 Good morning, everybody. How are you? Good? One of those active crowds I see. Well, we solved all the problems in the world because Apple just released a new iPhone and Germany said yes to bailouts for Europe. So when we were formulating this panel, we thought we'd have a different set of things to talk about, and being facetious, of course. But it's a bit of a lofty kind of a topic, but one that certainly merits debate and that is the roadmap for Asia, given where we are in the landscape with what's going on in Americas and what's going on in Europe. I want to introduce, in no particular order, so I'll just go from left to right, a very esteemed panel of the excellent commentators, Dr. Hazo Takanakta, son from Keio University now, correct? Spent many, many years helping formulate monetary policy in Japan at the MOF. And Dr. Minjoo, of course, who's from this country but calls Washington, D.C., home, has been with the IMF now for, what, a couple years? Two years? Two years. Yeah, okay. N.K. Singh came all the way to be with us from India, where he's a member of the, at times, rather chaotic parliament. And Robert Guess was kind enough to make his way from the Economist and he'll be weighing in to help us with the conversation today as well. I'd first like to ask Dr. Jiu to set the ball in motion. Asia, where are we in this whole thing? I mean, where to start, right? Thank you. This is a daunting challenge, but let me try to do that in two to three minutes. Overall, I would say Asia economy is doing quite well. And the growth is slowing down, that's true, roughly from 2010, which is 8.5% to last year's 5.9%. This year, we're looking at very much 5.5% GDP growth rates. It's slowing down, but compared to the rest of the world, it's still very strong because the whole world is roughly a little bit more than 3%. So 5.5% is quite a strong growth. But more importantly, the fundamentals is much stronger if we compare 1998 financial crisis at that time. And today, for example, in Asian areas, the copper deaths to equity ratio roughly dropped from 110% to 50% today. Particularly in Indonesia, for example, it drops really from 190% to roughly only 30% today. So corporate balance is much stronger and healthier. It's the same thing happening in financial sector. Financial sector deaths to equity ratio also drop dramatically compared with 1998 and today. It's roughly also from roughly 110% in average dropped to today 40%. For example, in Philippines, it can drop from 180% to today roughly only 30%. So the private sector, the financial sector is much stronger and the funding stress also reduced dramatically because it depends on external funding also reduced to roughly one-third at the level of 1998. So in that sense, and also there's tremendous space for infrastructure investments. ADB forecast roughly $8 trillion for the next 10 years. So it's a lot of room for growth and the fundamentals are stronger so they're doing quite okay. But obviously the challenge is, number one, when the global economy slows down the area can continue export to the whole world. I think that's the most important thing. The second issue is the capital flow. Because the capital flow tends to be more and more volatile in the past few years and the Asia becomes one area, money moving. We observe, see the money moving and the money move out. In 2008, 2009, money move out. And 2010, moving and 2011, move out and now moving again. So because the foreign capital account domestic market share increased dramatically. For example, in Malaysia, the local bonds market, foreign share increased roughly from 5% to 10% to today's more than 30%, 35% and something happened for the other countries. The foreign capital I think is the volatility of the foreign capital obviously is another, the second important challenge they are facing away. But obviously if the global economy further slows down, they will put tremendous pressures. But I would say the gain for the region, if you really ask me, is not sort of to survive for the region. It's rather remain to lead the global growth. Because Asia has to be the global growth engine for decades. Very strong growth, particularly emerging Asians grow so strongly. 2010 is a 9.8% GDP growth rate, last year 7.4%, this year still 6.2% growth rates. So can Asia continue to lead global growth? Can Asia continue being the engine of the growth of the world? I think that's the main challenge for Asia and we really need looking into that. I'll stop here. What's the answer? What's your answer to that question? I mean, the growth is still there. It's not what it used to be. Does it come and does it freeze up because of everything going on? But you point to the positive attributes of the balance sheets. The debt load isn't what it used to be. So certainly there's a buffer zone there. Yeah, there's a lot of policy spaces there. But to be able to continue to lead the growth for the whole world, the Asian obviously need to do more. And move into the more domestic consumption model, which is the whole case, not only particularly for China, but also for whole the region. I think this is very important. And bringing the value chain at the manufacturer is also another big issue. Service sectors still more, they have a lot of room to go. And building on the social security assistance and lay on the long term and the system more important support for the future growth also. There are a few major challenges remain. But I think for Asian in these particular moments, which are looking really, looking at the long term and looking high and aiming high, see whether Asia can continue to lead the global growth. Mr. Singh, Dr. Ju has laid out a scenario where it's almost like a fork in the road. I mean, there is an opportunity for Asia to do the right thing, but Asia does have to do the right thing. You can't just ride the coattails of the global winds right now. From your perspective in India, how well poised is your country? Well, I think that first let me say that it's nice that Asia gets a good certificate from the International Monetary Fund in terms of what Ben has just said, that it represents the more robust part of the world economic engine of growth. Clearly, the American recovery is still tentative. Europe is in deep trouble. But one of the things I'm sure that many would have wanted to point out is that you cannot pay entire Asia with one brush. There are some countries where the slowdown is more distinct than others, and I think that therefore in spite of the commonality, the differentiating characteristics of various Asian countries need to be stressed out. For instance, in India, to come to that specific point which you raised, we are currently having this