Excellencies, Ladies and Gentlemen,

Let me commence by first thanking the Chairman of the Asia 2000 Foundation of New Zealand, Hon Philip Burdon, for offering me the opportunity to take part in the celebratory activities commemorating another milestone in the young, but most active and fruitful, life of the Asia 2000 Foundation. It seems only yesterday when more than five years ago (1991) we began to talk about a serious program which could bring New Zealand and Asia closer to one another, economically and socially. And not to be up in the air, a concrete program was built around Asia 2000. And before everyone realizes, Asia 2000 has taken on a well-defined organizational shape with serious support from the New Zealand Government, New Zealand and Asian business groups. All this goes to show the seriousness and sincerity with which the Government and the people of New Zealand have been treating the pursuits of Asia 2000. They are to be highly commended for this farsighted effort which has come not a moment too soon.

Tremendous streams of water have flown under the bridge of economic cooperation and globalisation in the meantime. Through these processes, countries around the world now do not need to be repeatedly reminded of the increasing interdependence of their destiny and, therefore, the desirability of forging close inter-relationships at all levels. At the business level, networking has become a standard strategy by which strategic alliance is created to add value to one another’s output. Asia 2000 provides an international network that should both benefit New Zealand and Asia alike. Seen in this light, New Zealand’s role in the world economic arena could be sharpened and magnified through her involvement with Asia.

One of the most significant milestones of world trade development was the successful completion of the Uruguay Round in 1993. For the first time in the history of world trade negotiations, agricultural products were included as an integral part of the final trade liberalization agreement. New Zealand, together with like-minded Asian nations through the Cairns Group, were instrumental in keeping alive the negotiations on agriculture and in pushing through the important concessions on the reduction of domestic and export subsidies and on the tariffication of quota systems. Such a feat, which benefits both New Zealand and Asian nations which are major exporters of agricultural products, was achieved through the above mentioned alliance. Although we have together realized only more or less a third of our liberalization goals, we have set the process into motion which can be followed through in the near future. I am quite confident that, together, we are bound to make the WTO embrace our full trade liberalization goal in agriculture before too long.

As part of the Marrakech Agreement of the Uruguay Round is the creation of a new world trade body, the World Trade Organization. We should like to see this WTO representing all parts of the world in supervising fair and free trade, equipped with a dispute settlement mechanism that must function effectively. Here lies, therefore, another area where New Zealand and Asia could exercise our alliance in ways to render the objectives of WTO achievement. I am delighted to be able to report to you that, together, we have made an auspicious start. A few examples of no small significance might be mentioned in this regard.

First: New Zealand and most Asian nations were unified in the stance that the position of Director-General of the WTO should not be permanently assigned to any particular geographical area of the world. For example, as for the GATT, the predecessor of the WTO, all Director-Generals had been Europeans. With regard to the WTO, the Director-General position could be opened to the rest of the world, and therefore representatives from New Zealand and Asia should be seriously considered for the future. Considering the growing trend of Asian trading volume, it would certainly be appropriate to have a representative from our part of the world in the top executive position of the world trade body for once.

Second: The fact that Singapore was chosen as the site for the first Ministerial meeting of the WTO last December reflected the significant status of Singapore and Asia in the world trade scenario. But I still remember vividly when Singapore was first canvassing for support back in Marrakech in 1994, New Zealand and ASEAN were among the primary backers of the proposal for Singapore as the site of the ministerial meeting. This first WTO Ministerial Meeting was crucial in assessing the implementations of the Uruguay Round commitments, and in setting the tone for further liberalization of trade in services and agriculture.

Third: Again with the support of New Zealand and ASEAN among others, Thailand’s Permanent Representative of the WTO in Geneva was elected as the Chairman of the Committee on Trade in Agriculture. This leading role simultaneously carries the responsibilities to keep track of past commitments by member nations, and to initiate discussions that should promote the cause of further agricultural trade liberalization.

From all these points that I have just raised, it becomes quite clear that Asia is gradually taking on a more prominent role in world trade affairs. By working closely with countries like New Zealand and Australia, our common destiny could be shaped and enhanced through joint actions at the international levels. With Asia as a loyal ally, New Zealand’s own economic causes can also be furthered in a global environment.

