Speech by H.E. Lee Han Dong,Prime Minister, Korea
12 April 2002
A New Century: Economic Development and Future Cooperation
for Asia in the 21st Century
Prime Minister Zhu Rong Ji of China, Prime Minister Koizumi of Japan, Prime Minister Thaksin of Thailand, and all the Asian leaders and experts from various fields present here today,
I would first like to offer my congratulations on the successful opening of the First Annual Conference of the Boao Forum. I would also like to express my sincere appreciation to the Chinese government for the excellent arrangements made for this meeting and to thank Secretary-General Zhang Xiang and all the staff of the Secretariat for their hard work.
It is truly a great honour for me to have this opportunity to speak today on the theme of “A New Century : Economic Development and Future Cooperation for Asia in the 21st Century” at this meeting. I welcome the holding of this conference which has as its goal the pursuit of economic cooperation, co-existence and joint prosperity amongst the peoples of Asia.
Changes in the Global Economic Order
As we enter the new millennium we are living through rapid and drastic changes in the global economy, both in terms of “quantity” and in terms of “quality”. Swift advances in information and communications technologies have transformed all forms of economic activity, from production to distribution to consumption.
Cutting edge technology in such new fields as biotechnology (BT), nanotechnology (NT), and space technology (ST) have altered the very way in which we live.
Innovations in information and communications technologies, in conjunction with the liberalization of trade and capital flows, are leading to ever intensifying globalization. Globalization is now an unstoppable trend.
Along with globalization, the trend of growing regional cooperation among neighbouring countries has also emerged as a major feature of the global economy.
We envisage that the trends of unprecedented rapid technological advances, accelerating globalization and regional integration will serve as the basic framework for the formation of the global economic order in the 21st century.
Asia’s Potential to Rise to the Challenge of These Changes
Against the backdrop of these changes in the global economy, we, the countries of Asia, must also rise to the numerous challenges facing the people of the world.
At the end of last year, China joined the WTO with the blessing of all the countries of the world. As a consequence China has truly become a part of the global free trade system. Moreover, China has agreed to conclude an FTA with ASEAN by the year 2010.
Japan has entered into an “Economic Partnership Agreement” with Singapore. Furthermore, Korea and Japan have agreed to set up a Joint Committee among the private sector, governments and academic circles for the formation of an FTA between the two countries.
The ASEAN + 3 Summit Meeting bringing together ASEAN, Korea, China and Japan with a view to promoting regional economic cooperation in East Asia is now truly under way.
Moreover, in October 2000 Korea successfully hosted the Third Asia-Europe Meeting in Seoul, which aimed to further strengthen cooperation between Asia and Europe, thereby promoting prosperity in these two regions.
In particular, the Inter-Korean Summit of June 2000 generated a momentum for the promotion of peace and security on the Korean Peninsula, which are essential to the pursuit of economic cooperation in East Asia. I believe that the summit was the fruit of the consistent implementation of the sunshine policy pursued by the government of the Republic of Korea since the inauguration of President Kim Dae-jung, as well as the support given to it by the international community.
In the midst of difficulties in the international situation, the process of dialogue between the two Koreas has faltered somewhat. However, the visit to North Korea from April 3rd to 6th by the special envoy from South Korea led to the agreement to revive the temporarily-frozen relation between the two Koreas.
We have reached a breakthrough for the expansion of cooperation between the South and the North and reconciliation on the Korean Peninsula by agreeing on the early completion of the linkage projects of railways and roads, holding meetings between the military authorities, resuming the reunions of separated families, and holding the South-North Committee for the Promotion of Economic Cooperation in May.
In addition, the World Cup will be co-hosted by Korea and Japan in June of this year. This is the first time that the World Cup is jointly hosted and the two countries are fully cooperating with each other in every field to ensure the successful hosting of this event.
Moreover, the nightmare of the financial and foreign exchange crisis which devastated the East Asian region in 1997 is gradually fading. There are stronger signs of economic recovery.
Korea did not see the economic crisis of the late 1990s simply as a financial or foreign exchange crisis. We used it as an opportunity to seek fundamental solutions to the weaknesses and inefficiencies which had built up in the process of rapid growth over the previous 30-40 years.
