dia
Bangladesh
h
Andrei L. Kostin
Chairman and Chief Executive Officer, VTB
Bank, Russian Federation; Co-Chair of the World
Economic Forum on East Asia
12 | World Economic Forum on East Asia
Indonesia
a
Australia
Aust
tra
Philippines
p ines
i es
s
Pakistan
Pa
P
ak
n
Survival values
Self values
Note: Traditional-Secular values contrasts the relative importance of religion in societies. Survival-Self values refers to relative
importance of economic and physical security versus subjective well-being and quality of life.
Source: World Values Survey (2005)
Zealand, Pakistan and Sri Lanka, among
others (the European Union, Russia, North
Korea and the USA are also members).
Even as they step out on the global stage,
Asia’s leadership should remain committed
to regional integration. ASEAN has made
great strides in breaking down intraregional trade barriers, but much remains
to be done in integrating the service sector,
particularly financial services. Progress
has also been made in creating an ASEAN
Economic Community, although it remains
to be seen whether the 2015 target will be
met and how governments turn regional
commitments into domestic law. Given the
current problems in the European Union,
many participants recommended ASEAN
should focus on economic integration
rather than political union and a common
currency.
That said, closer cooperation in currency
management is needed to avoid the
competitive devaluations that bedeviled
Asia in the past. While lauding ASEAN’s
free trade agreements with China,
Australia, New Zealand, India and South
Korea, the business community wants
to see faster action on intra-ASEAN
economic integration, which it sees as
facilitating cross-border investments and
the flow of savings from surplus countries
to those in need of capital. There are also
calls to speed up the development of a
regional long-term debt market.
To strengthen social safety nets,
participants argued that issuing
government bonds is preferable to
raising taxes, as are removing obstacles
to private sector investment in the
provision of pension fund services,
health insurance and the like, and
improving credit markets and the ability
of companies and consumers to borrow.
Asian governments spend only half of the
2-3% of GDP estimated to be needed for
adequate protection. As a consequence,
citizens save 35% of what they make for
contingencies, instead of spending part of
it and providing export-led economies with
a second growth engine.
Asia’s leadership agenda is filled to
bursting, but the prospects for success,
in this post-crisis environment, have
never looked better. As Vietnamese Prime
Minister Nguyen Tan Dung puts it, “a truly
new opportunity has dawned on East
Asia.” The region should not pass up this
rare chance to make a difference.
Hemant M. Nerurkar
Managing Director, Tata Steel, India; Co-Chair of
the World Economic Forum on East Asia
“In the medium term, well developed
local capital markets are likely to be
the best tool for Asian economies to
sustainably absorb and benefit from
foreign investment.”
Japan's entitlement spending exceeds 10% of GDP
Michael Drexler
Spending on social safety net in select Asian economies
Managing Director, Global Head of Strategy,
Commercial Investment Banking and Wealth
Management, Barclays, United Kingdom
14%
Central government expenditures, 2007
(percentage of GDP)
“Growth in this region is going to
be the driver of the rest of the world
– and along with this growth comes
responsibility.”
12
Unemployment insurance
10
Health
8
Education
6
4
2
0
India
Hong Kong
Thailand
Malaysia
US
Korea
Japan
UK
Source: United Nations Statistics Division, Global Indicators Database; PwC analysis
World Economic Forum on East Asia | 13
Global Risks
14 | World Economic Forum on East Asia
Proposals
“One of the weaknesses that I’ve
observed is that the regional ambition
and roadmap is not an integral part
of the domestic capital markets plan
of each of the jurisdictions. It appears
that there’s a regional aspiration that
senior levels talk about but at the local
level, it is not part of the domestic
agenda.”
