Distinguished speakers at the event include Bank of Israel Governor Stanley Fischer, Former IBM Chairman Sam Palmisano, HSBC Group Chief Executive Stuart Gulliver, SEB Chairman Marcus Wallenberg, AIA Group Chief Executive and President Mark Tucker.
Founding Chairman Victor K. Fung set the stage by referring to four recent, defining events whose significance went to the heart of the Fung Global Institute's four research themes and the AGD 2013 agenda
"....Asia needs to re-think traditional approaches to growth, employment and sustainability, given the combined impacts of re-balancing, changing demographics, urbanization and environmental stresses. We attempt to bring Asian perspectives - in the plural - to bear on global issues ever mindful that there is no single perspective in a region as diverse as Asia. Equally, Asia benefits greatly from having access to global perspectives, such as those represented by the distinguished overseas speakers and participants at this Dialogue."
Re-thinking Growth - Are Business and Policy in Step?
"Growth is about jobs and it has been proven by a number of studies that, actually, trade increases jobs throughout the world."
"Growth is coming back slowly but employment is coming back more slowly...There may be a powerful trend that affects us long term, and that is that technology - in a variety of different forms - is busy taking out what are called "routine jobs", both white and blue collar... I believe these forces will start to show up relatively soon in developing economies in the middle income transition."
Can a Global Architecture Work for Finance and How Relevant is this to the New Problems We May Face?
"If emerging countries want a greater say in the global economy, they must contribute ideas and proposals on how to improve the system". Answering the question, "Can a Global Architecture Work for Finance?" I would like to answer upfront: Of course not. Countries are far too diverse for 'one-size-fits-all'. But there's another equally valid answer: Of course we must have a structure for international financial transactions that can accommodate the diverse needs of different countries from the most advanced " to those that are already on the path towards being highly developed as emerging countries, and to those struggling to find their way to that path."
In Conversation with Marcus Wallenberg
Keynote Dinner Dialogue: Marcus Wallenberg shared his thoughts on Europe’s view of Asia and China, innovation and family business
Asia's Financial Markets - In Search of a Better Regulatory Model?
Plenary Dialogue: Panelists discussed how regulators can better recognize risk factors in lending and how to balance regulation with the welfare of the wider economy
"When you have a banking crisis as in 2008, it's not because Lehman Brothers was big but that everyone else had the same problem ... I really wish that, given what we went through, Asian banking authorities will put in measures in very clear terms so that if things happen where all banks have the same problems at the same time they know exactly what powers they do have, so that markets are assured."
"Did the Chinese banks emerge from the crisis relatively unscathed due to skill or luck or circumstances? I would argue it was because of luck - luck, because the government had just completed the clean-up of the balance sheets of the banks, luck because we have not yet complex financial instruments " luck because our banking system is totally cut off from the global markets."
Asia's Re-balancing Act: An Opportunity for Global Business
Keynote Lunch Dialogue: Five years into the global recovery, every region faces its own challenges in returning to balance. This Lunch Dialogue focused on key global trends with particular relevance to Asia
"We need to harmonize discords in the complex process of global integration. If we fail, none of us will hear the music of the global orchestra, as everyone will revert to playing their own tunes on their own national instruments."
"If you were to lay out centers that create opportunities for entrepreneurs to take risk capital to invest and create new businesses, and all these businesses are inherently scalable, they could be global on 'day one'."
Innovation and Business Opportunity - Can Asia Lead?
"The point about Asian innovation is, I think, that we live in a world where globalization transcends borders. There is not one product introduced by our company in the past 10 years that has been based on the work done in just one country. So it's not about China innovation or Asian innovation: It's about how people are connected with the rest of the world."
"I have been asked if Asia can lead in innovation. Frankly, I have no doubt. One thing we all share probably if we lead a company is that innovation is at the top of our agenda. If there is one thing that keeps me awake at night, it's a question of 'too much' or 'too little' innovation, and where do we bet our money""
Boosting Trade in a Global Economy - Can Multilateralism Win the Day?
Plenary Dialogue: With the multilateral system seemingly unable to deliver much progress on further trade liberalization, this Plenary Dialogue discussed whether “mega” preferential trading agreements being negotiated outside of the WTO are the right way forward
What Matters Most for a Sustainable Asia?
With 40 per cent. of the world’s population, Asia’s sustainability challenges are immense. Drawing from their experiences in Asia’s two most populous countries, the panelists discussed the particular challenges facing China and India
"What's the character of Asia? One we all know is its higher population density, with 40 per cent of the world population living in Asia. If all that 40 per cent of the population rose to the status of a high-income country and want to live with consumption levels of the U.S., that would be dangerous for the world."
"What China wants to reform is the governance of China itself. Changing to a development model is not possible without changing the way the economic system works. How is China going to achieve this objective? It's recognized that without the reform these objectives can't be achieved, so this is how China is going to introduce environmental protection, create a harmonious society and social cohesion."
