Thursday, March 8, 2012

Three challenges to Asia’s global ascent

Asia’s regional experts are exhilarated by the fact that, after several centuries of stagnation, Asia is on the rise. Some have confidently predicted that in less than half a century, Asia will be the world’s most dominant region.

But Asia faces three key challenges that may threaten its rise: the need for inclusive growth, good governance and environmentally sustainable development. It is not enough for Asia to simply achieve higher economic growth. The world will not admire Asia unless its growth is accompanied by equity, unless the balance between development and environmental sustainability is restored, and unless Asia embraces the rule of law and rids itself of corruption.

In 1993, the World Bank published a landmark report, The East Asian Miracle: Economic Growth and Public Policy. Eight Asian economies were praised for their sustained and high growth and for their development model of growth with equity.

Today, Asia continues to enjoy high growth but with much less equity. The current trend is toward greater social inequality. For example, the gini coefficient in China stands at 0.47, and that in Singapore at 0.48.

Great inequality can lead to social unrest. It threatens social cohesion and harmony. It is fundamentally objectionable because it is contrary to the purpose of development — which is to benefit all citizens, rather than a privileged minority. In order to achieve inclusive growth, Asian governments will have to re-examine their economic model and social compact through economic, tax and social policy reforms.

The second challenge is good governance, and two aspects of good governance in particular: corruption and the rule of law.

Corruption is pervasive and deeply entrenched in most Asian countries. It is a cancer eating at the heart of Asia. Each year, Transparency International’s Corruption Perception Index publishes ever more dismaying figures. According to the 2011 index, only one Asian country, Singapore, is ranked among the top 10 least corrupt countries and territories of the world. Only two others, Hong Kong and Japan, made it to the top 20. Instead, Asian countries are constantly ranked among the most corrupt in the world. What is amazing is that democratic countries such as India and Indonesia are ranked as more corrupt than China. But corruption is not so deeply entrenched that it cannot be eradicated. The recent examples from the Indian states of Gujarat and Bihar, where significantly improved governance has helped reduce the level of corruption, shows that it can be done.

The rule of law is also weak in Asia. The World Bank’s Worldwide Governance Indicators include a rule-of-law index, in which the maximum score for a country is 100. In 2010, Australia and New Zealand were awarded 95.3 and 98.1 points, respectively. But apart from these two countries, only Singapore, Hong Kong and Japan have had scores in the 90s, while South Korea and Taiwan have reached scores in the 80s. Clearly, there is much scope for improvement in other Asian countries.

The third challenge is environmental sustainability. In the quest for growth, most Asian countries and cities have made the mistake of aiming for growth at the expense of the environment. The result is that, with the exception of Japan, South Korea and Singapore, Asia suffers from air and water pollution, degraded land and contaminated food. Most Asian cities are becoming increasingly dysfunctional and unliveable. The rainforests of Asia are rapidly disappearing and with them biodiversity is lost and ecosystems are endangered. Asian countries are also becoming major emitters of carbon, while Asian fishing fleets are partly responsible for the crisis in the world’s fisheries.

But these trends are incompatible with the quality of life to which most Asians aspire. Asians want to enjoy their environment in the way that Australians and New Zealanders do. They want to be able to breathe the air; drink the water; enjoy good sanitation; eat their food with confidence; swim in their rivers, lakes and seas; and enjoy their gardens, parks and natural habitats. Asians want to live in cities which are well planned and beautiful, with good housing, efficient transportation and good social amenities.

So, while the rise of Asia should be celebrated, the challenges it faces must not be underestimated. It is not enough for Asia to be prosperous — it must also become more equitable, promote good governance, and be able to ensure a high quality of life for all its citizens.

Tommy Koh is Ambassador-At-Large for the Government of Singapore, and is Special Advisor at the Institute of Policy Studies, National University of Singapore.This post is part of the series on the Asian Century which feeds into the Australian Government White Paper on Australia in the Asian Century.

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