Overview of the 16th “Asia Pacific Forum, Awaji Conference Japan”
International Symposium

Following an opening address from Representative Director Satoshi Iue，a welcoming tribute from Governor of Hyogo Prefecture Toshizo Ido，and awards ceremony for the Asia Pacific Research Prize（Iue Prize），an　explanation for the purport of the Awaji Conference was provided by Makoto Iokibe，President，Hyogo Earthquake Memorial 21st Century Research Institute．After three speakers gave commemorative lectures，Yutaka Katayama，Vice President，Kyoto Notre Dame University，took the role of the coordinator．

Abstract of the Commemoration Lecture: “Asia’s Future and Japan’s Role”

Speaker:Yasuo Fukuda（Former Prime Minister of Japan）

We mark the 70th anniversary of the end of World War II this year．It is quite natural that the Prime Minister of Japan speaks about the future in his Statement on the 70th Anniversary，but he must refer to the past as a prerequisite for speaking about the future．It is truly regrettable that Japan still argues with foreign countries on historical issues despite such long years have passed．At the milestone of the 70th anniversary，I hope that the Prime Minister will release a statement that will settle negative legacies and open a bright perspective on the future．

1．Asia getting older，Asia suffering internal conflicts

Japan is a part of Asia．The Asian region is now attracting attention for maintaining better economic growth levels than the rest of the world，and“growing Asia”has become a key concept．Among Asian nations，China is the focus of the most extensive international attention for the prominent growth it has achieved．

Asia will become senescent．At present，Japan and Korea are the first to be getting older；China will follow in five years，and Indonesia in 15-20 years．What each of these nations must consider is how to establish a new framework that enables them to continue providing their people with happiness，while the aged population surpasses the working-age population．

ASEAN members are doing well without major problems，despite the fact that they have different languages，ethnic groups，religions，cultures and traditions．Meanwhile，Japan and other nations with large economies are in conflict with one another．As the Asian region may be able to play a leading role in the world economy again，I have high expectations for the region and believe that it must achieve growth in an appropriate manner．Therefore，it is an essential task to overcome the conflicts involving Japan．Japan plays a significant role in the Asian region，and enjoys an extremely high reputation and confidence．Japan must take advantage of this strength．

2.China and Japan

The rise of China is a particularly big issue in Asia at present．Emerging China is sometimes focused on as an issue for the international community．This may be because China itself has insufficient recognition on how it should behave in the midst of rapid growth．

In the past，Japan also posed a threat to other nations with its rapid economic growth．For example，in the 1960s，Japan’s economy soared sharply to become the second largest in terms of GDP．That was a major threat to other nations，while Japan was unaware of the fact．The Plaza Accord in 1985 brought about appreciation of the yen，followed by excessive liquidity in Japan．Japan went on a buying spree of American assets，which whipped up feelings in the American public．

Thus Japan，through its experience of unintentionally offending other peoples，learned that a nation must remain modest though it has achieved economic growth．China at present，like Japan in those days，is unaware of the threat it poses to other nations．When I mentioned this point to a Chinese person，he said that he quite agreed with my opinion．I expect that such thinking will be reflected in their policies in years to come．The dispute over the East China Sea remains to be solved，and it must be settled through discussions between the related parties． Meanwhile，as to the dispute over the South China Sea，it seems that China did not expect this to be such a big international issue and as such，I believe that China will go to the direction where they will no longer be a threat to the international community in the future．In due course，their leader will make an appropriate decision．I had met and talked with President Xi Jinping of China before he assumed his post．He regularly referred to peaceful development，and advocated friendship with neighboring nations．He also said，“The Asian region shares the same destiny．”

When thinking about China，we should take into consideration that they are facing challenges unique to a nation of that size，that is，governing as many as 1.3 billion people．The Xi administration will last for at least seven and a half years．In light of this，we need to consider how we can patiently cultivate a good relationship with China．

3．What Japan should do

It is important for Japan to coordinate with nations around the globe in the future．However，the top-priority issue for Japan is to build better relationships with its closest neighbors．We should settle issues of history at this point，and develop a future vision for each nation．War is no longer an option for the future world．A minimum deterrent may be necessary，but not an excessive one．We should create cooperative relationships in various fields，including the economy．

