KEYNOTE ADDRESS BY MR S. ISWARAN, MINISTER OF STATE FOR TRADE AND INDUSTRY, AT THE SYMPOSIUM ON “OPPORTUNITIES AND CHALLENGES TOWARDS REGIONAL INTEGRATION IN EAST ASIA”, 6 NOVEMBER 2007, 1400 HOURS AT GOODWOOD PARK HOTEL (WINDSOR BALLROOM) 

Excellencies,

Ladies and Gentlemen,

Good afternoon.

Introduction

I would like to thank the Japan External Trade Organization (or JETRO), the Singapore Institute of International Affairs (SIIA) and the ASEAN Secretariat for inviting me to speak at this Symposium.

The Economic Research Institute of ASEAN and East Asia (ERIA) was first proposed by Japan at the 2nd East Asia Summit in January 2007. Much work has been completed in a few short months, and our Leaders are expected to formally endorse the establishment of ERIA at the 3rd East Asia Summit this November. This is indeed a positive development for the region and I am heartened by the progress. Today, I would like to speak about the important role that ERIA can assume against the backdrop of the exciting and challenging developments that are occuring in East Asia and ASEAN.

Importance of Economic Integration in East Asia

On the whole, the economic progress of East Asia over the past several decades has been positive and the general outlook remains sanguine at this juncture.East Asia is currently one of the global drivers of growth and a hotspot for attracting investments. Our economic evolution and optimism has been fuelled at various stages in turn by the rapid growth of Japan, the Asian Tigers and, today, the rise of China and India as emerging markets. But, the past is not always an indicator of the future.And without deeper economic cooperation and engagement in the region, we risk falling behind competitors who are eager to emulate and surpass East Asia. We need bold visions and concerted efforts to sustain our economic initiative and raise the standard of living of our people.

That is why East Asian countries must steadfastly pursue the path to greater economic integration.Such closer economic ties can yield benefits such as greater economic stability and resilience; greater market access for businesses within the region as physical and technical barriers to trade come down; and greater choice and opportunities for citizens.

We are certainly on the right track. Over a 35-year period from 1970 to 2005, the entire GDP of East Asia expanded by a vast 22.7 times, faster than the EU or NAFTA. Today, intra-regional trade in East Asia is as substantial as that of the EU and there are strong production networks in the region. The manufacture of a single hard disk drive, for instance, can involve multiple factories across the region from South East Asia to North Asia.These distributed production networks are aided by the growing web of bilateral and plurilateral FTAs amongst East Asian countries. These FTAs pave the way for the freer movement of goods, services and investments, and provide a natural starting point and catalyst for deeper regional economic integration to take place.

Role of ASEAN

ASEAN is in the ideal position at the heart of these exciting developments in East Asia. ASEAN was the first and only formal regional organisation to pursue regional economic integration in East Asia. By the year 2015, ASEAN aims to become a single market and production base under the ASEAN Economic Community (AEC).The AEC will facilitate the free flow of goods, services, investment and skilled labour, and a freer flow of capital. It will be easier and more attractive to invest and establish operations in ASEAN, rendering us an important part of any regional or global supply chain.

More importantly, ASEAN is non-threatening, enjoys good relations with major economic powers both in Asia and across the Pacific, and has enjoyed success in engaging our regional partners through fora like the East Asia Summit and the ASEAN Regional Forum. We are therefore well-positioned to effectively engage all stakeholders, and provide a neutral core for the emerging economic architecture that will shape East Asia. ASEAN has, in a way, already set the regional economic integration process in motion with the FTAs that we have negotiated or are currently negotiating with China, Japan, South Korea, India, Australia and New Zealand, and the EU. If we stay on course, we can be an integral part of the burgeoning economic progress of this region.

