Why CEPEA makes sense to Asia - ICRIER II- Risaburo NEZU- Presentation.pdf · Divergent ideas for East Asia economic integration ... ・・・・ Japan, China, ... Economic Corridor

Why CEPEA makes sense to Asia

Copyright 2010 FUJITSU RESEARCH INSTITUTE

April 6, 2010Risaburo NEZU

Fujitsu Research Institute

What is CEPEAWhat is CEPEAEconomic Development and Regional Integration

12. We welcomed ASEAN's efforts towards further integration and community building, and reaffirmed our resolve to work closely together in narrowing development gaps in our region. We reiterated our support for ASEAN's role as the driving force for economic integration in this region.

To deepen integration, we agreed to launch a Track Two study on a Comprehensive Economic Partnership in East Asia (CEPEA) among EAS

1 Copyright 2010 FUJITSU RESEARCH INSTITUTE

Comprehensive Economic Partnership in East Asia (CEPEA) among EAS participants. We tasked the ASEAN Secretariat to prepare a time frame for the study and to invite all our countries to nominate their respective participants in it.

We welcomed Japan's proposal for an Economic Research Institute for ASEAN and East Asia (ERIA).

Chairman's Statement of the Second East Asia SummitCebu, Philippines, 15 January 2007

4. The Ministers noted the report of the Track Two Study Group on Comprehensive Economic Partnership in East Asia (CEPEA), which shows greater potential trade and GDP growth if enhanced integration among EAS members is achieved. Consistent with the request of Leaders, the Ministers agreed to convey the report to Leaders at the 4th East Asia Summit (EAS). The Ministers also agreed to a Phase II Track II Study on CEPEA, detailing the pillars of


Phase II Track II Study on CEPEA, detailing the pillars of economic cooperation, facilitation and liberalisation as well as institutional developments.

Joint Media Statement of AEM+6 working Lunch in Aug 2008

18.We received a Statement from the Economic Research Institute fromASEAN and East Asia (ERIA) Governing Board Meeting. Weappreciated the ERIA’s contribution to regional cooperation, byproviding useful research and practical policy recommendations. Weencouraged ERIA to work with the ADB and the ASEAN Secretariat toaccelerate the completion of a “Comprehensive Asia Development Plan”in order to enhance the connectivity of the region.

19.We noted the final Phase II Report of the Track Two Study Group on


19.We noted the final Phase II Report of the Track Two Study Group onComprehensive Economic Partnership in East Asia (CEPEA) andwelcomed the decision of our Economic Ministers who met in Bangkokon 15 August 2009 to task the Senior Economic Officials to discuss andconsider the recommendations in the Phase I and II reports. CEPEA andEast Asia Free Trade Area (EAFTA) could be examined and consideredin parallel.

Chairman’s Statement of the 4th East Asia SummitCha-am Hua Hin, Thailand, 25 October 2009

What does comprehensive mean ?What does comprehensive mean ?

1. Free trade agreement

2. Trade facilitation

3. Economic cooperation


3. Economic cooperation

4. Energy and environment

5. Information technology

Divergent ideas for East Asia economic integrationDivergent ideas for East Asia economic integration

1．．．．Areas to be covered

・・・・ Japan, China, Korea

・・・・ Japan, China, Korea ＋＋＋＋ASEAN 10 （（（（EAFTA））））・・・・ Japan, China, Korea ＋＋＋＋ASEAN 10＋＋＋＋India, Australia, NZ （（（（CEPEA））））・・・・ APEC

2．．．．Contents of integration

・・・・ Free Trade Agreement

・・・・ cooperation programs such as climate change, monetary cooperation, human resource development and infrastructure construction


・・・・ coordination of economic policies

・・・・ institutional framework, OECD of East Asia: ERIA can serve as a basis.

3．．．．challenges

・・・・ Legally binding agreement is difficult

・・・・ FTA is a long term goal, not feasible in the near future

・・・・ No common value, such as free market ,democracy or common religion

・・・・ who takes leadership ?