What the world expects most from Japan is technological development．In addition to the development of individual technologies，it is also necessary to develop the human resources that can create new systems for society．Japan has only a small number of young people going overseas and coming from overseas．I am afraid that Japan may not be able to create new systems for global society with such an extreme lack of international exchange．

Abstract of the Commemoration Lecture: “Asia in the 21st Century”

Speaker: Takashi Shiraishi（President，National Graduate Institute for Policy Studies（GRIPS))

1．Long-term trends of changes

Global society has been facing two long-term trends of changes in the 21st century．One trend is shifts in the balance of power，exemplified by the fall of the Group of Seven nations，the rise of emerging nations，particularly China，and the increased presence of the Asia-Pacific region．These shifts have been driving transformation of the global and regional orders．

Another long-term trend of changes is the accelerated globalization of society，which has increasingly become evident from the transnational flow of capital，segmentalization of production processes based on individual country’s comparative advantages，and brain circulation（the drain/gain of excellent human resources highly valued in the labor market）．Against this backdrop，Asian nations in the future are expected to experience further urbanization，an increased number of those in the wealthy/middle class，and an aging population with a declining birthrate．Surprisingly，in spite of the expectation of an increase in the size of the wealthy/middle class，such problems as disparities in income，regional disparities，and poverty gaps between urban and rural areas will remain unresolved in most Asian nations over the next 15 to 20 years．Without taking some appropriate countermeasures，these disparities and gaps will eventually result in serious political and social problems．In general，each nation’s economic policies depend on the political system that nation adopts．Under a democratic political system，it is highly likely that the government will be tempted to focus on pork-barrel spending today rather than a perspective of national growth tomorrow．As demonstrated in Malaysia，if a national government remains reluctant to embark on structural reforms，most talented people will flee to overseas locales，causing an enormous loss to the nation in the end．

It can be said that Asia is currently required to address two types of politics：the politics of balancing or security，and the politics of economic growth．Because Asian nations have achieved distinct success in pursuing the politics of economic growth over the past three decades，natural expectations for continued economic growth at the same pace in the past are found among the general public．Failure in satisfying such expectations may incur the risk of collapse of the current regimes．

2．International relations in East Asia，Asia-Pacific region，and India-Pacific region

Unlike Europe，there have been tense relations between trade and security systems in Asia；the tension is becoming intensified in recent years．Although a hub-and-spoke security system，which is based on bilateral security agreements and military base agreements（both mainly with the United States），has been established and maintained in Asia，China is not included in the system．Meanwhile，in terms of trade，China has become the biggest trade partner for most Asian nations．Therefore，as a basic overview of current Asia，the more China reinforces armaments to achieve national prosperity with a strong army，and becomes self-assertive about its sovereignty in the South China Sea and the East China Sea，the more tense security in Asia will become，inevitably affecting regional trade as well． Responding to this situation in Asia，U．S．President Barack Obama stated in a speech to the Australian Parliament in 2011 that the United States is a Pacific nation，referring to the necessity of its military presence and“rebalancing”policy toward the Asia-Pacific region，strengthened cooperation with Asian partners，strategic involvement with and a hedging policy toward China，and the establishment of the Trans-Pacific Strategic Economic Partnership Agreement（TPP）．

China has extended its power in the Asia-Pacific region within just a generation．The extension has been so rapid that China’s moves are having considerable repercussions throughout the region，despite the intentions of national leaders．In Southeast Asia，nations that face territorial issues with China，such as the Philippines，Vietnam，Malaysia and Indonesia，are increasingly wary of China’s future moves．On the other hand，Laos，Cambodia and Myanmar are willing to strengthen their close relationships with China，expecting possible benefits in economic cooperation from China．

It also seems that there are growing differences in future growth strategies between mainland Southeast Asia and island Southeast Asia．In mainland Southeast Asia，the development of a wide-area infrastructure network has been accelerated．Every nation in the region is striving to pursue its own economic growth strategy based on the infrastructure network．On the other hand，nations in island Southeast Asia are independently mapping out their own，unique economic strategy．