Jose Isidro N. Camacho
Vice-Chairman, Asia Pacific, Credit Suisse,
Singapore
• Regional cooperation – In the face
of mounting global challenges and in
the run-up to the launch of the ASEAN
Economic Community in 2015, East
Asian countries must each take a
pragmatic yet bold approach to turning
commitments to regional cooperation
and integration into real policies and
national laws
• Agriculture – East Asia can put
together a model framework for
regional collaboration for other regions
and can demonstrate the political will
to cooperate in such critical areas as
the Greater Mekong Subregion
• Trade – The ASEAN Plus Three format
– South-East Asia and the three major
economies of North Asia – may be the
minimum grouping with enough power
to be a viable trading bloc
• Financial architecture – As the
region turns from focusing on the
immediate impact of the global financial
and economic crisis, cooperative
work is required to promote long-term
restructuring and reform, such as the
much-recognized need to deepen
domestic bond markets, especially to
promote infrastructure investment
• Twin priorities – East Asian countries
must commit to inclusive growth and
environmental sustainability if they are
to strengthen economic and social
stability and resilience
At the 2010 World Economic Forum on
East Asia, participants made clear that this
is no time for the region to be complacent.
East Asian economies have weathered the
global crisis and rebounded strongly, an
indication that they are now more resilient
and their banking systems more solid than
they were during the emerging markets
financial crisis of 1997-1998.
Yet there are further reforms that are
needed to ensure that Asian nations are
even better prepared for the inevitable next
crisis. These include remedies prescribed
more than a dozen years ago such as
deepening the bond markets, but where
progress has been limited.
For Asia to address effectively mounting
global challenges such as the threat of
another economic meltdown, climate
change, food and energy security,
persistent poverty, pandemics and
corruption, among others, countries must
pursue meaningful regional solutions
based on regional approaches. There is
no question that this imperative is already
widely recognized, if one is to go by
commitments made by government and
business leaders at the meeting, including
the five prime ministers who spoke so
strongly about how collaboration is crucial
to dealing with the impact of the economic
crisis and global warming and successfully
developing the Greater Mekong Subregion
(GMS).
But there was discernible concern among
participants that in this delicate period
of post-crisis reform – when institutions
One in five Asian companies report being asked
to take a bribe globally
Bribery prevalence
“Cooperation is most important. The
first step is the development of the
bond markets. We should also find
ways to support each other in a crisis.
This is the biggest challenge.”
Nguyen Van Binh
Deputy Governor of the State Bank of Vietnam
Percentage of companies asked to pay a bribe
30%
20
10
0
N th
North
America
W
t
Western
Europe
Global
Gl b l
AsiaA i
Pacific
Latin
L
ti
America
Africa
Af i
Central
C t l&
Eastern Europe
Note: Survey of 5,428 senior executives in 40 countries
Source: PricewaterhouseCoopers Global Economic Crime Survey 2007
World Economic Forum on East Asia | 15
and mechanisms of regional and global
governance are in for significant reform
and restructuring with long-term effects
– that this is a time for authentic and
meaningful transformational change. In
other words, East Asia has reached a
critical point in its regional integration
process. While pragmatism may still be the
best approach, bold efforts must still be
taken to deliver on the standard rhetoric.
Traditional progress by increments may
not be enough, especially as the rest of
the world turns to East Asia for global
governance leadership.
It is certainly welcome and gratifying
that Asia has a stronger voice and more
visible presence at the G20 international
table – especially with South Korea this
year’s chair. Yet over the long term,
Asia’s leadership in global governance
will be judged by how well it manages
its own regional initiatives. In this regard,
the advent of the ASEAN Economic
Community in 2015 will be a major
test, with the world looking to see how
each of the 10 nations of South-East
Asia translates regional non-binding
commitments into domestic policy and
national law.
There was certainly reason for optimism in
Ho Chi Minh City that East Asian countries
understand that the times warrant real
action. Consider the challenge of climate
change. South-East Asia, which is made
up in large part of low-lying archipelagic
nations, is already being affected by global
warming. The rise in commodity prices in
2007-2008, which resulted in a global food
crisis and social unrest around the world,
illustrated how fragile food and energy
security is today. Climate change is only
making the situation worse.
Substantial increases in crop production
are critical if the region is to keep pace
with its population growth. Fully harnessing
the potential of areas such as the GMS,
which is shared by six nations, will require
cooperation to meet production targets,
address the impact of urbanization
and industrialization, invest in and build
necessary infrastructure, implement
necessary technology to enhance
efficiency, and create ways to connect
farmers to global markets.