Long Term Global Investment - A Changing Role for Families?
"If there is something that the family provides it is to bring along some sort of long-term purpose to what the company is trying to do. Of course, you can always have a debate on whether there are financial measures that would distribute more cash or reduce investment into certain areas. But that comes down to a difference of opinion on how to run the business. At least, in my book, it's quite good to have this debate going on. From that point of view, a long-term shareholder can be of quite a bit of use to management."
"Sometimes business is about a value alignment. There are situations where we have been approached by some fund houses not looking for families, as such, but looking for investors who have a value alignment with their investment thesis."
From Snake to Horse - Saddling Up for 2014
"Looking forward, technology is very, very important to growth and very, very important to productivity; but it takes a long time to understand and to yield. The biggest shift you've seen today in technology is in 'Big Data' - it has the potential to transform every element of business operations, every element of society and the very corporate model itself. But it takes a long time to learn - so you have to start now."
"In the long term, what really matters is not 2014. What really matters on this globalizing planet is the next generation ... youth unemployment, rising inequalities, pressures on natural resources ... all these challenges are known but we don't do too much. My recommendation is to use a model called 'coalitions of the working' adapted from the report Now for the Long Term (The Report of the Oxford Martin Commission for Future Generations), bringing together cities, big business and civil society for the road ahead."
Partnerships for the Future of Sustainable Growth
Chairperson, Board of Governors, Indian Council for Research on International Economic Relations
This final panel comprising leaders of established think-tanks from around the world discussed how business and policymakers need to adjust their focus to benefit growth and re-balance the economy. Asia must become the bridge to the global dialogue on the future of sustainable growth
"What is the key takeaway from the Asia-Global Dialogue 2013? The quality of the Asian speakers has been fantastic. There were disagreements between Asian speakers and everyone gave you straight talk ... I take to heart Stan Fischer's advice, which was that if Asia is going to have a proper dialogue with the rest of the world we've got to do proper research and the FGI will do its best ... Asia can't do it on its own. Exactly as Rahmi Koc said: If Istanbul is the bridge between the East and West, Europe and Asia, the Fung Global Institute will be the platform (for) that Asia-Global dialogue ...we need to have partnerships - and how do we take these ideas, the questions that have been put, and turn them into action?"
"In this region we have not forgotten that 'face-to-face' actually matters and that there's no substitute for looking each other in the eye and mingling" and exchanging ideas - we cannot underestimate the importance of that". Capacities to analyze are increasing everywhere, universities are better around the world and think-tanks are better around the world. So there's room for networks of think tanks - and as think-tanks are good at lecturing governments and businesses on co-operation and so on I think we should do that.. We've made a start here."
"In China, now is the best time for a think-tank to give suggestions and to work on policy issues " here we discussed the (Communist Party's) Third Plenum meeting and resolutions. We know that suggestions came from government think-tanks, universities and NGOs - the total number came in its thousands to create the items of the reform plan " President Xi Jinping is trying to promote think-tanks to take part in the process for China's reform."
Asia Finance 2020
Intra-Asian Trade – The Renminbi Effect
The panel noted that Intra-Asian use of the Renminbi is growing in terms of value, lines of credit and settlements. Some 30 per cent. of Letters of Credit are now denominated in Renminbi. However, it is still a long way from becoming a fiat reserve currency – and not only because of China’s caution in pursuing full convertibility. Currently, there is a barely liquid Renminbi bond market, although the Third Plenum has set a goal of increasing the market dramatically. Currently, there is no way for institutional investors to effectively utilize their Renminbi holdings. More than 50 per cent. of mainland companies would give trading partners a discount if they could trade in Renminbi, but for the outside world there are still many challenges.
The Role of Long-Term Investors in Asia’s Growth
The panel noted that Asia has sufficient savings to finance its long-term development. However, there are very few viable investment vehicles to mobilize individual savings for long-term investment in Asia. Even in Japan, 56 per cent. of individual savings are in banks and six per cent. are in equities. Asian growth and long-term investment needs such as big infrastructure require big long-term institutional investment. The challenge is finding the way to channel these savings. The Australian model was cited as a possible example that Asia could emulate.
Asian Finance 2020 – The Search for a Blueprint
The panel noted that the Asian financial system must find new ways to foster innovation to break the region out of the role of assembler and exporter to the West. The financial system should concentrate on serving the real economy and encourage the development of small- and medium-sized enterprises (SMEs), which are nimbler and more open to innovation than bigger and older companies. The German Mittelstand – small- and medium-sized entrepreneurs – have shown the way, dominating Germany’s export market. Taiwan has successfully followed this model. China as outlined in the recent, Third Plenum, has identified SMEs as an important pillar of its economic reform.