difficult question of balancing inflation with growth, balancing austerity with trying to give a new stimulus as growth rates have tended to slow down, and of course the central banker wanting to anchor inflationary expectations and the difficult job of managing what is known as the impossible trinity of the central bankers. I think Asia challenges, in my view, to get back to a robust rate of growth, in my view, represent very quickly four important challenges. First and foremost, there is a tendency for Asia to become complacent. Are we too prematurely declaring a victory that Asia as the 21st century power has arrived on the scene? What if, for instance, Asia tends to become an entitlement-driven society which the latest issue of the economist points out, then, of course, we are in the danger of slowing down the very engines of growth which have given Asia the fundamental? The second, I believe, is that a better management of monetary and fiscal policy where, for instance, sensible economics far too much and for far too long has been trumped by insensible politics. So is it possible to find a better confluence between where sensible economics is also sensible politics? Third, I think that men hinted at this, how does one create jobs? Asia has a young demography, this is well known, but how does one create jobs and employment in the foreseeable future? The transition from services into manufacturing, this is a very critical issue for India and, of course, renewing infrastructure apart from creating new infrastructure. And fourth, I would say this whole social sector, really, education, which is a very big challenge, not only in terms of access, but in terms of quality of education, in terms of inculcation of skills which represent the emerging demands likely in this decade and in decade beyond in terms of healthcare systems managing inclusive growth with the factors of not allowing investment and savings rate to slow down. So Asia has difficult challenges, these challenges they must address. It cannot automatically assume that it has arrived as a driver of the 21st century. These difficult challenges, unless it is addressed, unfortunately, the Asia being the 21st century power will remain a rhetoric. Mr. Singh, you've listed so many challenges, it's almost mind-boggling. I wouldn't know where to start. What would the priority be? What do you think at least short-term, if you had to prioritize the challenges in the short-term and long-term? I think the first priority must be macroeconomic stability, which means managing inflation growth inclusiveness in a sensible kind of way, managing fiscal deficits where we do not follow the bad example of Europe, running countries down into what could be sovereign defaults. Second, I think, give emphasis on the social sector, particularly education and high-quality education in end-cultivational skills. And third, I think, being able to seek a confluence between sensible politics and sensible economics. Dr. Takanaka, may I start you off by giving us some insight? The rest of Asia has an opportunity, as Mr. Singh have highlighted, to make a difficult time work for them. Somebody once said in the U.S. recently, never let a good crisis go to waste. From the Japanese perspective, what should Asia not do, if I could start you off with that? Well, thank you very much for raising a very interesting point. Yes, I completely agree with two gentlemen. We have a lot of opportunities in Asia. We have a lot of challenges also in Asia. Based upon the experience of Japan, we now face another kind of challenges. Well, one of the most important points to be discussed here today will be what is the impact of the demographic change on Asia from now on? This is very important. In the case of Japan, the total population started declining about seven years ago and this provided a lot of problems in our society. But sooner or later, the similar thing will happen to almost all Asian countries. But maybe only one exception will be India. The total fertility rate in Japan is 1.3, Korea 1.2, Hong Kong 1.0, even in the case of China 1.5 or so. So sooner or later, the total labour force of Asian countries will start declining. Even in the case of China, the total labour force started declining in five years, in seven years or so, in Korea 10, 15 years or so. So we have a lot of challenges from now. At this moment, making use of the rich population, we are now in a kind of prosperous situation. But this will sooner or later bring about a very difficult problem on these countries. This is one important factor, demographic factor. Bust rate is low and sooner or later, labour force will shrink. This is the first point. And also, this is very unique to Japan. We are now suffering from very serious lacking energy. Maybe all Asian countries will feel the similar thing. But in the case of Japan, as you know, we had a very serious accident in nuclear power plant. Very strong anti-nuclear sentiment is existing. And also, the current ruling party, DPJ, is deciding let's reduce the dependency on nuclear power plant currently 30% or so to zero in 25 years or so. This will have a very strong impact on the energy cost in Japan, of course. But this is not only the problem for Japan, but also to the neighboring countries. Very strong sentiment, anti-nuclear sentiment will prevail. And as a result of that, what will happen to the economic development of this Asia, this country? And let me add one more point, this factor, stimulated by Dr. Jiu-Ming. Well, he well understands the balance of monetary economy and the real economy. And compared to the real economy, monetary economy has been expanding very rapidly. And this is creating a lot of problem. The huge, very vulnerable capital flow, as I mentioned by two. And this, yes, it's very serious problem. And many people are now discussing the various kinds of regulation on that. Also, I was in the banking authority, banking supervision authority in Japan. At that time, I made some regulations on banking sector. But this kind of regulation sometime will bring about very negative impact on the real economy. In the real economic side, innovation is needed, this risk capital is needed. But from the viewpoint of financial institution, it is becoming difficult to provide this kind of risk capital, because of some regulations. So this balance between real economy and monetary economy. And monetary economy expansion is very rapid and some regulations needed. Yes, I agree on this point, but there is a possibility. This regulation will bring about very negative impact on the innovation of the real economy. This is exactly what we are feeling based upon our experience. Let me get my peer, Robert, guest