Seen in this light, the regional group of Asia-Pacific Economic Cooperation (or APEC) provides another forum for joint initiatives to conduct trade facilitating policies and to advance trade liberalization at the same time. APEC has come a long way since its inception in Canberra in 1989, being conceived merely to function as a consultative forum for economic development issues. It has now set a definitive goal of trade and investment liberalization which may run along a faster track than the one sponsored by the WTO. By accelerating the process of freeing trade in this limited grouping, care must be taken to prohibit this opening of the floodgate to overwhelm domestic economic adjustments to be made by some APEC member countries, which are far less developed than others. In other words, the unequal economic development levels of APEC members should always be taken into account when the speed of liberalization has become a point of contention and negotiation. New Zealand, herself being a small and highly open economy, is more than others in a position to understand this dilemma. If she could play the role of a mediator, bridging the gap of understanding among the first world and the third world groups in APEC, the process of advancing liberalization could be delicately balanced by the right ingredients of development measures to narrow the gap.

Let me be more straightforward when we discuss this issue of development levels. The diversity in these levels is a matter of great concern to a number of developing Asian countries, since it indicates that the playing field may well be level, but the starting positions are not the same. With the exception of Singapore, this consistently appears to be one of the rationales behind ASEAN’s general reluctance to forge closer ties with other, more advanced, economic groups.

Here lies an important strategic approach which Asia 2000 can adopt, and one which I have already advanced for a number of years. In order for New Zealand to understand the Asian economic environment and to be considered as an integral part of the Asian economies, I find that it is important for New Zealand to be working closely with a particular Asian grouping. Considering the present regional economic cooperation, ASEAN obviously stands out as the most advanced in Asia. In my opinion, New Zealand needs a firm foothold in Asia, which ASEAN could provide. Closer linkages between New Zealand and ASEAN do not have to mean ASEAN’s admitting New Zealand into the ASEAN Free Trade Area agreement right away. Viable working relationships between the two sides must be cultivated, probably initially in the form of an associate membership. I have been informed that, at present, New Zealand and Australia are represented at the Post-ASEAN Economic Ministers Meeting, so that a forum is created where exchanges of ideas on economic and trade issues can take place. These dialogues can lead to concrete actions, some of which have already been agreed upon, such as the reconciliation of customs procedures and the alignment of measurement standards. Further trade facilitating measures could be jointly looked at in the future, for example, shipping facilities, the implementation of ISO requirements, upgrading of environmental standards, and streamlining investment procedures. As widely known, in the next couple of years ASEAN is bound to expand to include new members, which are Laos PDR, Cambodia and Myanmar. The ASEAN consisting of ten member countries is likely to become an economic and political entity of international significance. I can assure you that the powerful ASEAN spirit and solidarity will be maintained and may even gain in momentum in spite of the progress made under the auspices of Asia-Pacific Economic Cooperation. Already there are plans under the grouping of the Greater Mekong Subregion (GMS), which includes Thailand, Laos PDR, Cambodia, Vietnam, Myanmar and the Yunnan Province of China, to construct several roads and rail networks to link up the economies of this sub-region. When this sub-region joins ASEAN, excluding the Yunnan Province of course, these transport projects, and other joint economic development projects such as energy supply, telecommunication networks and tourism, will certainly get a boost. For New Zealand to be strongly involved in the development process of this region, it would mean a widening of the choices of projects that the business sector could be undertaking. It would also mean that an expanding market of more than 400 million people with rising purchasing power will be within reach. Therefore, a closer linkage between New Zealand and ASEAN must certainly be on the priority list of Asia 2000. In fact, through the economic and social means available within the confines of Asia 2000, the linkages could even be welded in an unobtrusive manner.

