Asia-Pacific Forum 2023
Day 1
[Opening Remarks]
Masakazu Toyoda
The speaker notes that this year’s forum is hosted solely by the Japan Economic
Foundation that has been watching and analyzing economic development in conjunction
with trade and highlighting global challenges for more than 40 years. He notes that theworld is now experiencing an unprecedented and complicated world situation, both
politically and economically.
The speaker states geographical differences irrelevant because most issues are sharedsince countries struggle to overcome common global challenges caused by COVID-19. Hestates that issues such as climate change and energy security have appeared after its
ease, as well as population aging that causes labor supply and social care problems. But
most of all, he notes the uncertainty in the trade environment.
The speaker states that the OECD has forecast more than half of world economic growthfrom 2024 to 2025 will come from rising Asian economies, but in the short-term, there
will be heightened downside risk arising from the increased uncertainties created by the
conflict in the Middle East and the war in Ukraine.
He states that armed conflict has increased and intensified around the world, and thatnational conflicts are becoming international resulting in unstable multi-polarized world
affecting commodity and energy supplies. The speaker points out the needs to find clean
energy sources, establish trade systems that are based on rules, and build a firm value
chain as a secure and stable development of Asia. This is essential for prosperity andpeace as the Asia-Pacific is still the motive force for global economic growth that accounts
for 2/3 of the world economic development.
Finally, he notes that countries’ economies, populations, political systems, and majorindustries all differ, but that they should work together to strengthen their economies
and eliminate geopolitical divides.

[Keynote Speech]
Prof. Naoyuki Yoshino
The keynote speech covers three points. The first is infrastructure investment, thesecond is climate change and the environment, and the third is fiscal sustainability andbudget deficits.
1. Infrastructure investment
Infrastructure investment is very important in many Asian countries, and there is aneed to bring private sector financing into this area.
There are two categories of capital; private capital and government capital. Government
capital alone has its own impact on GDP, but infrastructure investment can stimulate
private capital activity.

The resulting new employment and new industries will create huge increases in tax
income, or “spillover tax revenues”. Infrastructure investment has two impacts; thedirect effect of the infrastructure itself, and the indirect effect of bring new businesses
and residential areas.
68% of the total impact comes from spillover. Spillover effects should be partly returned
to infrastructure operators and investors. Public-private partnerships failed in many
parts of the world including Asia and Latin America because of the conflicting interestsof users and private investors.
54.5% of failed PPP were in Asia and 14.8% in Latin America. Some of the tax revenues
from spillover must be provided to these private investors so that they can have better
returns.
New highways in Manila tripled tax revenue, which is a huge spillover effect.
In Uzbekistan, GDP in regions with new railways increased 2% over other regions. In
Kyushu, total tax revenue doubled. The same can be said for the effects of digital
infrastructure.
In terms of land acquisition, Japan has used land trusts for many years. Landowners
keep land and lease it to building companies when buildings needed to be constructed tomake it easier to transfer land.
In India, Pakistan, and Indonesia, land acquisition is very difficult. The use of land trusts
so that landowners can keep the land would be desirable. Hong Kong uses 99-year leases
and 999-year leases.
2. Climate change and the environment
Infrastructure is very important but can result in massive CO2 emissions, so how canthis be handled?
In green finance and ESG, rating agencies have different definitions for how to measure
ESG or environmental issues. Investors used to look at returns and risks, but now theyalso have to look at ESG or greenness. So the definition of ESG being different from one
rating agency to another creates the problem of distortion in portfolio optimization.
3. Fiscal sustainability
Lastly, how can portfolio distortion be remedied? The best way is net carbon taxation.
Small businesses cause more than 50% of CO2. Large businesses have pressure fromstock markets and the corporate bond market, but small businesses borrow money frombanks and the informal market. A net carbon tax would be the best way to remedy andmitigate CO2 emissions.