from the Economist to weigh in. One thing I'm sensing here, Robert, is to talk about Asia as one cohesive region makes absolutely no sense at all. A short distance across the region can mean enormous differences in monetary policy, capital market development at all. I think it does make sense to make broad generalizations if you're trying to... I mean, you know, the world consists of seven billion people, and yes, we're all individuals, but you can't sort of preface every discussion by saying, right, I'm going to tell you what's going on for each one of the seven billion people in the world, because that would take rather a long time. I think the important division is between the one billion people, roughly speaking, who live in countries who are already rich and which, therefore, are growing more slowly because it's much harder to grow fast when you're at the cutting edge of innovation, and the 6th, 7th of the world's population who are living in countries that are emerging, and that's where the growth is going to come from. And most of Asia, Japan is not in that group, but most of Asia is in that group, and that's where we expect to see much more growth because it's easier to grow fast when you can take in all the best that's being done elsewhere in the world, adapt it to your own circumstances, and build on it. I was very pleased that Mr Singh brought up the issue of the welfare state. I mean, this is a very big thing in Asia. The speed with which China, for example, has extended its modest pension system to hundreds of millions of people is really impressive. It's really exciting. I think that you have to beware and you have to learn from the mistakes that other people have made in the past. Now, I'm particularly thinking of Europe here. There are two fundamental flaws with the welfare state in Europe. One is that we pay people not to work. The other is that we borrow money in order to pay people not to work. That compounds the error. It is a spectacular mistake. I strongly advise you when designing your welfare system that while it is extremely important that you make provision for the poor, that you make provision for the elderly and the people who can't work, that you have a system where you make sure that people have a proper education so that they can fulfil their potential, you make sure that you have basic healthcare provision, but that you never, never make it so that the incentives not to work are anywhere near to the incentives to work because if you give people incentives not to work, alas, they will not work. And that is tremendously bad for productivity. I think if we're looking to the long term with Asia, to my mind, the principle, particularly what's been going on in China, the growth of the past three decades has been spectacular. It's been impressive. It's been wonderful to see hundreds of millions of people out of poverty lifting themselves into the middle class, and that's been terrific. But we're now getting to the stage where inevitably growth is going to slow down because you've got to a wealth level where the richer you get, the harder it is to grow at 10%. It's one thing to double your income when it's $100 per head per year. It's quite another when it's between $5,000 and $10,000 a year. It gets harder to do that next step. Look, not so much at simply taking ideas from elsewhere, you have to become more innovative. And that's where you need the free flow of information. And that's where I think you have a big roadblock in China because the free flow of information here is terribly underdeveloped. It is, in my view, unworthy of such a great nation that the flow of information is so constricted here. We're sitting here at the World Economic Forum and the man who will become the leader of China in a few weeks' time. We don't know where he is. The Prime Minister was on the stage the other day and no one was able to ask him, excuse me, sir, where is Xi Jinping? I mean, this is the kind of question. Can you imagine Barack Obama going missing for, you know, a number of weeks? And Joe Biden's on the stage and no one asks him where he is. This is something, you know, does he serve the people or do the people serve him? You need to know these things. It does happen, you know. He disappears to the golf course a lot, Obama. Yeah, but, you know, there is secrecy actually about President Obama. You know what it is? We know he's on the golf course. We're not allowed to know what his score is. Partial transparency there. Mr. Sena, when Robert started addressing the issue of welfare formation, you started nodding rather violently. Yes, because I think I agree with you. Would you therefore believe that we require a much better alignment of monetary and fiscal policy to respond to something that Hizir was saying earlier? And second, do you think that far too many Asian countries have too prematurely begun to embrace a model of welfare economics which is going to deter Asia's quest for really becoming an engine of growth and that this embracing of that model of welfare state. By the way, there is the other challenge that if you don't do it, what happens to this enormous number of people who are still in abject poverty? How does it bring about a model of inclusive growth which excludes a form of welfareism but doesn't compromise with long-term growth? Can I get Dr. Ju to address that? Because a lot of what Robert has raised and Mr. Sena has expanded on is exactly what China is going through right now. The reason they're not buying more things is because they're worried about their healthcare because the infrastructure is not complete. The infrastructure is very, very lacking. And if you don't mind just listening to me for 15 seconds, when talking about building a welfare state, we are going through that exact problem in Hong Kong right now with the leaders wanting to build more public housing because private housing is becoming so far out of reach. Almost half of the people are heavily subsidizing just about every aspect of their life. The other half are competing against the government and the formation of the welfare state to keep themselves ahead of things. It's becoming a very two-prong polarized society. I'd like to see that. That has happened in China, hasn't it, already? Well, the welfare system obviously is quite a big challenge today for everyone. For the advanced economy, further reform welfare system is a mega issue, as Rob mentioned. And in the emerging market, low-income countries, to build an effective welfare system is also the main challenge. I think the principle is a very simple, more broad coverage, incentive to work and share the cost and efficiency of the system. But when it comes to the region, obviously