ASEAN has the aspiration in acquiring a status to be recognized at the international level. The Asia-Europe Meeting (or ASEM) which was staged in the beginning of 1996 in Bangkok, brought together leaders from fifteen countries of Europe and ten countries from Asia. This unprecedented feat, was conceived to pave the way for the leaders of these two important regions to gain a better understanding of each other. This is rather subtle, but crucial in view of the fact that leaders of the Pacific Rim are already intensifying their cooperation, with the Summit meeting of APEC leaders having been made into an annual event. Although at the ASEM Bangkok meeting nothing substantial on trade was discussed, the resolution to work together in the areas of investment, technology and transport was deemed an auspicious start. I bring this issue of ASEM to your attention with the explicit purpose of getting New Zealand’s interest in the exercise, that is if you are not already interested in the idea of joining in. Being more strongly linked to Asia should mean that New Zealand has a certain right to participate in ASEM. So do countries like Australia and India. It might make the Summit meeting a bit crowded, but still the ASEM should remain more focused and confined than, for example, some official meetings at the United Nations functions. As a country that used to be strongly tied to Europe and now being reoriented towards Asia, New Zealand’s role in ASEM should be highly useful in again serving as a bridge to help promote cross-continental understanding.

Excellencies, Ladies and Gentlemen,

I have discussed at length the issues of international economic cooperation and the recent progress of some regional groupings to emphasize the gains for New Zealand in being part of these movements centering around Asia. It has been widely accepted that Asia is a strong growth region, with a fairly large degree of economic openness that is being translated into rapidly expanding volume of international trade, being backed up by a sizeable population with an emerging middle class with rising purchasing power. Asia represents an area which is in great need of huge investments at all levels of infrastructure. With this insight, the nurturing of comprehensive relationships encompassing economic, political and cultural ties through the programs of Asia 2000 should be deemed a logical step in the right direction.

It is probably appropriate, therefore, to spend some time here reviewing the process of economic and social development and transformation in Asia. Through this review, we might gain more insight into Asia’s growth potentials and will learn of the areas or niches that New Zealand may find as suitable points of contact and penetration. According to a recent document published by the Asian Development Bank, the eight best performers in Asia (namely Hong Kong, Singapore, Taiwan, Korea, China, Malaysia, Thailand and Indonesia) grew at an average of over 5.5% per year in per capita terms between 1965 and 1990. It was also said that, with the exception of some European countries immediately after the Second World War, growth rates of this magnitude and duration are unprecedented in human history. In this regard, it is interesting to note that of all the explanatory variables for growth, for example, initial development levels, geographical location, availability of natural resources, social indicators such as life expectancy, demographic variables, and a set of policy variables, consistently carries the bulk of the explanation for growth differentials. This set of policies includes key factors like saving rates, quality of institutions-sometimes equated with the stability of governments and openness in terms of liberal foreign trade policy. Saving rates in Asia have grown substantially in the last few decades and are now among the highest in the world. Singapore; for example, is noteworthy for sustaining a spectacular rise in saving rates from 13% in 1965 to 30% in 1975, and over 40% since 1982. It is important to note that these high saving rates in East and Southeast Asia are the results of high rates of both private and government savings.

As for the liberal foreign trade policy, one can clearly discern its effect through the graduation process from being predominantly primary products exporters to labor-intensive products, and presently on to more capital and technology intensive exports. In Korea and Hong Kong, labor intensive exports dominated throughout the 1970s, but in the early 1980s these countries began to produce more capital and technology based exports. China, India and the Philippines are moving in that direction, with capital and technology intensive products accounting for more than 20% of exports. In Singapore, Malaysia and Thailand, capital and technology based pro-ducts accounted for more than 50% of total exports. A salient feature explaining the rise in technology intensive exports is the strength of one main sector: electronics. Electrical equipment alone accounted for over 20% of total exports in Malaysia, Singapore and Korea between 1990 and 1994, and about 15% in Hong Kong, Thailand and the Philippines. China and Indonesia are also rapidly moving in the electronics exports direction. In major categories of electronics exports, at least seven out of the top ten exporting countries in the world are from East and Southeast Asia. Asia’s major advantages in attracting electronics industry lie in what economists call the “factor price equalization” which is rather obvious and in the existence of the so-called “export processing zone.” Because of factor price equalization, industries are drawn towards Asia where relative costs are lower and skill levels are rising. Export processing zones are enclaves in which foreign and domestic firms are given the special privileges of having access to duty-free imports, tax holidays and other incentives, and physical resources such as factory space and public utilities, on the condition that they export all or most of their products. A typical incentive package offered to firms located within a zone includes tax holidays of up to 20 years, 100% profit repatriation, free access to foreign exchange, efficient customs clearance, preferential access for financing, and capital grants in the form of subsidized factory space or worker training. Export processing zones have long been popular in East and Southeast Asia, and have been instrumental to a large extent in rapidly promoting industries such as electronics in Korea, Malaysia and Taiwan, and garments in the Philippines, Indonesia and Sri Lanka. In case New Zealand business would like to venture more deeply into Asia, these zones are worthwhile considering as potential sites. On the other hand, the EPZ idea might deserve to be looked at if the authorities responsible in New Zealand would like to give more catalyst to export promoting activities.

