4. Future Demographic Challenges

While difficult to see in the present circumstances, Asia faces serious demographic challenges in the future.

5. Continuing Divides

1. Its spectacular post-World War II economic growth and social transformation notwithstanding, Asia continues to have about two-thirds of the worlds poor.
2. Development gaps, lack of good governance, latent historical, ethnic and religious animosities and some protectionist sentiments continue to exist.
3. In this context, ASEAN has sought to narrow the development gap among and within its member countries. The Initiative for ASEAN Integration (IAI) extends assistance to the newer members (Cambodia, Laos, Myanmar, and Viet Nam) so that they can integrate not only with the older, six member countries (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand), but also with the regional and global economies.

History has taught us that a socio-economic structure where enclaves of prosperity subsist in a sea of poverty, is simply not sustainable. One only needs to observe problems in the Middle East, along the US-Mexico border and between North Africa and the European continent.

Similarly, some of the most intractable contemporary conflicts are testament to our inability to manage cultural, ethnic, political and religious diversity. Indeed, the world is changing ever more rapidly. A huge advantage in Japan's post World War II economic miracle was its homogenous population. In a region that is rapidly integrating and in the face of an aging population this has arguably become a major challenge.

The human resource industry carries the brunt of adapting to, and indeed anticipating, the needs of the private and public sectors.In the New Asia, the key imperative is to develop human capital adaptable to the challenges and opportunities of regional integration.

In practical terms:

1. Legacy and history have made Asians more familiar with traditional Western culture and society than with their Asian neighbors.
2. The ability to operate effectively in this rapidly-integrating region will require a much better understanding of the culture, values, practices and governance systems of our neighbors.

Western development models have achieved a great deal. However, in the contemporary context, they appear to be capital-intensive, environmentally-invasive, and socially unsustainable.
I believe it is time to draw upon the wisdom and insight of Asia for the development models that will shape our future. The challenge calls for a better understanding of our individual cultures, aspirations, business and development models and indeed new ways of looking at ourselves and dealing with each other.

The Boao Forum for Asia (a useful thermometer for gauging East Asian thinking), in its Annual Report for 2007, acknowledged that the region fares considerably well in the provision of regional public goods, particularly in the protection of the environment, natural disaster response, prevention of communicable diseases, energy security, good governance, prevention of transnational crimes, and agricultural productivity.

It however underscored the need for institutional mechanisms for better coordination and cooperation in managing regional public goods. In addition, the Boao Forum stressed the importance of building networks and alliances involving the private sector. It sees the regions wide disparity in development as the principal impediment to regional integration.

Aware that technology and innovation are indispensable if Asia is to sustain its historically high growth rates, the Asian Development Bank is forming knowledge hubs in selected developing countries throughout the region to strengthen research and disseminate new development concepts and technologies. It is contemplated that these knowledge hubs will become reservoirs of expertise, providing the region up-to-date knowledge products and services tailored to regional needs.

A key challenge to ASEAN is that labor productivity levels in China and India are increasing more rapidly than ASEAN's. This is important because productivity is an essential determinant of national and regional competitiveness. Increased productivity reduces poverty and improves general living standards. It leads to higher wages, shorter working hours, in short, a better material quality of life. The International Labor Organization points out that the working poor do not suffer from lack of work, but rather from low productivity and consequent poor remuneration for their labor.

The ASEAN Economic Community envisions a stable, prosperous and highly competitive ASEAN economic region in which there is free flow of goods, services and capital, equitable economic development and reduced poverty and socio-economic disparities.

The ASEAN Economic Community seeks to establish a single market and production base - thus making ASEAN a more dynamic and important segment of the global supply chain. The strategy contemplates:

1. Fully implementing the regions existing economic initiatives which include: the ASEAN Free Trade Area (AFTA), the ASEAN Framework Agreement on Services (AFAS) and ASEAN Investment Area (AIA).
2. Accelerating regional integration in priority sectors;
3. Facilitating the movement of business persons, skilled labor and talent;
4. Strengthening the institutional mechanisms of ASEAN, including the improvement of the existing ASEAN Dispute Settlement Mechanism.
5. Adoption of the ASEAN Charter, which is expected to be completed towards the end of this year.
   Given the many important regional developments, it is clear that human capital development will, in large measure, determine the regions success in realizing the promise of a strong, peaceful, prosperous and fully integrated ASEAN Economic Community.

The new human capital development paradigm must combine modern technology, a meritocratic ethic that rewards performance (and punishes non-performance) with the fundamental Asian ethic that subordinates individual interest to that of the community's. Operating as we do in a developing region, we must strongly advocate and encourage the development of broad-gauge managers, entrepreneurs and leaders capable not only of generating financial dividends but also of bridging social divides.

Formidable as the task ahead is, there is some optimism on the future of the region:

1. The ILO study on Labor and Social Trends in ASEAN finds hope in the demographic dividend offered by an anticipated increase of the prime-age population in the ASEAN region, i.e. aged 25- 54 years, from 39.9% in 2005 to 42.1% in 2015, coupled with a decline in the proportion of economic dependents. Harnessed intelligently, this larger potential labor force represents an opportunity that could translate into higher rates of savings, greater investment and economic prosperity.
   
   
2. The report of the Eminent Persons Group for a new ADB on the other hand, envisages an Asia-Pacific region in 2020 that would:
   
   

   Witness Asian per capita GDP achieve parity with Latin America’s – up from one-fourth of Latin American per capita GDP in 1980. See the vast majority of Asians living in middle-income countries, with perhaps only 10% remaining in absolute poverty (i.e. $1 a day). Be much more urban, with the majority of people living in mega or medium size cities. Remain a “capital-surplus” region. As a whole, Asia can be expected to continue to maintain large accumulated reserves. Become even more integrated. By 2020, the Asia-Pacific region could account for about one-third of world trade - compared to a projected U.S. share of about one-seventh. Continue to attract significant private capital flows from within the region and from the rest of the world. The region’s high domestic savings rates will substantially reduce the need for official capital from outside the region. Become an even larger user of natural resources.

While the statistics are impressive, the environmental, social and ethical challenges that Asia confronts are formidable. Leaving its comfort zone, the Asian HRD community should espouse the development of managers and leaders that understand the complexities of Asia, and are knowledgeable, capable and committed to the vision of sustainable and inclusive growth.

Thank you very much for your kind attention.