“Let’s start the first step –
macroeconomic coordination
among countries. That’s much more
pragmatic.”
Kiat Sittheeamorn
President of Thailand Trade Representative
In the agriculture sessions, business,
government and civil society leaders
began to put together a set of action
points that could turn into a framework
or model for public-private agricultural
collaboration to be presented at the
World Economic Forum Annual Meeting
2011 in Davos-Klosters. As part of this,
12 global companies at the East Asia
meeting joined with the Government of
Vietnam to launch a public-private task
force to advance sustainable agricultural
growth in the country. The task force will
take an innovative approach to improve
food security and agricultural sustainability
nationwide.
The opportunities for deepening and
broadening regional cooperation in East
Asia are boundless. Getting mechanisms
right and making them work will be
“Green growth is not just an option.
It is the new paradigm that the world
must be committed to.”
Yoon Jong-Soo
Deputy Minister of Environment of the Republic of
Korea
16 | World Economic Forum on East Asia
difficult. It increasingly appears, for
example, that given the constraints of
the global market, ASEAN must combine
forces with the three large North Asian
economies – China, Japan and South
Korea – to create a powerful enough
trading bloc. But turning the ASEAN Plus
Three concept into a real East Asian single
market will take much political will and
courageous leadership, especially at a time
of widespread economic stress.
Many participants underscored how
important it is for East Asia to remain
committed to the spirit of open
regionalism. They also emphasized that,
to strengthen the stability and resilience
of its economies and societies, the region
must focus on promoting inclusive growth
and environmental sustainability. Shifting
resolutely to a low-carbon growth path will
insulate the region from another serious
economic downturn and will also be a
critical factor in driving the new economic
growth necessary for Asia to contribute to
rebalancing the global economy.
The question is whether Asia’s typically
pragmatic leadership can take even bolder
steps to deepen collaborative efforts to
improve governance, infrastructure and
human resources. In the end, it will come
down to the individual governments to
make good on ambitious commitments
to cooperate to address global risks.
Business leaders, who represent
enormously powerful interests across the
region, must also look to the long term and
determine what would really benefit them.
For example, businesses, especially local
companies, can take a lead in promoting
regional efforts to tackle corruption.
World Economic Forum on East Asia | 17
Sustainability and Green Growth
18 | World Economic Forum on East Asia
Proposals
• Development models – Asian
countries should balance rapid
economic expansion with the need to
protect and preserve the environment
by promoting low-carbon industries
that can become new engines of
growth
• Business models – Green
entrepreneurs should devise new ways
of doing business, including innovative
distribution strategies, to make the
cost of using energy-efficient goods
attractive to consumers
• Partnerships – Government should
provide low-cost financing and R&D
incentives to green businesses, devise
supportive regulatory and policy
frameworks, and partner with the
private sector to build master-planned
satellite cities
• Procurement – Governments and
businesses should buy goods and
services that promote long-term
sustainability to support the growth of
low-carbon industries
• International cooperation –
Governments should harmonize their
approval processes for green goods
and services to cut “green tape” and
bring new products to market faster,
and should avoid protectionist policies
that hamper the flow of green goods
• Subsidies – Subsidizing the cost of
fossil fuels to make energy affordable
to the poor should be stopped; the
money saved should be used to help
the disadvantaged in other ways, such
as education, livelihood skills and
capacity building
• Changing mindsets – Promoting
green awareness and environmentally
friendly practices among employees,
children, consumers and regulators
must be given high priority
In the sessions under this sub-theme,
participants made the same point over and
over: Asia can take credit for being the
first to recover from the global economic
crisis, but its rapid return to growth also
increases the risk of unsustainable use of
resources and worsening climate change.
The region’s leaders, particularly those in
East Asia, must surely keep their economy
growing strongly to bring prosperity to all
citizens. At the same time, they should
make sure resources are conserved and
emissions of carbon and other greenhouse
gases are reduced.