Excellencies, Ladies and Gentlemen,

With Asia moving on to a new round of growth and stability, new challenges will have to be faced. Asia’s challenges could be in areas that New Zealand has a particular interest in or can latch on to, so that our relationship could become even closer. Please permit me to say a few words about only the three major issues to convince all of you of the vast opportunities that lie ahead for our nations.

First, human resources. Developing Asia is now home to over 3 billion people. Much has already been achieved in relation to improved levels of literacy. High levels of human resource development have indeed been central to the success of the development strategies of the so-called high performing Asian economies. As Asia climbs up the product cycle ladder, employment will be concentrated in industries and services which have high contents of sophisticated knowledge and skill intensity. Sharp increases in secondary school enrollment rates are being achieved, while access to higher education has also dramatically expanded in the past three decades. But it is precisely the region’s past educational achievements that have created a number of future problems with regard to the availability, quality and financing of education, particularly higher education. The combination of a large population and increased rates of secondary school enrollment and graduation will create enormous pressure for the expansion of higher education, especially in science-based fields. Apart from this, Asia will have to cope with the demographic transition leading to the “greying” of the population. The proportion of older people will increase, creating new educational demands. The population over 65 will exceed 10% in China, Sri Lanka and Thailand by the year 2025, and will be over 15% in Korea and Singapore. Educational demands are therefore likely to come from those who may have exiled from formal educational systems early and wish to return, those seeking mid-career advancement, and those changing career pathways in mid-life. The total demand for university enrollments in Asia is projected to nearly triple over the next two decades. In part because of the difficulty of securing admission to local universities, and in part because of the superior knowledge and skills that are thought to be available in foreign universities, a large and increasing share of Asians seeking higher education will have to attend schools abroad. We will be seeing dramatic expansion in the cross-border flows of students, both from high-performing Asian economies to developed countries, and from other less-developed Asian countries to the former.

Second, environment. Rapid urbanization under the condition of strong demographic pressure in Asia has produced inadequate living conditions and environmental degradation in cities and surrounding areas. In 1950, five cities in the Asia-Pacific region had a population of over 4 million: Tokyo, Shanghai, Beijing, Calcutta and Tienjin. The number of such cities rose to seven in 1960, and 21 in 1990. By the year 2000, the region is expected to have 28 such megatropolises, which will be home to some 200 million people. Apart from urbanization, rapid industrialization in Asia, especially in East Asia where the industrial sector has grown at an average 9.1% per annum over the past 25 years, with their proportion to GNP jumping from 32 to 46% during the period, has led to an additional environmental problem. Typical examples of regional industrial pollution include air and water pollution, and disposal or emission of regional industrial pollution include air and water pollution, and disposal or emission of toxic substances. These problems not only pose health hazards to local citizens, but also present grave risks to fishing and the survival of wildlife. Also, economic growth accompanied by rapid industrialization pushes up the demand for non-recyclable resources such as fossil fuels and minerals. To understand the looming environmental challenges for Asia, let me cite the following results from the study by Japan’s Environment Agency:

(a) By the year 2025, total primary energy use in the Asia-Pacific region will multiply between 2.3 and 3.8 times the level of 1990 as a result of population increases and rapid industrialization if no particular measures are taken. The level of carbon dioxide will expand between 1.7 and 3.2 fold during the same period.