3. Asia in the 21st century

There are three points that I think Asia should consider in the 21st century．First，the more important the balance of power becomes，the more geopolitically different maritime countries and continental countries are recognized，exemplified by the differences in national strategies of mainland Southeast Asia and island Southeast Asia in recent years．The second point is that each nation will be required to decide on its national and political goals by choosing from two alternatives：the politics of national prosperity（like the“Chinese Dream”in China），and the politics of improved living standards for the people（like the“American Dream”in the United States）．As the third point，a failure in satisfying individual citizen’s needs and expectations will result in the drain of excellent people to foreign countries．Effective policies to attract interest of talented people will be a decisive factor of successful national development in the future．

Abstract of the Commemoration Lecture: “Emerging Challenges in ASEAN：Skills and Global Production Value-Chain”

Speaker: Shandre M．Thangavelu（Associate Professor，The University of Adelaide）

1．ASEAN Economic Community（AEC）

The ASEAN Economic Community（AEC）is an economic integration by ASEAN countries aiming for fair economic development，a highly competitive economic region，a single market and production basis，and integration of the region into the global economy．Currently，there is almost no sign of progress in the liberalization of services yet，and the problem of investment remains to be solved．National liberalization entails changes in the flows of not only trade but also of people，and therefore the flow of unskilled workers is important．

2．Ongoing Situations in ASEAN

When you look at ASEAN，there are four important perspectives．The first point is an increase in the size of the service sector compared to GDP．In ASEAN，the service industry is growing．An inflow of young people into urban areas means an increase in the engagement of poor people in agriculture．Since this leads to a decline in agricultural output，then to imports of food from other countries，and finally to a rise in food prices，growth in the agricultural sector is now needed．Meanwhile，the growth of the service sector leads to a rise in GDP，and also to an increase in female employment．In addition，since consumer goods have diversified and a shift toward service trade is underway，skilled workers are needed，and human resource development is crucial．Facing an aging population，ASEAN should raise the skill level of young people and encourage women to participate in the labor force．

The second perspective is the decrease in foreign direct investment（FDI）flowing into ASEAN after the Asian financial crisis．This indicates a change in the production structure．From now on，ASEAN needs to increase FDI．Regarding the global value chain（GVC）in Asia，Japan，a country with a high level of technology，is in the upper part of the chain．However，Korea is trying to catch up with Japan，and Korea is followed by Hong Kong，Singapore，and Taiwan，and then by Malaysia，Thailand，and the Philippines．Although China is still in the lower part，they are promoting a wide variety of measures to quickly catch up with other countries．Cambodia，Laos，Myanmar，and Vietnam（CLMV）are in the bottom part．

The third viewpoint is a widening economic gap and growing government deficits．At the time of an economic crisis，while rich people can control such risks and become even richer，poor people cannot deal with them．The growing government deficits have been caused by aging populations and structural unemployment．

The fourth angle is a small accumulation of human capital to enter the next stage of GVC．In some ASEAN countries，secondary education is very weak，and if they do not solve this problem，they will fall down the value chain．Accordingly，they should invest much more in education．

3．Necessary Political Measures

Five political measures should be implemented in the future．First，it is imperative to liberalize services．While approving of the migration of workers，it is necessary for countries to mutually certify workers’skills．

The second measure is skill development．In ASEAN countries facing aging populations，it is important to ensure that educated young people work．Cooperation between the public and private sectors，such as enhancement of the accumulation of human capital with the involvement of the private sector，is necessary．

Third，it is necessary to invest in secondary education．To realize development of domestic industries，it is essential to develop small and medium-sized enterprises（SMEs）．

The fourth concerns correction of the shortage of regional organizations．Transnational pollution，territorial sea problems，food security，environmental problems，etc．are now becoming even more important．The Trans-Pacific Partnership（TPP）and the Regional Comprehensive Economic Partnership（RCEP）are different in terms of scale and coverage area，but it is important to make good use of them for each purpose．

The fifth measure is regional integration．The ASEAN Highway Network（AHN）is a land transportation infrastructure connecting main roads in ASEAN．This will lead to cost reductions in transportation and trade，helping to establish cooperation in ASEAN．I believe that the connection of ASEAN will promote flows of services and people， the active participation of SMEs in trade and investment，and regional integration．