・・・・ Relationships with US

4．．．．Realistic approach is to start with specific cooperation programs. Energy and Environment, food safety, infrastructure construction may be among early harvest.

European experienceEuropean experience1922 Richard Coudenhove –Kalergi

(Pan Europaische Bewegung)

1948 Benelux customs union OEEC

1952 Integration of market for coal and steel (ECSC)

1958 European Common Market (EEC),

1964 Common Agricultural Policy (CAP)


1964 Common Agricultural Policy (CAP)

1968 Unified customs union

1971 European Monetary Unit -first phase

1985 Schengen agreement (free movement of people)

1991 Maastricht treaty (economic convergence)

1998 European central bank, single currency (Euro)

Asian approach will be different from EuropeAsian approach will be different from Europe1. European integration is based on legal framework (treaty) and

institution (European Commission).

2. Asian approach will be more ad-hoc, project/sector oriented

and pragmatic. We will start with what will be feasible with the

membership of interested countries.


3. While discussion is underway, East Asia-wide FTA is not

feasible at the moment, cooperation programs that aim to

narrow the developmental gaps may go first, such as cutting

back on carbon emission, monetary cooperation,

infrastructure building.

Asian countries are aging rapidly, but they are not prepared for aged society.Asian countries are aging rapidly, but they are not prepared for aged society.

KoreaAust

ralia

Japa

nUSA

OECD（（（（30

））））

Ratio of senior

citizens7%14% years

Japan 1970 1994 24

Korea 1999 2016 17

China 2001 2024 23


0000 20202020 40404040 60606060 80808080IndiaVie

tnamInd

ones

iaChi

naThaila

ndPhilip

p ine

KoreaAust

ralia

China 2001 2024 23

Thailand 2001 2022 21

Indonesia 2016 2035 19

Vietnam 2019 2034 15

India 2020 2043 22

Source: OECD Pension at a Glance

Coverage ratio of publicpension scheme

Income gaps in Asia are far larger than industrialized countriesIncome gaps in Asia are far larger than industrialized countries

15

20

25

30

35

40


0

5

10

Aus

tral

ia

Cam

bodi

a

Indi

a

Japa

n

Mon

gol

Pak

ista

n

sing

apor

e

Vie

tnam

Income share of top 10% Income share of bottom 10%Source: OECDE Society at a Glance

Trans-border movement of people is still limited in AsiaTrans-border movement of people is still limited in Asia

MalaysiaMongol

New ZealandPakistan

PhilippinesSingapore

ThailandVietnam

OECD


0 10 20 30 40 50

AustraliaBangladesh

ChinaHong Kong

IndiaIndonesia

JapanKorea

Malaysia

Source: OECD Society at a Glance

Current account of Asian countries（% of GDP)Current account of Asian countries（% of GDP)

2

4

6

8

10

2008


-6

-4

-2

0

2

Japan China India Australiaand NZ

EmergingCountries

ASEAN-5

200820092010

Source: IMF Database

Aging progresses at different timings in AsiaAging progresses at different timings in Asia

65

70

75 9.9% 4.3% 1.2%

GDP growth rate (Japan)


50

55

60

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

China India Japan Korea

6.9% 4.1%

GDP growth rate (Korea)

Source: United Nations

Economic growth ratesEconomic growth rates

2.12.7 2.6 2.3

13.0

9.4

6.3

10.69.6

7.3

4.7

7.98.7

5.6

1.3

6.5

2.7

1.0 1.3 1.7

10.0

7.7

4.7

8.4

5.0

10.0

15.0

2007

2008

2009

2010(予測)(forecast)