(b) Given the rapid industrial expansions, it is predicted that sulfur dioxide emissions will also multiply 1.7 to 3.4 times the current level by the year 2025, resulting in acid rain and soil degradation over a wide area.

(c) Even under the medium population growth scenario, many of the forests in the Asia-Pacific will be converted to grasslands or croplands. The forested area in the region is expected to drop by about 15% by 2025, and to about half the current level by the end of the next century.

(d) Crop productivity will be another area affected by climatic change. Significant yield drops will emerge in major production areas.

This leads me to my third challenge for Asia.

Three, food. Economic growth can produce dire implications for the Asian food equation. The focal point of this ongoing historic change is China. As a result of increased meat consumption, inspired by steadily rising affluence, coupled with a declining availability of arable land stimulated by rapid conversion to commercial and industrial usage, China in 1995 became a net feed-grain importer for the first time in many years. Because of climatic change, according to the study by Japan’s Environment Agency, grain production in China and India will be negatively affected. China, one of the major wheat producers in the world, will suffer from a yield drop of 15% for winter wheat, and 21% for spring wheat. India, another major area producing 10% of the world’s wheat, will also suffer from a 55% decrease in the yield. Such potential yield changes, coupled with the increase in population density and the change in eating habits, will influence the food problem in a very serious fashion. Rising food deficits on the part of ASEAN, Korea and Japan will compound rising Asian regional food shortages, which center on feed grains.

Excellencies, Ladies and Gentlemen,

When I addressed an Asia 2000 seminar in Wellington in May 1992, I also touched upon what I called core issues of major importance to Asia in the year 2000. I concluded then by reiterating my belief that New Zealand’s role can fit in with all these prospects. I ventured to offer ten suggestions as part of the strategy of linking New Zealand with Asia. Now, five years later, Asia 2000 has actually outperformed anything that I recommended at the time. So there should be no more need for me to repeat the message.

Asia 2000 has obviously been responsible for the intensification of activities between New Zealand and Asia at all levels-trade, investment, flows of funds and people, etc-beyond any expectations. As parting comments, I would like to advise more focusing, particularly on the trends that I mentioned, on the people to people relationships, and on the understanding of each other’s problems and aspirations. There is some need for focusing because I would like to see Asia 2000 programs being cost-effective. Although all the achievements cannot, and should not, be measured in pecuniary terms, efforts cannot be spread around too thinly. At the risk of being over-simplistic, I would suggest New Zealand; (a) strengthen her international role with closer ties with ASEAN; (b) conduct her foreign policy with an eye to playing a bridging role between Asia and the rest of the world; (c) provide logistic support for New Zealand business sectors which could strongly compete in the areas of challenge that I have just outlined.

I would like to emphasize the need to understand each other’s problems because closer contacts do create frictions. Familiarity may sometimes breed contempt. In his latest book “The Future of Capitalism”, Professor Lester Thurow speaks about global leadership in a multi-ethnic world that should be supported by a society that finds it easy to absorb talented people from different ethnic groups. People of all nationalities would definitely be more mobile in the near future and would settle down to live in places of their choice, which needs not be their original birthplace. They sometimes would follow the pattern of production and investments that are now being located throughout the world, based on the so-called factor price equalization. Outward-looking societies should enjoy ethnic diversities that reflect a global environment. Asian investors in New Zealand, about 18% of total foreign direct investment in 1995, cannot be more predatory than foreign investors coming from other parts of the world. Neither should Asian immigrants provide any threat or invoke any fear of Asia embracing New Zealand, considering Asians have been considered top performing citizens in the United States for the last 20 years. In a similar manner, New Zealand’s view on human rights standards in Asia should also be backed up by a total understanding of how Asian Society functions. Much of the time it could be explained not so much by oppressive regimes as by the searing economic needs due to oppressive poverty. All in all, Asia 2000 should facilitate this ambitious process of learning and understanding.

I am delighted to inform you that New Zealand is now known in not only as a kiwi and wool country, but also more and more as your diversified scenery culture and kind attitude. I could only wish that you would take more time to learn to appreciate Asia as you have done with the United States and Europe. It surely would give you a balanced view of the world, and would enrich you both culturally and probably also financially.

Thank you for your attention.