Over the last three to four years the Korean government has pursued sweeping reforms in four major sectors: the financial, corporate, public and labour sectors. In this way the Korean government has addressed weaknesses in the financial system and introduced transparency into corporate management. By taking bold privatization measures and by enhancing flexibility in the labour market, we have established much sounder economic mechanisms and stronger market economy.
Korea now has a system of permanent structural reforms not only in the private sector but also in the public sector. This has enhanced overall efficiency in our economy and society and has also enabled us to respond with greater flexibility to changes in the external environment.
In this process of economic reforms, we have learned the valuable lesson that cleaning up illicit practices and corruption and breaking away from government intervention in the economy are important first steps in reform efforts.
Such emerging changes in Asia with the advent of the 21st century meaningfully demonstrate that Asians are beginning to recognize the importance of the new challenges that arise from the novel global economic environment.
The Asian region accounts for more than 60 % of the world population. And yet national incomes and levels of various economic activities, such as trade, in this region do not account for even one third of world totals.
The majority of Asian countries fall far behind Western countries in terms of industrialization. Those Asian nations that were amongst the first to experience economic development did so in the 1960s and others later in the 1970s and 80s.
However, we Asian countries, who are now termed NIEs or Newly Industrializing Economies, are closing the gap with the developed countries. This is a source of great satisfaction for us.
Moreover, ASEAN countries are making use of their ample natural resources and economic cooperation to accelerate the process of development.
In addition, through its successful pursuit of market economy, China is achieving rapid economic growth at an unprecedented pace. India is also emerging as a valuable source of human resources of the highest calibre in the field of information technology.
The end of the 20th century was a time when the potential for development in Asia became clear. The 21st century is a time for Asia to become the center of the world economy. This will be an era in which Asia will serve as a driving force for growth in the global economy while countries within the region will experience shared development and a rise in the quality of life of their people.
Tasks We Face in the Promotion of Economic Cooperation in Asia in the 21st Century
As we step into the 21st century let us not forget the mistake that Asia made in failing to make use of the opportunities offered by the industrial revolution which Britain underwent in the 18th century.
It is a painful fact that with the exception of Japan, Asian countries as a whole were slow to wake up to industrialization, and therefore failed to become developed countries.
As I mentioned earlier, the world is now being rocked by a revolution in information technology which brings with it changes far greater in scale and depth than those of the industrial revolution.
Should we fall behind in this information age, the consequences will be far greater than that of our past failure to seize the opportunities of industrialization. We would face a much greater development gap and find ourselves in an inescapable vicious circle of poverty.
We Asian countries face great challenges. In this century we must make our economies more open, strengthen cooperation in the information and technology fields, and deepen regional economic cooperation. In this way we must embark on a new beginning and come to the fore in the information age.
(1) Enhancing Regional Trade and Investment Cooperation
I believe that expanding trade and investment among countries in the region is a good starting point for economic cooperation in Asia.
In the year 2000 the level of intraregional trade amongst EU countries was 53% whereas the level of intraregional trade amongst East Asian countries totaled 49 %.
It is particularly worthy of note that intraregional trade among the countries of East Asia has increased more than twofold in the last ten years. This fast rate of growth surpasses the levels in any other region and is an indication that there is greater scope for further increase in intraregional trade in this region than in any other.
The WTO Doha Development Agenda negotiations currently under way are expected to advance the liberalization of trade and investment at the global level.
However, we need to take promotion of cooperation among countries in this region one step further.
To this end, we need to intensify efforts to expand regional trade. For example, we should pursue measures for continued reduction of tariffs, the removal of non-tariff barriers within the region, the establishment of channels for the sharing of information on trade regulations, and the laying of necessary foundations for e-commerce.
We should pursue cooperation in the fields of technology and investment expansion in a mutually complementary way so that all the countries of the region can benefit from this.
We must also expand investment in the field of information and communications technologies. We should seek to overcome the digital divide, establish optical cable networks between regional countries, build infrastructure such as roads and ports, and work together for the joint development of resources and industrial restructuring.
I believe that we can effectively pursue the promotion of trade and investment in close cooperation with the private sector.
To this end, all Asian leaders should have a more important role to play than ever in facilitating mutually beneficial cooperation between companies in different Asian countries.
(2) Strengthening Cooperation to Ensure Stability in the Regional Financial and Foreign Exchange Market
I believe that we have to focus our efforts on stabilizing the financial and foreign exchange markets in the region. This will be essential if we are to ensure that we do not live through another painful experience like that which Asian countries underwent in the financial crisis of 1997.
