MFA Press Release: Address by Minister for Transport and Second Minister for Foreign Affairs Raymond Lim at the World Economic Forum Global Re-Design Initiative Singapore Country Hearing at the Lee Kuan Yew School of Public Policy on 1 December 2009

ASIA AND THE CHALLENGE OF GLOBAL GOVERNANCE

Professor Wang Gungwu, Chairman, Lee Kuan Yew School of Public Policy,
Professor Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy,
Mr Rick Samans, Managing Director, World Economic Forum,
Lord Mark Malloch-Brown, Special Advisor, World Economic Forum,
Distinguished Guests,
Ladies and Gentlemen,

1 I am delighted to join you all this morning and I wish to commend the LKY School of Public Policy and World Economic Forum for putting together this Singapore Hearing.

2 This is a period of significant transition in world affairs. The transition is being propelled, not by conflict as used to be historically more significant, but by common threats which afflict us all. The challenges of our time are multi-dimensional and have been made more complex by globalisation and technology. We have all become more acutely aware that unless we work closely together to deal with these common challenges and threats - as nations, civil society organisations and individuals - the problems of the global financial crisis, climate change, terrorism and a host of other transnational threats and issues cannot be dealt with effectively.

3 That being said, with these challenges also come opportunities to reshape international institutions and norms and to reframe global and regional architectures. While countries have always paid lip service to the need for cooperation and collaboration, today, we all recognise that this is absolutely imperative, and that we need to enhance global governance.

Emerging Asia

4 Asia's role is critical. The rise of Asia was already clear before the financial crisis hit us. But the financial crisis underscored the growing weight of Asia in global economic affairs relative to the West and in fact, accelerated the process. Where the process leads, will determine the global landscape in the coming years. When President Barack Obama announced at the Pittsburgh G20 Summit that the G20 would replace the G8, he implicitly acknowledged the end of the post-World War II world order.

5 The rise of China is by now a familiar story. China is expected to achieve 8% or more growth in 2009. China, with its reserves of over US$2 trillion, is the biggest creditor of the US government. This makes it a major stakeholder in the US economy and consequently, the global economy. With each year, the gap between China, the US and Japan will narrow. In 20 to 30 years, China's GDP will surpass the US', even though its per capita GDP would still be a quarter of the US'.

6 India too will have an increasingly important role to play in global affairs. The World Bank recently projected that in 2010, India's economy will grow at the rate of 8%. India's growth has been fuelled by the sheer size of its population and their entrepreneurial spirit. The US has acknowledged that India has a key role to play. Prime Minister Manmohan Singh was President Obama's first official guest at the White House.

7 India and China are the larger, but not the only facets of the Asian story. Japan and Korea are key players too. Korea will host the G20 Summit next year, the first time by an Asian country. Placed between the giants of China and India, is ASEAN, playing a major role in shaping a network of cooperation in the Asia-Pacific region. ASEAN is at the centre of a web of regional forums and structures which it has been driving in order to strengthen the regional architecture.

8 ASEAN itself is progressing towards closer integration with the signing of the ASEAN Charter and the creation of an Economic Community by 2015. In the broader region, ASEAN+3 (i.e., China, Japan and South Korea) has become an established process for concrete cooperation, including mechanisms for economic and financial surveillance. The larger East Asia Summit, comprising ASEAN plus China, Japan, South Korea, India, Australia and New Zealand, is also developing substance.

9 As you know, Singapore just hosted the APEC Economic Leaders Meeting. This was the culmination of our 2009 APEC Chairmanship and also an occasion to celebrate the 20th anniversary of APEC. With its core mission of promoting regional economic integration, APEC is a vital piece of the regional architecture. It also serves as a useful forum for the US and a rising Asia to engage each other and manage the shifting equilibrium.

10 Elements of the regional architecture like APEC, the ASEAN Regional Forum and East Asia Summit, play an important role in providing structure and balance to the new multipolar reality. They have the critical function of ensuring that the region remains stable and open. They also provide a robust framework for economic cooperation. Their representative structures, give everyone a stake in the region, which is key in ensuring Asia's continued growth and stability.

Asia in the Post-Crisis World

11 The relationship between the US and China has become the most important geopolitical issue of this century. Whether Asia can continue to have dynamic growth in a stable and peaceful environment will depend upon how these two countries conduct themselves and more critically, on how they conduct their relations with each other.

12 For the immediate term, the strength of recovery of the US economy is the critical swing factor in global forecasts for 2010. The IMF's October "Asian Economic Outlook" highlighted that US consumption was responsible for about one-quarter of Asia's export value added and this has created a significant vulnerability. As the report stated, "If over the coming decade US consumption slows dramatically, the impact on Asia's growth could be sizeable."

13 At the same time, the Asian countries will have to do their part as responsible stakeholders and shoulder their fair share of the burden in the international system. The reform of the share quota at the World Bank and IMF, agreed to at the G20 Pittsburgh Summit, is a case in point. We must work together across countries and across continents to reach a consensus on the big issues and make our interdependence work for the benefit of all.

Global Governance

14 We need more effective mechanisms to engage the various parties for better coordination, cooperation and enforcement in many areas ranging from international financial regulation to combating pandemics, climate change and terrorism. If we are to be most effective, it is not just governments that need to be engaged and involved in global decision-making but also non-state actors like civil society organisations.

15 Post financial crisis, the G20 has emerged as a good framework to discuss global issues. It is a more inclusive framework than the G8. The G20 has seen governments coming together to tackle the financial crisis, but this cooperation will have to continue beyond the crisis. G20 marks the start of a process of reshaping the global architecture that is needed for a more complex and inter-connected world.

16 The G20 process itself requires better definition. As we begin to deal with core global issues, the G20 will need to be more consultative and transparent in its deliberations. All countries, big and small, will be affected by how the G20 deals with these issues. For the G20's deliberations to be translated into effective actions on a global scale, these decisions need to be seen as legitimate. This will require the G20 to develop appropriate mechanisms to engage and consult a wider range of countries.

17 A key challenge in global governance for the G20 and other similar mechanisms is to strike the right balance between the competing imperatives of effectiveness and inclusiveness. If a meeting is too big, it becomes unwieldy. If too small, it lacks representation, legitimacy and effectiveness. In this regard, I would like to offer three practical proposals.

18 First, ensure the involvement of the UN, UN agencies or the Bretton Woods institutions such as the World Bank and the IMF which have the requisite mandates, technical skills, and most importantly, the legitimacy to deal with key global issues. It is important for all states, especially smaller states which comprise the majority of UN members, to be given the opportunity to raise issues of concern and have a say in the outcome. Second, consider the involvement of significant regional organisations in discussions on issues of global concern so as to ensure that all states are engaged in the issues being deliberated upon, thereby enhance the legitimacy of any decisions taken. Third, build in sufficient flexibility to allow for the involvement of all parties with significant interests and a capacity to contribute to good outcomes. This will ensure that deliberations on key issues of global concern would engage all the relevant parties, so that decisions would be widely supported.

Conclusion

19 Crisis and opportunity, we are often reminded, are two sides of the same coin. We now have an extraordinary opportunity to re-boot, reshape and rebuild our global and regional structures to serve us all better. We will require structures to deliver better cooperation and more effective coordination at both the global and regional levels.

20 The imperative is to ensure an open, globalised system that promotes economic interdependence among countries. The greater the stakes in one another's success, the more incentive countries will have to cooperate, and uphold a stable world order which fosters growth and prosperity for all.

21 Thank you.

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