These are not necessarily antithetical
goals. In 2008, Korea retooled its
development model to place more
emphasis on green technologies, which
the country’s planners see as the new
engines that will arrest the declining pace
of GDP growth from 8% to just around
4% currently. The shift to a low-carbon
economy is also meant to help mitigate
the effects of climate change – Korea has
made a voluntary commitment to cut 30%
of its carbon emissions by 2020.
“Government and business share
the same goal: we both want to see
strong and sustainable growth in
Vietnam’s agriculture sector. We have
identified a number of ways in which
we can work together more effectively
towards that goal.”
Cao Duc Phat
Minister of Agriculture and Rural Development of
Vietnam
China and Japan are making similar
adjustments, and so are Asia’s smaller
developing economies. Vietnam
considers itself particularly vulnerable to
climate change because of the central
place of the Mekong River and Mekong
Delta in agriculture. Three high-level
committees have been formed to develop
and implement an action plan whose
components now include the reforestation
of 5 million hectares of denuded land and
a US$ 200 million climate response fund
to support initiatives in the provinces and
among business enterprises.
“I would love to see ASEAN
collaborate more on approval
processes in agriculture.”
Carl Lukach
President, DuPont Asia Pacific Limited, Japan
World Economic Forum on East Asia | 19
“At least half the countries in Asia
have subsidies for fossil fuels, opening
the system for abuse. When you
subsidize fossil fuels, people abuse
the system. In order to get the right
behaviours, you need to price at
market levels and find other ways of
helping the poor.”
Stuart Dean
President, ASEAN, GE International, Malaysia
This is a puny amount and underscores
the need to collaborate with other nations,
international organizations and businesses.
Corporations are key players. Largely
using their own resources, multinationals
are developing low-carbon products that
promise to cut carbon emissions and
increase energy efficiency. The company
GE, for example, is building a new aircraft
engine that it says is 15% more fuelefficient than current models and could
save airlines US$ 1.2 million per aircraft
per year.
Other companies not directly involved in
green technologies are also contributing
to climate change mitigation and reaping
big savings. For example, German retailer
METRO, whose 2,000 stores consume
the same amount of energy as a city
of 500,000 inhabitants, aims to reduce
energy consumption by 15% through
LED lighting, use of solar power and other
alternative energy sources, and a more
efficient and productive supply chain.
Participants stressed that more needs
to be done. R&D in green technologies
consumes massive amounts of capital
and is thus beyond the reach of small and
medium size businesses. The resources
of even the biggest companies are also
not infinite. Government incentives and
tax breaks can go a long way, as will a
supportive regulatory framework (including
intellectual property protection), reduced
“green tape” in product approval and
distribution, and procurement policies that
favour environment-friendly suppliers.
20 | World Economic Forum on East Asia
Research should be shared across
sectors, companies and borders. Some
proprietary techniques must remain with
the discoverer, but basic technologies
and foundational knowledge should be
dispersed as widely as possible. The issue
of silos extends to governments, which
may be tempted to protect their homegrown green industries by erecting barriers
to keep out foreign green products. The
more helpful approach is for governments
to harmonize their product approval
processes so green products and services,
regardless of where they were developed,
can get to market faster.
Subsidies pose another challenge. At least
half of the governments in Asia subsidize
the price of fossil fuels, electricity and
water so the poor can afford them. Not
only does this practice encourage wasteful
consumption, it is also a disincentive
to the commercialization of low-carbon
alternatives. The solution is not always to
produce more fossil fuels or tap additional
water resources. Squeezing efficiencies
from current capacity and reducing
operational losses, for example in water
distribution, can significantly increase
supply.
There is no question that economic
growth in Asia should not only be rapid
and environmentally sustainable but also
inclusive. The recent violent protests
in Thailand show what can happen if
economic and social disparities become
too wide. But subsidies are not the
answer. Indonesia has proved that they
can be lifted without disadvantaging the
poor. In 2005, Indonesian fuel prices
surged 125% after state subsidies were
trimmed, but fuel consumption fell 30%.