International financial transactions total around 4 trillion dollars a day. Of this, quite a considerable amount is not connected in any way to the real economy but is simply made up of transactions across borders to obtain financial gains.
In an attempt to combat speculative funds and prevent economic turbulence, the Financial Ministers of ASEAN and Korea, China and Japan reached an agreement, called the Chiang Mai initiative at the ASEAN + 3 Finance Ministers’ Meeting. On this basis, Korea, China and Japan are playing a key role in efforts amongst Asian countries to take steps for the conclusion of currency swap arrangements. We must intensify such efforts.
In addition, there is a call for a monitoring of short-term speculative flows of capital and the establishment of an early warning system for foreign exchange crises. There is a need for greater exchange of information and deeper cooperation on these tasks.
We must consolidate the exchange of ideas and experience between countries in the area of financial sector reform. This will be essential if we are to overcome the weaknesses in the financial sector which are common to all Asian countries.
(3) Stepping Up Cooperation in the Areas of Cultural, Educational and Technical Exchanges
In the industrial age, physical resources such as capital, labour and natural resources were the dominant factors. However, in the 21st century intangible resources such as knowledge, technology, information and culture will play a key role in economic growth.
If we look back on the history of Asia, we are reminded that it was Asians who came up with such inventions as paper, the art of printing and the digit “zero”.
In the knowledge-based economy of the future, their high level of education and outstanding creativity will be the greatest assets of the peoples of Asia as they strive to achieve successful development.
In the future we must develop and apply information technology and, as we do so, seek to combine traditional industries and the industries of the knowledge-based economy to identify a model for “sustainable development”.
Korea has exerted concerted efforts to develop information and communications industries over the last four to five years. As a result, it has established high-speed information networks which connect the whole country. Moreover, it is a world leader in the application of Internet technology to financial and securities sectors and in the use of mobile communications.
In addition, Korea is highly competitive in world markets for semiconductors, TFT-LCDs, CDMAs, etc. and mobile communications technology and manufacturing.
Moreover, we are pushing ahead with informatization in all types of traditional industries.
Asian countries are now rapidly expanding trade not only in hardware such as goods, but also in terms of software such as knowledge, skill, information and culture.
Exchanges in the fields of science and technology, vocational training and life-long learning have also been a topic of great discussion. Through such exchanges, we can achieve strong cooperation among countries in the development of human resources.
In this regard, it is particularly important that we bear in mind that the digital divide, which inevitably emerges as the knowledge-based economy takes form, may easily evolve into a “knowledge gap”, giving rise to greater economic and social inequalities between countries and peoples.
Urgently pursuing cooperation among countries within the region in the field of education and vocational training, will be critical in overcoming the information and knowledge gap.
(4) Intensifying Development Cooperation to Eliminate Poverty
In today’s world, the international community is finding that poverty is a source of confrontation and conflict in many forms.
The eradication of poverty and enhancing quality of life, thereby giving hope to humankind as a whole, have emerged as tasks of the utmost importance.
Various international organizations, including the United Nations, are endeavouring to address the issue of development at the international level. However, ridding Asia of poverty is primarily the responsibility of Asian countries and we must therefore endeavour to identify measures to resolve this problem.
Korea is playing its own part in efforts to alleviate poverty in Asia. Of the total Official Development Assistance (ODA) provided by Korea to developing countries, 40 % is allocated to the Asian region. In the future, we will, within the limits of our capabilities, endeavour to increase such assistance.
In the early 1960s, Korea was classified as a poor country with per capita income of less than 100 dollars. Now that figure has risen to a level of 10,000 dollars and Korea has developed into a Newly Industrializing Economy.
We are more than willing to share with Asian countries the experience we have gained in this process of growth and what we have learned from the successes and failures of various policies.
Tasks We Face for the Fostering of Economic Cooperation in the Asian Region
I would now like to turn to the question of the various tasks ahead of us as we seek to build a framework for regional cooperation in Asia.
There are a number of obstacles to the building of regional economic cooperation in the Asian region. Amongst them are differences between countries in terms of economic capability and sources of conflict stemming from past history, to mention a few. And yet I believe that there are also many factors conducive to the building of regional economic cooperation.
In particular, all five of the world’s biggest ports are in the Asian region : Hong Kong, Singapore, Pusan, Shanghai and Kaoshung.