[Session 1: Newly Emerging Trade Architecture in the Indo-Pacific Region]
Moderator
The moderator notes that panelists will agree that free trade and trade liberalization
can be an engine to promote economic growth, but that the question is: how? He statesthat this region has architecture including CPTPP, RCEP, and IPEF, and poses thequestion of how this new trade architecture could contribute to trade liberalization. He
states that an international economy based on trade liberalization would initiate
domestic economic reform and thus encourage economic growth through rationalization.
(The moderator introduces the panelists and outlines the forum structure)
Panelist A
The panelist asserts that the multilateral system has been constrained, so regionalarrangements have played an important role, and points out that in Asia-Pacific, there
are four major frameworks: APEC, CPTPP, IPEF and RCEP.
The panelist asserts that RCEP is the most important one, and is the world’s largest
regional framework arrangement and brings all the major economies together. The
panelist states that is important because East Asia is still the key in the Asia-Pacificarea. The panelist expresses the opinion that the main problem does not lie in trade blocs
and trade constraints, but a general lack of dynamism, before noting that the Chinese
economy is still recovering from COVID 19, there have been political and security
interruptions to markets and supply chains, and political relations have a negative on
regional economic growth.
The panelist asserts that regional cooperation frameworks have failed to play a majorrole like APEC to promote the integration, cooperation, and regional economic alliances,and that the challenge is to find a new approach to make the Asia-Pacific more dynamic
and overcome the current trade obstacles.
Panelist B
The panelist expresses the view that the Indo-Pacific has brought an urgency forregionalism, which is expected to be very different from the post-war regional economicarchitecture.
The panelist states that the real question is how much different this will be and what
the role of ASEAN, India, and the Global South will be in this new architecture. It is
known that supply chain and production networks in Southeast Asia and East Asia havebeen the reason for rising prosperity in several countries, but the pandemic revealed
fault lines in these trade linkages, while supply chain resilience has also been tested.
The panelist emphasizes that the implicit trust in efficiencies and returns has beenquestioned.
The panelist expresses the opinion that, the politics and welfare narrative have theupper hand in this dialogue, and China's centrality in the supply chains of Asia and evenof Europe is also at the center of this dialogue.
The G20 and G7 were both held in Asia in 2023. Both groups emphasized resilient andtrustworthy supply chains and have agreed to work with emerging and developing
countries and to make them important players in the global supply chain. ASEAN and
India will be very important players.