it has its own challenges because the population is very strong, per capita income is still low, and the infrastructure exactly you mentioned for the software, the institutional capacity is still very weak. This is so that makes things much more challenging. But good news is, as Rob says, a lot of lessons we can learn from the advanced economy in the past few years particularly, so many lessons. So this is a good window opportunity for the region to start to think about that, and particularly also important for China because it's a population of 1.3 billion people, and many people live in the rural area, per capita income is extremely low. So how do we provide a general service to this group of people and also have efficiency for the whole system? I think that's good news. The good news, if you're looking for the 12 to 5 year plan from China, and they do sort of all that, they put a lot of efforts in terms of to build a welfare system for the long-term sustainability. I think that's very good. But if I may, I would like to bring things a little back to today because this is very much a long-term issue. I would say for the region to be able to lead the growth of the world, the most important issue is still the manufacturing. How do we make the manufacturing much more productive and make the manufacturing more efficient? We at the Found Data Study, we try to see after 20 years of globalization how the world is interconnected to each other. What we found is very interesting in this region in Asia is forming a huge vertical integrated supply chain. So all the country in the region is more or more integrated in the manufacturing. And Asia is manufactured based off the whole world. When the whole region form an integrated supply chain, the issues, number one, how do we improve the efficiency? And number two, how do we enhance the interregion trading? Number three, how do we provide the financial service for these supply chains? And number two, how do we reduce the risk? Because obviously there's a risk for a very integrated supply chain. For example, the Japanese earthquake, but even a flood in Thailand, such a small issue, had a huge impact on the supply chains. So how this Asia can make this supply chain more efficient and also reduce the volatility, reduce the risk is obviously a big challenge. Because this supply chain is really expanding dramatically. For example, you probably will not believe Brazil. Brazil today belongs to this supply chain. For example, probably you don't believe in Chile. Chile today belongs to this supply chain. Mozambique, Zambia. So more and more countries from the war today because this globalization. Come to Asia, join this very big, I call it the Pan-Asia Vertical Integrated Supply Chain. How this Asian country is working together to move this supply chain and make this supply chain really be sustainable growth and more durable. I think that's the real issue. Dr. Takanaka, it sounds like Dr. Jun is talking about coordinating each country doing what it does best and becoming part of a larger solution rather than so much overlap or something like that. Can you comment please? Yes, I appreciate Dr. Jun Min raised the importance of supply chain. Yes, last year we felt very seriously the importance of this supply chain. Since then, the new term was quite often used among business leaders. This is the BCP or BCM business continuity plan, business continuity management. And also, many Japanese business already understand that, but still this is not enough, we found that. So as we mentioned, the coordination is very much needed. In this process, the coordination of business institution, business system should be also considered. In this regard, this is not only the problem for the business sector, but also for the government policy. The structural reform will be needed. Very important framework should be supplied, provided by the coordination among the governments. That's the important point. Also, let me raise small comments on the social welfare that we have been discussing. Well, very recently, we have a lot of discussions on that in my country. As you know, Japan already has some certain level of social welfare system. For your information, the pension payment GDP ratio in Japan is already higher than that of England. Yes, and almost equal to Germany. So we already have this kind of income redistribution system to some extent. Still, people complain a lot. So, well, do you remember that last year's Davos meeting, we had a very interesting session focusing Nordic model, Nordic model, or North European models. In my understanding, we have to distinguish two kinds of social welfare. One is very simple income redistribution, to save poverty. This is very important to stabilize the society, to stimulate the demand side. But what we need more is some social welfare system to strengthen the supply side of the economy, while women labour forces need it. But so that women can work very safely, some kind of new type of social welfare to support the family, to provide the kind of care service is needed. This new type of social welfare should be also considered also in Asian countries. So very simple old fashioned income redistribution is needed, but at the same time, as you mentioned, we have to be very careful for the moral hazard problem in this case. At the same time, we should challenge, Asian countries should challenge the new type of social welfare, Nordic type, to strengthen the supply side of the economy, not passive welfare, but to the active welfare to strengthen the economy. That's our experience. As long as you bring that up, I want to mention something just very briefly. You've heard of, you know who Jim Rogers is, right? You've heard of Jim Rogers? Anybody out there know who Jim Rogers is? He's a good friend of mine. He's a regular guest on my programs. I was having a quick bite with him the other day and I asked him how long he'd been living in Singapore and he said something like four years, five years. And I said, oh, are you going to get your permanent residency? You want to naturalize and lose your US citizenship so you don't have to pay those taxes anymore? He goes, no, no, no, no. He said the demographics don't work in a place like that because it won't exist in 30 or 40 years the way the birth rate is going. He said, same thing's going to happen where you are. Same thing is happening to Japan. He said the same thing could possibly happen to China as well. I don't want to dwell too much, you know, on what's going to happen in 2030, but could we address this quickly before moving on? Most predictions, if you want to predict what the bond market is going to be doing in 2030, forget about it. You've