The subsidy funds were reallocated to
help the poor in other ways, such as cash
transfers, healthcare programmes and
assistance with education.
Inclusive growth, however, implies
increased pressure on resources. As the
ranks of the middle class expand, more
and more people will be able to afford
homes, cars, appliances, clothes, bags
and shoes. Newly empowered citizens
will gravitate to the excitement and
high-paying jobs in Asia’s megacities.
In partnership with the private sector,
governments should build master-planned,
largely self-sufficient satellite cities
offering employment, entertainment and
education to ensure sustainability of their
metropolitan centres.
It is also critical that as cities in the region
develop, they should incorporate in their
master plans the social dimensions that
were not often taken into account by
cities in developed countries. If East Asian
urban areas integrate social concerns and
responsibilities as its megacities grow, then
they can avoid many of the problems that
plague metropolises in the West.
Participants underscored the importance
of changing mindsets regarding energy
conservation and overall consumption.
About 43% of greenhouse gas emissions
are attributed to household and individual
energy use. In Korea, green initiatives
include an information campaign to
educate citizens on low-carbon lifestyles,
labels that inform consumers of a
product’s carbon footprint, and a points
system that rewards households that have
reduced energy use. Children are also
targeted in this awareness and education
campaign to ensure low-carbon behaviour
becomes a way of life.
“In the future, currencies in Asia will
appreciate and go on appreciating
because we are the net surplus area
of the world. Asian economies have
to be able to live with that kind of
new fundamental change.”
Supachai Panitchpakdi
Secretatry-General, United Nations Conference
on Trade and Development (UNCTAD), Geneva
Asian investments in clean energy rose in 2009,
despite the recession
Financial investment in clean energy, by region
New financial sector investment in
clean energy (US$, billions)
$60
50
40
“Looking at Asia, one sees very good
examples of trade opening leading
to growth. The countries that are the
most open have been doing better
during and after the global crisis than
countries that were less open.”
30
20
10
2007 2008 2009
0
Europe, Middle East and Africa
Source: Bloomberg New Energy Finance (2010)
Americas
Asia-Pacific
Pascal Lamy
Director-General, World Trade Organization,
Geneva
World Economic Forum on East Asia | 21
Regional Competitiveness in a Global Economy
22 | World Economic Forum on East Asia
Proposals
• Education – As in the rest of the
world, East Asian countries need to
address educational deficiencies to
shift from by-rote schooling to produce
more critical thinkers, innovators and
entrepreneurs
• Values – The reform of education
systems must aim to inculcate values
to ensure that social responsibility
and sustainability become guiding
principles for young people
• Public-private partnership – If East
Asia is to develop its human resources
to effectively boost its competitiveness,
business must work together with
educational institutions and national
governments to shape curricula and
learning strategies
• Connectivity – Governments must
take more of a big picture strategy –
not a ministry-by-ministry silo approach
– to enhancing the hardware and the
software needed to boost connectivity
across the region
• Harmonization – Efforts to increase
East Asia’s connectivity should focus
on creating a common set of rules from
customs regulations to visa procedures
to facilitate the legitimate movement of
people
Whatever the impact of the global
economic and financial crisis, the
long-term battle to bolster East
Asia’s competitiveness in a global
economy continues. Despite the strong
performances of some of its economies
in the World Economic Forum’s Global
Competitiveness Report rankings, the
region still has a long way to go to
strengthen its position by improving
infrastructure, fostering its consumer
markets, encouraging innovation and
training future talent. It was not surprising
perhaps that some of the most forthright
discussions and debates at the meeting
took place under this sub-theme.
Consider the plenary session on the
outlook for Asia’s next generation of talent.
Participants candidly acknowledged that,
as in the rest of the world, there is a crisis
in education in Asia, as countries struggle
with how to reform and restructure their
education systems to better prepare youth
to cope with the pressures of globalization.
Education systems are failing to bridge
knowledge and skills gaps. While the
region is making progress in improving
access to schooling, increasing focus is
needed on the quality of that education,
how to ensure that young people are able
to find jobs, and how to promote not just
knowledge capture but critical thinking,
reasoning and values that encourage
social responsibility and tolerance.
