ADB urges East Asian states to ink trade deal

Cebu, January 15:

East Asia must work towards a full free-trade zone and take swift action to cut poverty, the head of the Asian Development Bank (ADB) warned regional leaders today.

The region also needs to improve infrastructure and find common cause on coping with transnational woes like crime and disease if it wants to stay competitive in future, bank president Haruhiko Kuroda said.

Speaking at the second annual East Asia Summit of 16 nations, Kuroda said the region had made progress on economic integration and recovered from the Asian financial crisis a decade ago, but needed to do more.

“Asia is home to 12 of the world’s 15 tallest buildings — a testament to its ability to rapidly generate wealth. But it is also home to the world’s largest slums,” he said.

“Unless prompt action is taken, the region may lose its competitive edge,” he told a closed-door summit. “In order to more effectively play the role of a hub, however, ASEAN will need to boost its own competitiveness and pace of internal integration.”

The 10-member ASEAN bloc agreed at its weekend summit to create a single market area by 2015, five years earlier than originally planned.

Kuroda hailed that decision but said the entire region represented at Monday’s gathering — ASEAN plus Australia, China, India, Japan, New Zealand and South Korea — should work toward a full free-trade agreement (FTA).

“East Asia has to chart a clear road map to establish a region-wide FTA,” he said. He said the region’s GDP grew about by five per cent in 2006, a record since the Asian financial crisis.

“If the current growth trends prevail, by 2030 East Asia, excluding India, would account for about 40 per cent of the world economy — similar to the figure in 1820, around the time a prolonged decline in the global importance of East Asia began,” he said. “The region is clearly re-emerging.”

He said a determination to integrate with the world economy combined with ‘pragmatic’ economic policies had produced “an East Asian economy that is inherently the most dynamic in the world”. But he said four key problems — poverty, infrastructure gaps, environmental damage and the threat of cross-border problems such as contagious disease, crime and the management of natural disasters — needed to be addressed.

“It would be desirable for East Asia to take note of these challenges and consider some suitable strategy to effectively tackle them,” Kuroda said.