got no idea. But if you want to predict, you know, what the population of people over the age of 30 is going to be in 30 years' time, actually you've got a very accurate idea of that because they're all born. Demography is something you can make reasonably accurate predictions about. And here, in many Asian countries, and our Japan and Korea are leading the way with the incredibly low birth rates, but China is up there, okay, and China's bigger, so it sort of matters more. The economy of the future, you know, can only be built by people who are alive and working in the future. If you have intergenerational transfers, if you have the idea that today's pensions are paid by today's workers, which is what we have in most western countries, then if you're not actually producing tomorrow's generation, you're completely stuffed. I mean, you look somewhere like Greece, okay, where they have the idea that, you know, you can retire at 50 and you get sort of massive pension payments from the government, and the birth rate there is comparable to Japan and Korea. I forget what it is, it's slightly more than one child per woman, which means that, you know, each generation is half as large as the one it was. And you can imagine a pyramid, right, like this, and each generation is half as large, and the one at the bottom is trying to support this enormous thing on the top. It doesn't work. So you've got two choices. Either you have more babies, which, you know, is a choice that only people can make for themselves. It's not something that should be coerced, and generally, as countries get richer, people have fewer babies, they manage their own fertility. So you've got to take that as, you know, people make their own choices, and if you have an old age pension system, that fits with that demography. And the best way of doing that is to make the main assumption that wherever possible, people are saving for their own retirement, that they are putting aside money that they have earned, and hopefully it is being invested in a productive way to sort of give capital to companies that might grow and create wealth in the future. They're making more of their own responsibility for their own retirement. And that's something I think Singapore has done pretty well. Now, whether they've done it well enough to cope with their demographic crunch, because they really aren't having babies there, I don't know. Mr Singh, do you want to call another? Do you want to bring it back to, you know, the coordinating? Yeah, I just want to make, just wanted to brief comments. I entirely agree that, you know, people have to make their own individual decisions. You know, in the initial comments, will that mean, therefore, the ageing composition of certain large countries in Asia? Will that, therefore, either result in much higher burst of innovation and much higher burst of productivity in which the kind of manufacturing hubs Ben was referring to will really require less men, or will it mean a much freer policy in terms of movement of people across the globe, that the administrative boundaries get more and more shattered as the logic of demography propels the world into fostering a regime which really permits much freer movement of people across the globe. This is one issue I want to raise. The second issue I very quickly I'll raise is that, you know, means you mentioned about China, this being the first year of China's 12th five-year plan of the 12th India's 12th five-year plan. One of the factors is that we are aiming clearly at much lower energy intensity in terms of securing energy security and much lower density in the use of fossil fuel. So how does one really balance out high levels of productivity, high patterns of productivity which really requires less and less use of fossil fuel. And what does that mean in the short run if you cannot transit to alternative fuels in terms of compromising growth and in terms of aiming at much lower levels of growth than you have historically mentioned. So food and energy security I thought from Asia's point of view is another two very critical issues because agricultural productivity will have to increase very, very substantially if we are really going to feed Asia's people, not only in terms of basic food but in terms of the higher quality of food which normal Asians are now seeking for themselves. What Mr. Sting is saying they sound like long-term goals but it's actually part of the current plan like agrarian reform legal reform movement basically deployment of land use in a place like China. So it actually becomes a very short-term sort of a program doesn't it or a short-term initiative? Even it's a long-term program you have to start now because you really have to work on the aging issues is coming as my friends mentioned it's really coming and you have to be the assistant but you talk about mention about the cooperation so I would like to bring one issue also to the table on financial sector this is also really the short-term issue there's a lot of reforms that the Asians should do it's very interesting if you're looking for the past 10 years the region attract the FDR except Japan roughly $1 trillion $980 billion but the region accumulated 4x reserve $4.5 trillion what does that mean? That means the region import $1 trillion but export $4.5 trillion so the region is a net capital exporter which is fine but meanwhile region need a lot of captures so the financial sector still need further development need a long-term financing mechanism need a financial market for example in 1998 we talked about a lot Asian need a long-term financing bonds market after 10 years we still don't have that bonds market we need a lot of major financial systems we need to have more balanced systems we don't have that one yet and the Basel III implementation also the important challenge for the region so this is a lot of room for the region to cooperate to build a financial center and the financial market I think is particularly for the region because Asians obviously need a capture but you cannot export $4.5 trillion in only 10 years horizons and the region have to import capital again so this is also the major challenge for the region and a lot of cooperation is required is anybody taking the lead in deepening the capital Marcus because I know exactly what you mean there's a serious maturity mismatch issue where capital is not committed for a fixed period of time so it becomes undependable capital and that's why so many monthly adjustable rate mortgages and so many parts of Asia instead of 30 year or 40 year conventional fixed so you can actually do your budgeting I understand totally what you're talking about I ask a lot of people about it but nobody