Singapore: Asian economies may have overcome the 1997-98 financial crisis but now face new threats such as income disparity, climate change and a possible global economic meltdown, government and business leaders said on 24 June.
“A shock will come at some point,” Singapore Second Finance Minister Tharman Shanmugaratnam warned attendees at the World Economic Forum on East Asia.
“I think emerging markets have to brace themselves to put into place shock absorbers to deal with this sort of event ... it requires astute management,” he said.
Asia’s government and corporate sectors must join hands to develop policies and new leadership to tackle these new pressing global challenges to ensure sustainable growth in the region, delegates told the World Economic Forum on East Asia.
Some 300 government and business leaders including Philippine President Gloria Macapagal Arroyo and the chiefs of Coca-Cola and Nissan Motors Co. are attending the two-day meeting organized by the Geneva, Switzerland-based World Economic Forum.
Singapore’s Tharman said there was a “high degree of complacency” in the region after a period of stability following the 1997-98 Asian financial crisis.
But he warned the region must be alert amid a “significant buildup of risks” as huge capital inflows into emerging markets, especially in Asia, led to asset price bubbles in stock markets, property, commodities and equity markets.
A pullback could lead to severe economic problems, he said.
Thailand’s Finance Minister Chalongphob Sussangkarn urged East Asia _ which holds most of the world’s foreign reserves -- to play a bigger role to tackle global imbalances before it spirals into economic chaos.
Soaring trade deficit in the United States and growing trade surpluses in countries such as China are seen as major threats to the global economy.
“We see these imbalances as a danger but there is not enough effort” to tackle them, Chalongphob said.
The Asian Development Bank urged the region to tackle rising income disparity, warning that some social indicators in the region are worse than in sub-Saharan Africa.
Some 1.9 billion Asians still live on less than US$2 (euro1.50) a day, while 2 billion have inadequate access to sanitation and clean water, said ADB’s Managing Director General Rajat Nag.
“We’ve two faces in Asia ... one Asia is growing very well and the other Asia is struggling behind,” he said, warning this could cause grave social and political tensions that may unravel the region’s growth.
Arroyo urged China, India and Japan to show greater leadership in the region, while the United States -- the region’s traditional power-- is preoccupied in the Middle East.
Japan’s Deputy Foreign Affairs Minister Masaharu Kohno called for greater cooperation among countries to fight global warming, especially by developing a successor to the 1997 Kyoto Protocol which expires in 2012.
The U.N. treaty caps the amount of harmful gases emitted in industrialized countries. Currently, developing countries like China and India are exempt from Kyoto’s obligations _ part of the reason why the United States and Australia have refused to join in.
Carlos Ghosn, chief executive of French vehicle maker Renault SA and Japan’s Nissan Motor Co., said carmakers should take the lead to reduce carbon dioxide emission to fight global warming but one industry alone cannot solve the problem.
“You are not going to fight emission by singling out on one industry because CO2 is emitted by many industries ... we need to have an integrated approach,” he said.