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“A Borderless Asia: Vision for Regional Integration”

Opening Remarks By
Rajat M. Nag
Managing Director General
Asian Development Bank

At the 40th Annual Meeting Seminar Series

5 May 2007, 2:00 - 4:00 p.m.
Kyoto International Convention Center, Japan

Distinguished Guests, Ladies and Gentlemen:

Before I begin, I would like to welcome all of you to this important seminar. The impressive cast of speakers and our moderator for today's seminar include the ASEAN Secretary-General, the IMF Deputy Managing Director, Mr. de Ocampo (a former secretary of finance), internationally recognized academic experts and policy makers on regional economic integration, and a well-respected financial columnist. We very much appreciate you taking time out from your busy schedules to attend this event.

The description of this seminar – a Borderless Asia: Vision for Regional Integration - succinctly covers the background of the dramatic transformation that has altered the Asian economic landscape over the past two decades and especially since the Asian financial crisis 10 years ago. For example, increasing intraregional trade, improved physical connectivity, rapid growth of large emerging market economies such as PRC and India, and the spread of vertically-integrated production networks has certainly brought us all closer together. The private sector has been at the forefront of the integration process in Asia. Partly in response to the rapid “contagion” of the Asian financial crisis, authorities realized how important economic cooperation is—and the need to institutionalize interdependence. Indeed, working together, markets and governments can broaden the process of regional cooperation and integration in Asia.

But when we speak about the future of Asian economic integration, we may note that subregions within Asia are at different stages of regional integration. East Asia has been at it the longest, and has thus made the most progress—especially the ASEAN+3 countries. Together, these countries are now working on initiatives to deepen integration not only in trade and investment, but they have also started the process for monetary and financial cooperation. Within East Asia itself, the Greater Mekong Subregion, which ADB has worked with since 1992, focuses primarily on enhancing connectivity, improving competitiveness, and building a sense of community.

Building on our operational experience in subregional programs over the past 15 years, ADB has now formally adopted a Regional Cooperation and Integration Strategy. This is designed to support economic integration in four key areas: (i) cross-border infrastructure and related services; (ii) cooperation in trade and investment; (iii) monetary and financial cooperation and integration; and (iv) cooperation in the provision of regional public goods. Also, we are now developing a framework for mobilizing the resources required to implement the Strategy—the Regional Cooperation and Integration Financing Partnership Facility.

Economic integration at any particular point naturally brings varying degrees of benefits to individual economies. And given the highly diverse cultural, social, economic, and political context that spans Asia and the Pacific, the notion of a joint framework that largely accepts— and eventually even demands—the abandonment of some level of economic sovereignty can be a very difficult “sell” to national populations. Within ASEAN, for example, target dates for compliance vary—normally between the middle-income ASEAN members and the so-called CLV countries of Cambodia, Lao PDR, and Viet Nam. This is a pragmatic way forward.

Given this backdrop, a “multi-track, multi-speed” approach to cooperation appears to be evolving in Asia. Under this approach, a few countries can start working together on selected common issues, leaving the option for other countries to join later, or for new issues to be added. The process builds gradually, and as various cooperative frameworks are adapted to attract additional economies to the mix, it will naturally widen the scope of cooperation over time.

But enough said from my end. I am anxious to hear your thoughts. Now it is time to hear from our distinguished group of speakers. I want to thank you for joining us to contribute this important discussion, and we look forward to hearing the outcome of today’s seminar.

Thank you.