gives me an answer nobody seems to want to take the lead on this I think there's a few things in the multinational institutes ADB is very much working on those issues try to build a bonds market we very much support from the funds to build a bonds market in the region the Singapore government the Japanese government and the Chinese government are also working to see how they expand the financial sector in the region and what we see, I think the one thing if you're looking for roughly six to nine months ago when European Banker deleveraging really you see the trade financing you see short-term investments in infrastructure it's really tight but the region manages well I have to say you see some volatility but not terribly bad also this is still small part of what you mentioned the mismatching issues but more fundamental is on long term issues so this issue should on the table for the region to have a really a detailed or workable working plan I'd like to get Dr. Takanaka to respond to that and after that I'm going to open it up start thinking of some questions you'd like to pose to our panelists and help us get into a really an interactive session if you would, would appreciate that Takanaka-san? Yes, thank you how to realize that type of cooperation, especially among Asian countries in this regard I'd like to raise two suggestions to Dr. Du Min I really hope you accept that one is well ten years ago I was nominated as the minister for financial services in Japan that was very much embarrassed to find out where is my counterpart I mean in some countries this kind of regulations is controlled down by the minister of finance in some countries down by central bank but in some countries controlled by financial services agency or something like that this very diversified and in the case of G7, G20 only the financial minister, the central bank are supposed to get together but financial minister is excluded I'd like to say there is no place where the top leaders get together on this issue of course also multilateral effort is needed so in some cases though in this case of the diverse meeting we have a very informal chance to get together but anyway please remember please consider the case of Europe this is problem actually happening in European countries there is no body to discuss that but they have just started discussing so banking union problem banking union problem so we need some uniformed coordinated body to place for the leader to get together on this issue this is one tradition the second one is whenever we have discussions we want to get more information about investment saving balance what is happening to investment saving balance in the total region we have some partial information we can analyze to some extent but I appreciate if IMF can provide very continuously what's happening to investment saving balance for each region each country this will help a lot to have very constructive discussions this is my short suggestion I appreciate so we do have the first things we will vote you being the chairman for the coordination for the global banking union and we will provide your data I think he likes what he's doing you are a financial regulator you are busy trying to get rid of it that's a good idea can I open it up does anybody have any questions or issues do we have microphones gentlemen in the third row can you state your name and where you are from I'm from the Japanese corporation agency my question is the quality of the growth which you were talking for the time being the positive growth is expected but when we look at the genetic coefficient for instance it's getting worse what do you think of the policy implication on this issue go ahead anybody start off I would actually dispute your premise the genetic coefficient globally is not getting worse it's getting better because the emerging markets are catching up with the rich ones but that's compatible with the fact that in every country that's growing within those borders the genetic coefficient is getting worse I don't think we should worry about this too much I think worrying about inequality is something that people you know the point is for everyone to get richer globally it's doing just fine once you start trying to manipulate the sequencing of who gets richer when you end up retarding growth I think it's a very dangerous idea but in India this is a very major controversy that has the genetic coefficient actually deteriorated well there is evidence that they have been a marginal dip in the genetic coefficient but that has been backed up by really very high rates of growth what is more important is that the genetic coefficient regrettably measures only a fragment of what really income divides are for instance it doesn't capture cost in education it doesn't really capture access to housing it doesn't capture access to the high quality health system so the genetic coefficient is not necessarily the one and only methodology which must be used while assessing the quality of growth go ahead I slide different agreeways from Robert although I understand the very high risk against the economists from the economists globally that's true it's a converging because advance and low income increase strong growth strong so the per capita GDP between advanced economy and emerging low income country convergence that's true but within the countries from both advanced economy and the emerging market low income country the income inequality actually increases I think that's the fact so that's the issues we have to take away so in that sense agreeways the gentleman's I think the quality of the growth obviously is more important as there are many issues and you produce the real things to meet the people need I think is the number one you not only produce machines only produce only things it's also a very important issue because inclusiveness become ever important for the growth if the fruit of the growth cannot be shared by everybody you don't think it's a successful growth and this has become ever important issue in many emerging and low income countries but there are very difficult issues and challenges because the first issue is globalization globalization tend to favor on trade sector but not on the non-tradable sector so the first thing we observe in the past years the income between the tradeable sector non-tradable sector are getting wider now this also means the government the country have to start have the policy help the non-tradable sector and the poor people in the early stages rather than too late but classical theories you have the tradeable sector after a few years you accumulate the money and the captures then you come to work on the non-tradable sector you build a social