0.4 0.6 0.5

-1.2

-2.5

-3.9-4.8

-5.3

1.31.0 1.3

-10.0

-5.0

0.0

アメリカ欧州イギリス日本中国インド ASEAN-5 アジア途上国

US Europe UK Japan China India Emerging Asian

Countries

Japanese FDI to BricsJapanese FDI to Brics

8,0907,774

6,7067,015 6,793

6,273

4,000

5,000

6,000

7,000

8,000

9,000100 million Yen


425 636

1,8901,316 1,568 1,628

119 195 213 267

0

1,000

2,000

3,000

4,000

2005 2006 2007 2008

India China Brazil Russia

Comprehensive Asia Development PlanComprehensive Asia Development PlanComprehensive Asia Development PlanComprehensive Asia Development Plan

Delhi-Mumbai Industrial Corridor

Mekong-Japan Economic and

○ The Economic Research Institute for ASEAN and East Asia (ERIA) has been developing the "Comprehensive Asia Development Plan" in cooperation with the ADB and the ASEAN Secretariat, as per Japan’s proposal, since last June.

○ ASEAN is planning to coordinate with the "Comprehensive Asia Development Plan.”○ “Delhi-Mumbai Industrial Corridor” has already been put into practice, through the cooperation of Japan and

India.○ At the Mekong-Japan Summit last year (in Tokyo), the “Mekong-Japan Economic and Industrial Cooperation

Initiative” was agreed on by leaders.○ At the “Indonesia-Japan Joint Economic Forum”, held on Jan 11th, 2010, Minister Naoshima and related Ministers

in Indonesia agreed on the development of the “Indonesia Economic Development Corridor.

East Asian East Asian CommunityCommunity


Philippines

Indonesia

Brunei

Industrial Corridor

Mekong-India Industrial Corridor

BIMP East ASEAN

Growth Area

Malaysia

and Industrial Cooperation Initiative

・Chennai

・Delhi

・Mumbai

・Ho Chi Minh

IMT Growth Triangle

Indonesia Economic Development

Corridor

DelhiDelhi--Mumbai Industrial Corridor (DMIC) projectMumbai Industrial Corridor (DMIC) projectDelhiDelhi--Mumbai Industrial Corridor (DMIC) projectMumbai Industrial Corridor (DMIC) project

Develop the broad area between Delhi and Mumbai by connecting industrial estates and ports with Dedicated Freight Corridor (DFC) and road for the trade and FDI promotion.

METI ‘s former Minister Akira AMARI proposed the idea to Mr. Kamal Nath, Minister of Commerce and Industry, during the visit of Prime Minister ManmohanSingh to Japan in December 2006.

In January 2008, Delhi-Mumbai Industrial Corridor Development Corporation (DMICDC) was incorporated to prepare detailed projects and to coordinate DMIC project development, finance and implementation.

In October 2008, PM Manmohan Singh visit to Japan , the two leaders agreed on the establishment of the Project Development Fund(PDF) and the support of the Early Bird Projects.(Japan:5projects, India: 12projects)

DMICDC selected the Consultant “ Scott Wilson” for Detailed Perspective Plan

Project OverviewProject Overview

Kolkata

Delhi

Mumbai

Major Cities and NetworksMajor Cities and Networks


DMICDC selected the Consultant “ Scott Wilson” for Detailed Perspective Plan for overall DMIC Region, and each DMIC states are proceeding to select the Consultant for Development Plans for various investment regions.

ImplementationSteering Authority

�Finance Minister (Chairman), MCI Minister (nodal) & other related Ministers, Chief Minister of the related States�Approval of projects & finance patterns, Monitoring, etc.

