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As the world marks the fifth anniversary of the global economic downturn, the roller-coaster ride to recovery is beginning to even out and there are now early signs of growth in some developed countries. The US seems to have begun its journey to recovery while the Euro Zone still remains in recession. Although not immune to the effects of the contagion, Asia continues to lead the world in terms of global recovery.
According to the IMF’s World Economic Outlook, 2013, Japan’s growth is projected to be 1.5 per cent in 2013. China’s growth is projected to touch 8 per cent. India’s growth is expected to be around 5.75 per cent and the ASEAN-5 economies are expected to clock a growth of around 6 per cent. It is vital for the Asian business community to strengthen intra-regional ties so that it can play a leading role in making this growth sustainable.
Role of governments
It is for this reason that business leaders in these countries have urged their respective governments to take firm steps to boost intra-regional exports. They have also called for coordinated efforts to reduce logistics and trade transaction costs, and other non-tariff barriers, and simplify and harmonise cross-border customs procedures. Regional connectivity is a key factor determining the expansion of bilateral trade volumes. The Asian business community has urged respective governments to effectively link all trade-enabling infrastructure and collaborate to enhance the regional network. Governments would do well to step up bilateral and multilateral cooperation for the delivery of regional public goods in addressing key global and regional issues — climate change, epidemics, disaster management, good governance, cross-border crime.
To sustain economic growth over the medium term and make growth across Asia more inclusive, a diverse policy agenda will be required, ranging from economic rebalancing to strengthening the sources of private sector-led investment, to reforms in goods and labour markets, and meeting the opportunities and challenges from rapid demographic change.
Trade reforms
In deepening the regional economic connect, Asian countries have entered into numerous bilateral trade agreements with each other. In fact, proliferation of free trade agreements (FTAs) has been greatest in Asia, with more than 100 ratified FTAs involving at least one Asian economy. The main challenge lies in consolidating these agreements into a regional FTA — multi-lateralising the bilateral FTAs, granting non-discriminatory preferences to non-members, thereby eliminating preference discrepancies. Over the last three years, Asian business leaders have expressed their support for firming up a Free Trade Area of the Asia-Pacific (FTAAP). They have cited the ASEAN Framework for Regional Comprehensive Economic Partnership (RCEP) as an example of regional cooperation aimed at circumventing the spaghetti bowl of Rules of Origin issues that get in the way of free and open trade.
In the financial sector, industry leaders are encouraging their governments to continue applying outcomes from the Asian Bond Markets Initiative (ABMI).
Energy security
Energy security is a major issue for Asian economies. Asian countries are now seeking to work together to develop alternate energy resources through public-private cooperation. The aim is to promote energy-conservation technologies as well as low-carbon technologies. A key prerequisite for joint development and transfer of technology is unification of standards. Standardisation has a larger ripple effect than a single invention and if adopted in vital fields, including IT, environment, energy, electronics, machinery, and chemicals, will enable greater technology transfers.
It is against this backdrop that CEOs and heads of leading industry chambers representing 13 business organisations from 10 Asian economies are converging in New Delhi for the 4th Asian Business Summit . The World Economic Outlook observes that the potential impact of external risks on Asia remains considerable. Mitigating this risk will weigh heavy on the business leaders at the Summit.
(The author is Chairman, CII Innovation Council)
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