security system but today it can be different because the globalization is too fast too strong and a country a government is too small so you have to prepare yourself to dealing with this issue in the very early stage I think this is a very important issue everybody wants to talk about Gini coefficient but Dr. Takadaka 0 for on Gini it was terrible it was terrible it was terrible it was terrible as well so what's perfect what's the magic in between maybe well Mr. Arakawa raised a very interesting question and I basically agree with you observation well quality of growth had various kind of meaning maybe inclusive growth or not but this is important because this is directly linked to the employment so far but decision changing actually so we have to evaluate the situation very carefully at the same time another aspect will be the supply side of the economy is improved or not that's my understanding for example this year maybe you will be amazed to hear that Japanese growth rate GDP growth rate this year will be very high because of stream radial by the construction demand and construction fiscal expenditure package so this is very temporary growth but at the same time in order to keep the long term growth the supply side should be strengthened and innovation is needed also this kind of aspect should be also discussed very carefully then there should take up a question from the front row here thank you you have mentioned that Asia should raise a modern welfare system and at the same time maintain the long term growth is a big problem for Asia countries and my question is what's the top priorities in terms of building Asia's own welfare system and at the same time maintain its long term growth thank you that's a good question I think what we learned from past 10 years because the pressure from the globalizations the governments really have to start earlier to build a welfare system to provide the long term security system for every citizen to build a welfare system for the poor it becomes very important because as I mentioned a few minutes ago the globalization is such a big force and when you want to go back to build a system it's probably too late so we have to start early I think that's number one number two the few things are very important the first issue is the healthcare system and also give the incentive for the people to work and to consume provide safety flow for the poor also important because you always have the poor people at the corner of the world and they need help so when you grow you always need to provide the safety flow for the poor it's become ever important issues today because the growth tends to be strong and the people have the education technology and they tend to get the most benefit from the growth so you need to protect the food and also the pension system you have to start early as early as you can because it's really the long term process you cannot wait you finally don't have enough resource the last important issue is education the world is changing so fast and so dramatic the technology is changing almost every day and the skill changes so fast to build education systems investing in education to make people and also low cost so people will be able to consume more and it becomes an ever important issue for the home world and also particularly for Asia for the region the region has a good tradition to invest in education but facing the challenge of the fast changing technology and the globalization is still the top priority for the region Dr. Takanaka isn't there a question isn't the jury still out how much of a welfare mechanism needs to be led by national government and how much should as much as possible be put into the private market this is another very difficult question but as I mentioned the coverage of welfare is very wide so we should distinguish one of each pension system and medical system is very much different in addition to due observation let me add one thing please run from the negative experience of Japan as I mentioned we already have some pension system and medical care system et cetera and our grant to the poverty it is not difficult politically to provide this kind of system during the period the income is going up however we need to provide the social welfare system targeting the working generation working generation as I mentioned the pension GDP ratio in Japan however this ratio the expenditures for younger generation welfare GDP ratio it's all about one third or one fourth of the European country in the case of Japan so at the very first stage of discussions I'd like you to discuss very carefully not only the aged for the aged people but also the young working population of here I really hope you have good discussions on that can take another one anybody on this side of the room sir in the front row here my name is Albert Heuser from BASF I have a question regarding the aging population it was mentioned several times somehow I'm puzzled with this topic because when we go back we also as a big threat the young and growing societies and now we talk about in Asia about the aging society so therefore I would like to hear is it a real threat for Asian societies and further development or is it a trigger for change to really a better development and perhaps a good answer to this from the one or the other from the report in fact Mr. Singh let me add to that the birth rates you know they very very dramatically across Asia you'll go to Indochina I think Vietnam I think about half the population is like 28 or under somewhere in that neighborhood so there are Asia is still young right in the aggregate what I think that yes Asia really provides great diversity India's population of 1.1 billion now will not stabilize till 2040 on the other hand the composition of the Japanese population has begun to show very distinct signs of aging so I agree with the general spirit of what that question suggests that it is both an opportunity and a challenge and how does it really address it say in the case of India how does one really not only move towards rapid population stabilization but how does an inculcate skills and education which is a much better value added to for creation of wealth both in India and globally speaking in other societies the challenge would be moving towards greater innovation and productivity so that the gains are nearly not compromised so I think that one will have to have a variation of policies depending on the specific situation that the country faces I would give a much simpler answer an aging society is a good thing it means we're not dying okay given the choice between dying next year and not dying next year I don't hesitate I don't have to think about it right I would