“The talent is there; the ambitions
are there. You have talented and
motivated people who excel. But
what do we do to unlock that
potential?”
David Thai
Founder, Chief Executive Officer and Chairman
of the Board, Viet Thai International Joint Stock
Company, Vietnam; Young Global Leader
Participants stressed the critical need
for public-private partnership in shaping
curricula and fostering talent. Business and
educational institutions must work together
to change the way young people are
taught, to update and improve learning, so
that economies are better served by their
schools and companies are better able to
cope with the shortage of talent. Publicprivate partnership is crucial if countries
in the region are to increase spending on
Asia's R&D spending is forecast to match US spending in 2010
Forecast R&D spending
Forecast R&D spending, 2010 (US$, billions, PPP)
R&D spend
as % of GDP 3.41%
1.50%
0.90%
1.95%
2.85%
$400
300
“Nation-building is about developing
our human resources. The people
are the most important. But in human
resources development, we are falling
behind. We are doing a poor job of
addressing the knowledge and skills
gaps.”
200
100
0
Japan
Source: Battelle, R&D Magazine (2009)
China
India
Rest of Asia
US
James T. Riady
Chief Executive Officer, Lippo Group, Indonesia
World Economic Forum on East Asia | 23
the research and development they need
to stimulate innovation and creativity. The
human resources are there; the challenge
is how to unlock their enormous potential.
“If there is anything we have learned,
it is that the spirit of open trade and
open capital has made East Asia’s
strong growth performance possible.”
Donald P. Kanak
Chairman, Prudential Corporation Asia, Hong
Kong SAR
“ASEAN Plus Three will stand a
chance to create a powerful enough
trading bloc.”
Victor L. L. Chu
Chairman and Chief Executive Officer, First
Eastern Investment Group, Hong Kong SAR:
Member of the Foundation Board of the World
Economic Forum
24 | World Economic Forum on East Asia
Many participants also pleaded for a reexamination of values, especially against
the backdrop of rapid urbanization, the
perception that social divides are widening,
the emergence of a vibrant middle class,
and challenging demographics – a youth
bulge in some, a grey bulge in others. The
quality of education should not be the sole
responsibility of schools; families need to
be deeply engaged. There must also be
greater recognition of youth culture and
the social and political implications of the
connectivity of young people, particularly
in light of the emergence of the Internet,
mobile communications and the popularity
of social media tools. Asia’s young
consumers will be instrumental in shifting
economies to source more growth from
domestic demand than from exports.
The need to foster not control connectivity
in East Asia was a priority for participants.
A focus of their discussions was on the
continuing infrastructure deficiencies
in many countries. To surmount this
gap will again require public-private
partnership. Reforms are also needed
to make it easier to raise money for
infrastructure investment. Efforts to deepen
domestic bond markets will be crucial.
Businesses have to be willing to work
with governments to devise innovative
mechanisms for cooperation so that the
social goals that the latter seek and the
commercial objectives that the former
require are met.
Perhaps more importantly, East Asia
needs to focus on following through
with the connectivity commitments that
countries have already made. The reality
of the region’s connectivity – the way
goods move across borders, the ability of
providers to offer transnational services,
and even the ease with which people
can legitimately move from one country
to another – seems to lag behind its
vision. Logistics companies lament that
governments often take a piece-by-piece
approach to policies such as those that
cover the transport of goods from arrival at
a port or airport to delivery to the end user.
This is why, despite genuine enthusiasm
for the launch in 2015 of the ASEAN
Economic Community, many question
whether this landmark event will result in
an authentic single market. Governments
in the region need to work on creating
single-window customs systems and
harmonizing customs rules and trade and
investment regulations. While South-East
Asian countries appear to be working from
the same regional integration playbook,
they are not all on the same page.