Moreover, the region is set to develop into a major world hub and has gone a long way towards achieving this with large international airports such as Korea’s Incheon International Airport, China’s Pudong Airport, Hong Kong’s Chek Lap Kok Airport and Japan’s Kansai Airport.
Despite the long-standing conflicts within the region rooted in history, I believe that the common East Asian heritage can serve to bring the countries of the region together in a spirit of understanding and cooperation.
Furthermore, Asia boasts excellent human resources in the information field and the peoples of the region are united by common elements in their culture. I believe that if they are only given the opportunity, all the peoples of Asia will be more than able to attain a high level of expertise in the field of information technology.
A major stumbling block to economic cooperation in the region is the treatment of backward industries in individual countries. Even if we cannot address this problem fully, I believe that we can approach this issue with wisdom, starting by reaching agreement in areas where cooperation is feasible and translating this into concrete action. In this way, we will be able to overcome this problem.
To this end, political leadership is of paramount importance.
However, it has to be said that the countries of the Asian region have shown a lukewarm attitude not only to bilateral free trade but also to the fostering of regional cooperation in this regard.
We in Asia do not have much time at our disposal.
I stress again that if we fall behind in the information age of the 21st century we will experience much greater difficulties even than we did in past times of industrialization or colonialism.
Asian countries are all at different stages of development and have their own unique cultural backgrounds. Nevertheless they are united for the common goal of achieving economic and social development and of building a prosperous future.
Asian countries must share their experiences with each other and cooperate with one another to form a framework for closer regional economic cooperation. There has never been a greater need to do so : this will be the key if Asia is to assume its place as a major region which enjoys prosperity in the 21st century.
As we pursue the goal of fostering economic cooperation in the region there is one factor which will be absolutely indispensable. That is, Asians must come to a deeper understanding of history and culture of their neighbouring countries.
Korea has done its own part towards fostering an atmosphere conducive to forming a framework for economic cooperation in the region. We have in recent years made a number of proposals at the Summit meeting between ASEAN, Korea, China and Japan.
In particular, with a view to ensuring that the discussions on long-term measures for economic cooperation in East Asia become more institutionalized, President Kim Dae-jung proposed at the Brunei Summit in 2001 that the ASEAN+3 Summit be developed into an East Asian Summit.
In addition, President Kim Dae-jung’s proposals for “Research on Measures to Realize the Concept of an East Asian Free Trade Area” and “the Creation of an East Asian Forum” received the support of Leaders of the region.
We have a saying in Korea that “A journey of a thousand miles starts with but a single step”. I believe that there is no doubt that President Kim’s proposals represent a very valuable “first step” on the journey towards regional cooperation in Asia.
Such initiatives lay out a blueprint for joint efforts amongst Asian countries in the 21st century to pursue trade and investment cooperation, to work together to usher in the age of knowledge and information, to cooperate in the fields of education, vocational training and culture, to overcome development gaps and to rid our region of poverty.
In the latter half of the 20th century the diversity and dynamism in the Asian region allowed it to play a driving role in the global economy.
I am quite sure that again in the 21st century the dynamism and creativity evident in the Asian region will allow us to play an even greater role.
Economic innovation and prosperity will be driven by private companies, workers, research institutions, academics and experts in the private sector, who will play the leading role.
It is the driving force, vision, courage, and technological innovations of people such as these that will breathe life into the Asian economy.
The building of networks to promote opportunities for the joint development of technology and cooperation for joint research in the private sector, and mutual exchanges of human resources, education and training will serve as the basis for such efforts.
The active support for the building of such networks in the private sector from governments of each of our countries will be vital.
The fact is that until now we have been passive in our approach. We have endeavoured to find short-term measures to meet the immediate challenges of the global economy.
However, there is now a need for Asia, as a leading player in the global economy of the 21st century, to find a new vision. It must take an active role to create the course of the global economy in the medium to long term.
To this end, a wide variety of parties concerned including those in government, business and academic circles as well as individuals, must, in a spirit of cooperation, engage in discussions on a plan of action and endeavour to translate it into reality.
I very much hope that this “Boao Forum” will constitute a valuable opportunity to come up with an action plan and a clear vision for Asia in the 21st century.
In conclusion I would like to offer my congratulations once more on the launch of the Boao Forum and to say that it is my sincere wish that our efforts here will yield every success in the future.
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