Global Value Chains
Global Value Chains – Responding to Policy Risk
The panel noted that geo-politics, local politics and protectionist sentiment are influencing trade policy, which impact global value chains. Multilateralism is still the best way to ensure a level playing field for all. It allows developing economies to participate on an equal platform, as opposed to preferential trading agreements that often exclude smaller countries. It also continues to serve as a bedrock for the preferential arrangements. Efforts to improve the measurement of trade should continue to receive close attention so that policy decisions are based on more accurate information on trade, jobs and value creation.
Enabling Trade in a Changing World
The panel discussed how global value chains are affected by governments either through policy action or inaction, focusing on the impact of trade barriers such as tariffs, standards and border procedures on access to markets and value chain competitiveness. Panelists noted that unnecessary trade costs can arise as a result of policy design, interpretation and administration. It is in the interests of stakeholders to address these issues because the benefits of reducing trade barriers can be significant. Panelists agreed that reducing value chain barriers would significantly drive productivity and competitiveness.
The Risks and Rewards of Innovation
There is growing attention to the role of innovation in value chain operations. The panel noted that continuous innovation is imperative for value chain competitiveness. Sources of innovation vary along the value chain, involving both consumers and suppliers. Innovation space goes beyond manufacturing technology to include service-based innovation. An innovation-friendly business environment will generate more value and jobs. The digital age has further expanded and globalized innovation space, presenting new opportunities for participating in global value chains, particularly for young or small entrepreneurs.
Evolving Growth Models
The Foshan Story: A Chinese Lens on State and Market
Industrial powerhouse Foshan has important policy lessons for the rest of the country as China begins its transition to a more market-driven economy. As part of the Pearl River Delta (PRD), but lacking the advantages that came with Special Economic Zone status, Foshan could not develop itself along the prescribed track taken by its neighbors. In Foshan, the State has for decades assumed a support role for businesses, with more openness to experimentation in providing infrastructure and encouraging domestically-oriented enterprises. The result is an economy linked into 30 global markets, along with thousands of strong local brands. Today 60 per cent. of Foshan’s GDP is generated by private enterprise. However, Foshan’s sustainability challenges are mounting.
Escaping the Middle-Income Trap – Implications of the Foshan Experience
Foshan, a city of seven million in the Pearl River Delta, has a per capita GDP of US$14,828 – well above the World Bank’s high-income threshold of US$12,616 and even above Shanghai’s per capita GDP. This was achieved without being designated as a Special Economic Zone. The panel explored what enabled Foshan to achieve this growth, and how might this be applied to other Chinese cities. The strategy that brought China this far will no longer work. Foshan’s strength came from a shift of the State away from directing the market and towards a greater focus on governance. The panel noted that the trend must be extended across China if the country is to develop a competitive market in which innovation and high-value industries can grow.
China’s Latest Reforms – A New Growth Model
The Third Plenum of the 18th Party Congress outlined a greater role for the market in China’s economy. The ambitious reforms are destined to fundamentally remake China’s economic system. The panelists noted the influence of domestic departments and think-tanks on the document, which is a roadmap aimed at moving the economy to the high-income class. At the core, the market as the “decisive” factor in directing the economy. One panelist saw it as curtailing the influence of the government in the market, while another saw the introduction of the word “governance” to state actions as signaling a new emphasis on the rule of law.
Asia's Sustainable Development
Re-thinking Competitiveness, Economy and Environment
The past three decades of fast growth in much of Asia has had severe impact on the environment. Many now accept that protecting the environment and undoing much of the damage already caused is essential. The panel noted that environmental consciousness is growing, but not fast enough. “Others are not doing enough,” seems to be the common refrain. However, governments that have to provide services such as water, electricity and transportation with dwindling natural resources are realizing their responsibilities. Cooperation with all sectors has slowly begun, but there is a long way to go.
Re-thinking Growth and Social Development
Increasing inequality, advancements in technology and labour markets and demographic shifts are shining new light on issues of growth and inclusiveness. For developing Asia the concerns are especially acute, given the huge populations involved. Among the challenges are opportunities as well. The panel noted that there are several driving forces for companies doing business in the Asia-Pacific region today. Foremost are the economic headwinds as developing countries still largely depend on exports to advanced economies. Second, firms face ecological headwinds as the global requirements of protecting the environment get stricter. Third, there are headwinds of social inclusion: taking care of all the people without exception – has become an imperative for governments and businesses in general. Cambodian and Bangladeshi panelists provided ample examples to illustrate problems and prospects in their societies.
Kick-starting Asia’s Sustainable Future
Although policy and regulation can help promote sustainable growth in Asia, the private sector holds the keys for much of the financing, innovation, and implementation that will be required. The panel discussed how business leadership can help to accelerate the shift towards sustainable growth? Panelists dwelt on the successes and problems of companies that have made such efforts. The panel also noted that some companies in niche situations have succeeded in promoting sustainability while making decent profits. This rare combination might not apply across the board, but there are useful measures that all companies can adopt.