In the years running up to 2015 and
beyond and in this critical post-crisis
period of global redesign, how national
governments fulfil their regional and
global commitments will be enormously
important. If the gap between rhetoric
and reality remains – especially in crucial
areas such as infrastructure, education
and connectivity within the region – East
Asia will have a tougher time maintaining
its competitiveness in a rapidly changing
global economy
World Economic Forum on East Asia | 25
Acknowledgements
The World Economic Forum would like to thank the Government of Vietnam for serving as host country of the World Economic Forum
on East Asia.
The World Economic Forum would also like to thank all the following entities who have supported the Government of Vietnam for the
World Economic Forum on East Asia:
Baoviet Holdings
BIDV
Saigon Invest Group (SGI)
The Vietnam Bank for Agriculture and Rural Development
Vietnam Oil and Gas Group (Petrovietnam)
Vietnam Posts and Telecommunications Group
Vietnam Construction and Import-Export Joint Stock Corporation (VINACONEX)
Vietnam National Coal - Mineral Industries Group (VINACOMIN)
Construction Joint Stock Company No. 1 (COFICO)
Vietnam Steel Corporation (VNSTEEL)
Strategic Partners
Agility
Alcatel-Lucent
AT&T
AUDI AG
Bahrain Mumtalakat Holding Company
Barclays PLC
Bombardier
BT
CA Technologies
Chevron
Cisco
Credit Suisse
The Dow Chemical Company
DuPont
Hanwha Group
HSBC
Kudelski Group
Manpower
Marsh & McLennan Companies (MMC)
METRO Group
The NASDAQ OMX Group
Nestlé
NIKE
Prudential
SK Group
Standard Chartered Bank
VimpelCom Ltd
VTB Bank
26 | World Economic Forum on East Asia
Regional Partners
SICPA Holding
Meeting Supporters
Vietnam Airlines Corporation
VinaCapital
Host Broadcaster
Vietnam Television (VTV)
World Economic Forum on East Asia | 27
Contributors
Sushant Palakurthi Rao is Director, Head of Asia, at the World Economic Forum. The World Economic Forum on East Asia was under
his direct responsibility, with Patricia Lehnherr, Event Manager and Meeting Coordinator; Clara Chung, Community Manager, Asia;
Global Leadership Fellow; Fabien Clerc, Community Manager, Asia; Global Leadership Fellow; Anne-Catherine Gay des Combes, Team
Coordinator Asia; Béatrice Laenzlinger, Senior Community Relations Manager Asia; Jaeyoung Lee, Community Manager, Asia Pacific;
Global Leadership Fellow; and Christoph S. Sprung, Senior Manager, India and South Asia
Nancy Tranchet, Associate Director, Editing at the World Economic Forum, worked with Alejandro Reyes and Cesar Bacani to produce
this report.
The World Economic Forum would like to express its appreciation to the summary writers – Wayne Arnold, Kaiser Kuo and Catherine
Ong – for their work at the meeting.
Session summaries are available at: www.weforum.org/eastasia2010/summaries
Editing: Nancy Tranchet
Design and Layout: Kamal Kimaoui, Associate Director, Production and Design
Layout: Floris Landi, Assistant Graphic Designer
Photographs: Chanettee Thanachaiary and Sikarin Thanachaiary
28 | World Economic Forum on East Asia
This publication is available in electronic form on the World Economic Forum website.
World Economic Forum on East Asia Report:
http://www.weforum.org/summitreports/eastasia2010 (HTML)
http://www.weforum.org/pdf/summitreports/eastasia2010.pdf (PDF)
The electronic version of this report allows access to a richer level of content from the meeting, including photographs, session
summaries and videos of selected sessions.
Other specific information on the World Economic Forum on East Asia, Ho Chi Minh City, Vietnam 6-7 June 2010, can be found at the
following links:
Meeting News www.weforum.org/eastasia2010
Session Summaries www.weforum.org/eastasia2010/summaries
Photographs www.weforum.org/eastasia2010/photos
Programme www.weforum.org/eastasia2010/programme
Interviews www.weforum.org/eastasia2010/interviews
Partners www.weforum.org/eastasia2010/partners
Webcasts www.weforum.org/eastasia2010/webcasts
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the state of the world by engaging leaders in
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agendas.
Incorporated as a foundation in 1971, and
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