Challenges Ahead

In this pursuit of economic progress and further integration, however, there are also challenges for East Asia and ASEAN economies to manage, especially in urban environments. Economic progress is bringing about rapid urbanization as people flock to cities in search of jobs and a better life. The UN Populations Fund projects that, between the year 2000 and 2030, Asia’s urban population will nearly double from about 1.4 billion to 2.6 billion. This will certainly strain urban infrastructure and resources such as energy and potable water.

Energy, in particular, will be a key challenge for East Asia and ASEAN. As our cities grow and our peoples’ lives improve, we will need more energy for everything that we do – to light our homes, fuel our cars and power our industries. We are cognizant of the fact that reliable and affordable energy is an essential element of the urban lifestyle.We are equally and perhaps acutely aware of the trade-offs to be made between more intensive use of energy and the impact on our environment.Emissions from vehicles, factories and power stations affect our air quality. The burning of fossil fuels for energy is also the key contributor to greenhouse gas emissions.

East Asia and ASEAN, which embody developed and emerging economies and populous countries, epitomises this triangle of tension between economic growth, energy requirements and environmental sustainability.Unbridled growth without heed to environmental consequences is not an option.Neither is the surrender of economic growth and higher living standards for our people.Indeed, the East Asia and ASEAN economic integration process, with all its diversity and varied interests, will be a litmus test of mankind’s ability to balance the demands of development with the needs of the environment, to reconcile progress with sustainability. With rising concerns about climate change, we have to procure alternative and renewable energy sources, promote better emission-reduction technologies and energy efficiency, and protect existing carbon sinks such as the tropical rainforests of Asia. The Southeast Asian and East Asian countries need to take collective ownership of this challenge and be part of the global effort to find solutions.

The Role of ERIA

We will require help in this important endeavour and this is where the ERIA comes into play. I would like to commend the ERIA Expert Group and Japan for their hard work and leadership, and encourage you to continue on the course that you have set for yourselves. The ERIA, which will be located in ASEAN, is intended as a unique, policy-oriented research institution focused on enhancing East Asia’s wider economic integration. It will be able to support ASEAN and East Asian policymakers in policy analysis and capacity building.

The ERIA will be working on projects under three pillars which are very relevant to regional economic integration and progress, and close to the heart of ASEAN’s own fundamentals. The first pillar, deepening integration, centres on ways in which we can strengthen trade facilitation and bring down barriers to ensure continued growth in the region. The second pillar, narrowing development gaps, ensures that integration will benefit all stakeholders. The third pillar, sustainable economic growth, encompasses research in the fields of energy, environment and poverty reduction which is crucial to the continued success of the region.

Given the import of the tasks at hand, it is essential that the ERIA comes up with practical policy recommendations. I am pleased to note that the ERIA Expert Group has launched two “test-run” projects as examples of the potential applicability of ERIA’s policy research.

The first, “Developing a Roadmap Towards East Asian Economic Integration,” provides detailed recommendations in areas such as the role of SMEs in the region, or the building of optimal logistics networks in East Asia. I am sure economic policymakers will be anxious to get their hands on an advance copy for some trenchant analysis and advice.

The second test-run project, “Energy Security in East Asia,” demonstrates the potential of ERIA to provide substantive research on the energy-saving potential of East Asia and ASEAN, as well as the economics of biomass utilization and biofuel standards. ERIA could also be a leader in aspects of climate change research. For instance, Japan is a leader in energy efficiency and ERIA can hold joint seminars or workshops in partnership with energy research institutes based in ASEAN. Singapore for instance will be keen to collaborate with Japan and other countries in the region to further develop our capabilities in this regard.

Conclusion

In conclusion, I hope that the participants at this Symposium will have fruitful and positive discussions on the economic and environmental challenges that lie ahead for East Asia. I would also like to express my appreciation of Japan’s efforts in driving and funding the ERIA process, and to promote integration in the region. We in ASEAN and Singapore will continue to be actively engaged with the research work of the ERIA in the quest for a more prosperous future and sustainable environment for all.

Thank you.