�Full-time CMD, Heads of the related pubic companies, experts, representatives from the related ministries and state governments

・・・・・・・・・・・・・・・・Special Purpose Vehicles (SPV)

Project Goals & Approach

Within 5 years,Double employment potentialTriple industrial outputQuadruple exports from the region

Develop 24 nodes identified(12 for the 1st phase <2008-2012>)

ChennaiBangalore

Red Dedicated Freight C orridorRed Dedicated Freight C orridorRed Dedicated Freight C orridorRed Dedicated Freight C orridorBlue National H ighway #8Blue National H ighway #8Blue National H ighway #8Blue National H ighway #8

Project Development Fund(150 million dollars)

Project Development Fund(150 million dollars)

Delhi-Mumbai Industrial Corridor Development Corporation (DMICDC)

Special Purpose Vehicles (SPV)



“Mekong - India Economic Corridor”“Mekong - India Economic Corridor”

BangkokBangkok★

India

★Daw ei

Mekong


Phnom Penh Ho Chi M inh CityPhnom Penh Ho Chi M inh City★

Ranong

★Pangnga

Pak Bara

★

★

★

MekongMekongMekongMekongMekongMekongMekongMekong--------Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial CooperationCooperationCooperationCooperationCooperationCooperationCooperationCooperationMekongMekongMekongMekongMekongMekongMekongMekong--------Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial Japan Economic and Industrial CooperationCooperationCooperationCooperationCooperationCooperationCooperationCooperation

Hard InfrastructureHard Infrastructure

（（roads, ports, etcroads, ports, etc））

MJ-CI

239 hours in total, and more than more than half will be spent half will be spent

Time needed for

Ho Chi Minh～～～～Ranong～～～～ChennaiVietna

m

LaoMyanma

r

Vietna

m

LaoMyanma

r

Corridors in Mekong Region

North-South

○ Promote in an integrated manner, hard and soft infrastructure development and

industrial development, in each corridor in Mekong region. (To support Human

development in logistics, introduction of electronic customs, etc as a soft

infrastructure)

（Agreed among ministers, in Mekong-Japan Economic Ministers’ Inaugural Meeting (Thailand, Oct 2009), and agreed among leaders, in Japan-Mekong Summit (Tokyo, Nov 2009))


（（roads, ports, etcroads, ports, etc））（（Promotion by the Promotion by the

PublicPublic-- Private Private PartnershipPartnership））

Soft InfrastructureSoft Infrastructure

（（Truck logistics beyond Truck logistics beyond the boundary of customs, the boundary of customs,

nations, etcnations, etc））

SMEs, New Industry SMEs, New Industry

SectorsSectors

（（SEZSEZ etcetc））

half will be spent half will be spent in customs or in customs or TransshipmentTransshipment

TransportationTransportation100 hours100 hours

Customs, Customs, TransshipmentTransshipment

139 hours139 hours

Thai

Cambodi

a

Thai

Cambodi

a

North-South

Economic

Corridor

Southern

Economic Corridor

Ho Chi Minh

North-South

Economic

Corridor

バンコク

To Chennai

(India)

What does current financial crisis mean to ASIA ?What does current financial crisis mean to ASIA ?

Asian countries must;a) shift gear from export to domestic consumption and

investment through opening up of domestic market and deregulation

b) reduce excessive saving (household and corporate) through developing social safety net

c) prepare for aging society (pension, medical insurance, etc) d) narrow income gaps through effective redistribution program


d) narrow income gaps through effective redistribution programe) address social injustice f) pay due heed to the impact of their policies on others.

All these challenges call for major transformation of domestic economic and business structure. Asian countries stand to benefit by high quality economic analysis and learning

from others’ experiences.

How we can facilitate policy dialogue and coordination among Asian countriesHow we can facilitate policy dialogue and coordination among Asian countries

� Strong capacity for research and policy analysis

� Need forum for discussion and capable secretariat

� Learning process for new policy fields, such as consumer protection, competition, IPR, labor market


consumer protection, competition, IPR, labor market policy, social policy

� Pressure on member countries to facilitate structural reform and enhance openness

� ASEAN alone lacks in leadership, we need more to deepen partnership

21 Copyright 2010 FUJITSU RESEARCH INSTITUTECopyright 2010 FUJITSU LIMITED21

Documents

Why CEPEA makes sense to Asia - ICRIER II- Risaburo NEZU- Presentation.pdf · Divergent ideas for East Asia economic integration ... ・・・・ Japan, China, ... Economic Corridor