rather not die next year however because it's a very profound change in the human condition it throws up enormous challenges and it means that you have to change the policies that you had yesterday and again you know you learn from Europe and America where we set up these pension systems that were predicated on the idea that people were going to retire at 65 and die at 66 okay and it's pretty sustainable it doesn't cost very much to pay for that kind of system but if you're going to retire at 65 and live to 90, 95 100 then you're going to spend a large portion of your life not working that's bad it's fiscally unsustainable and it's bad for the people who are doing it working is good for you it gives you self-esteem it gives you something to do during the day it gives you a reason to get out of bed it gets you out of your wife's hair all this kind of thing but the solutions are not rocket science people have to work longer because it's not like we're as unhealthy at 75 as we used to be at 66 we're actually living long healthy lives and if you can do that if you carry on working for longer then the problem solves itself but if you get into a situation where people think that they have an entitlement to stop working and for someone else to pay them not to work for the next 30 years then that doesn't work but I think that you know one will have to look to country specific for instance India the issue would be he doesn't retire at 65 let's say he retires at 70 well there are lots of young people queuing up you know wanting to take the job so I think that depending on which country in which circumstance you are one would have to re-craft the strategy depending on that that is the lump of labour fallacy there is not a fixed supply of jobs the fact that someone older than me continues to work does not prevent me from getting out of bed you're done already? if you have a flexible labour market if you have a flexible labour market then the fact that other people are working is not a problem let me leverage something you mentioned freedom of human movement remember you raised that issue a little bit earlier in Japan I don't know anybody from outside Japan who has lived in Japan for whether it's 5, 10 or 20 years has been able to naturalize and become a citizen they talk a lot about importing maybe this is one of the reasons on the flip side Singapore is facing a problem right now because 40% of the population is foreigners and that's really upsetting people you can't please people you don't let people in you let people migrate and you turn everybody off you can't please people people are terrible but this is a global issue because if you're looking for 20 years the horizons what happens in Europe we'll get into the aging problems the population will be on downsides Japan problem will be the same and India will produce roughly 250 million people and Africa will produce roughly 400 million people today the baby in Nigeria bonds it's more than all the baby will bond in Europe think about that so we talk about captive flow in 20 years we talk so this is a big issue obviously this is a lot of cultural issues a lot of emotional people's feelings a lot of political issues as well but this is a reality people are not eager to make people happy but this is a challenge for the whole world we've had a wonderful discussion we are at our time limit 30 second wrap up and I mean 30 seconds Robert final thought leave us with an impression to dwell on as we depart today okay economic growth is about people it's also about the ability of people to communicate with each other one of the things I mean so far the most successful society in the history of the world has been America and this has been because they have welcomed people from everywhere which means that people come there not only do they bring youth energy and ideas they bring connections to other parts of the world they bring ideas they bring the channels of communication and that's something I think Asia and particularly Japan in the short term should be thinking about if you want to have people and talents and connections to the rest of the world in the future you have to welcome foreigners well I think that just a variation on that one is that yes I agree that economic growth is not only about numbers being measured and now I think that one is increasingly moving towards economic growth being viewed as the index of happiness and I think that that index of happiness in terms of life quality what it means to inculcate values to promote systems in which people feel happier is a much better way of measuring economic growth than perhaps some of the more traditional ways in which economic growth is measured and I think Asia is a unique opportunity where given its traditional values one should seek an index of happiness along with the index of economic growth then leave us with a profound thought I think that as I mentioned if I come to Asia I would say the game for Asia is not to survive but rather to remain in leading the global growth I think that's the role Asia should play for the whole world and for the region itself there are a few things that are important the first issue is sustainable growth the key challenges that make Asia are called vertical integrated supply chain more sustainable, more efficient and also move up the value chain to serve the world the second issue is the gentleman's point make the growth more inclusiveness it's also important to make the fruit be shared by everyone this is the most important the third issue is given the region's population and also the energy dependency the green growth is a must by the way thank you for giving me a new term to use on TV the verticalization of Asia you just helped me out there we relatively focused on the population demographic issue today up to 1990s we should remember we had a lot of discussions over whether the population is an asset or a liability for the economic development and successful breaks, successful with China, India especially showed that the population is an asset so this is where we stand now but from now on what will happen is a liability so this is our real challenge in order to conquer the situation it is very important to enhance the intellectual exchange like this between China and United States between Japan and United States we had a lot of intellectual exchange but among Asian countries intellectual exchange is still limited guys you are great thank you very much I want to request that your anytime you use my words of verticalization you should pay me one dollar I have to prep you? on TV? deal I know you work for the IMF sure not making money like Chinese codders thank you everybody have a great rest of your form