The panelist notes that ASEAN and India were the quickest to recover from the supply
shocks of the pandemic, and met the high demand for goods, services and vaccines. The
panelist states that this is how see things going forward; that this region will play themost important role and the emergent architecture will rely on India and ASEAN.
The panelist states that there is a narrative that the Indo-Pacific has an exclusionary
policy and this architecture comes at the cost of excluding China, and that this issomething which needs to be dispelled in this forum. The panelist proposes that the
emerging Indo-Pacific economic architecture is actually a preparation for the economy of
the future more than a reaction to China's centrality, and that the aim is to foresee future
trading rules, the future of work in the region, and the future digital economy.
Geographical inclusiveness is a very important in this architecture. Smaller countries
are new entrants in the regional supply chains and their inclusion is important.
On a positive note, the panelist asserts that the Indo-Pacific architecture will not justpromote multilateralism and global governance for their own sake, and that it is avehicle to bring back a rule-based system, perhaps offering a way forward to bringmutual trust and mutual growth back into the region.
Panelist C
The panelist notes the importance of the current new growth. He notes that recent
growth data is encouraging for India, exceeding expectations with 7.6% in Q2 and 7.4%
in Q1. He points out that India has invested $120 billion of its own domestic resourcesin addition to other efforts from multilateral development institutions, and has a credible
growth story with manufacturing becoming established and becoming part of global
value chain.
The panelist points out that TPP, CPTPP, and TTIP have garnered attention in terms of
how they are unfolding and the role they could have played.
He states that within the Indo-Pacific Region, 12 countries have come up with an IndoPacific Vision. He notes that with USA, Japan, and Australia on one side, the Indo Pacificinterest has also multiplied with the European Union, and now the latest from theWestern bloc is Canada to have issued a vision document. These countries have issued
their Indo-Pacific Vision and action strategies and ASEAN and South Korea alreadyhave clearly set out their vision documents.
The panelist notes that the commonality is a rules-based inclusive order with a free,open, and inclusive approach.
He notes that the idea of Quad is part of the supply chain resilience initiative, whichaims to provide predictability, and that with the surge in manufacturing in India andtrade expansion in parts and components, this is very significant. The panelist notes thatIndia is part of the IPEF and all four pillars, and this gels well with India's own Act East
Policy and IPOI.
The panelist assets that this provides bandwidth in terms of how the new tradearchitecture will depend not only on trade-facilitating measures but also on
predictability of supply chainsPanelist D
The panelist expresses the opinion that it would be quite beneficial for us to look at firstwhat kind of challenges this region is facing at the moment and how to respond.
In the panelist’s opinion, there are four major issues faced by the countries andeconomies in the region. The first is rapid technological progress, including digitaltechnology that will allow and facilitate swift and perhaps significant rearrangement of
global and regional supply chains in the future.
The second is the increasing demand for more sustainable development that requires a
lot of financing and also massive behavioral changes in society and a significant shift inbusiness and economic strategy.
The third challenge is demographic change, which the panelist states will affecteconomies a lot as many economies will grow old before they are rich, and this will put
pressure on the economy and society.
Those three challenges have all been made worse by increasing geopolitical tensions inthis region. We have enjoyed 40 years of peace and stability and it has contributed a lot
to development, supply chains, and value chains in the region. But the current major
power rivalries threaten this stability.
The panelist states that the responses to these developments from most economists in
the region are not helpful, saying there have been three types of response: creating
unilateral policy and distancing from multilateral trading systems, weaponization of
trade and economic policy, and protectionism. The panelist asserts countries in theregion should cooperate and promote regional integration instead of drifting apart.
The panelist says that while the narrative of the Indo-Pacific actually originally comesfrom a security perspective rather than an economics initiative, it actually has evolved
to include cooperation, and expresses a belief that the spirit of cooperation and economic
integration should be amplified in discussions of the Indo-Pacific.
In the panelist’s opinion, the basis of dialogue should also be to create inclusive and open
regionalism, and new trade architectures should also discourage the increasing use of
unilateral policy and prevent weaponization of trade policy, while also encouraging
greater reforms to achieve more prosperity.
Panelist E
The panelist highlights that topic of the current IEA’s World Congress is conflict,fragmentation, and divergence in the world economy, and that discussed on the first day
was how to rebuild the trading system. The panelist notes the Asia-Pacific in particular
has benefited from trade and investment, so it is very important to rebuild the system,and that two important initiatives, CPTPP and RCEP, are making progress, but there
are still challenges: the implementation of commitments in these frameworks and themonitoring and enforcement of these commitments.
The panelist notes that another challenge is that IPEF negotiations have not been
completed yet.
In terms of global agreements, the panelist asserts that the WTO is not functioning
effectively and that plurilateral agreements can make up for this, but a serious problem

the WTO has is its poorly-functioning dispute settlement mechanism, which is why many
countries in the world have set up a multi-party interim appeal arbitration agreement
called MPIA. The panelist believes countries who are not members of MPIA should
consider joining it to complement the WTO.
Returning to RCEP and CPTPP, the panelist states that one of the problems may benational security exceptions, and while national security exceptions can be justified, thepanelist believes that have also been abused. Thus, the panelist believes the meaning of
national security exception should be clarified, but acknowledges that this is very
difficult. He states that the so-called ‘small yard, high fence’ can be a good framework,
but to deal with this ambiguity of national security exceptions, the countries,
particularly the US and China, should keep talking and discuss what national security
exceptions should be.
The panelist highlights that protectionism is increasing because of increasing
geopolitical risks, increasing natural disaster risks, and climate change and so on, butthat another important factor behind increasing protectionism is increasing domestic
inequality resulting in disadvantaged group of people demanding protection, and many
countries have experienced this.
Finally, the panelist states that in order to promote trade liberalization, which isconnected to implementation of commitments under regional trade agreements,
countries need to solve or reduce increasing inequality, and states that this is a domestic
policy matter, although is very closely related to international trade policy.
Panelist F
The panelist states that Asia-Pacific economic architecture drove a lot of growth in theregion for a several decades, and it was a case of location being driven by best economic
competitiveness. The panelist notes that optimal trade areas were very well defined andwere broadly following the David Ricardo win-win framework, and that the benefits fromregional trade agreements were well defined and brought a huge number of people outof poverty and into the middle class.
The panelist asserts that now a lot of things have changed, and we are seeing the locationof industry in the region being driven by security issues, risk avoidance, nationalism,
and other populist issues, while the issues of where and how to produce and the form of
supply chains are now very clouded by activist trade protection, distorting industry policy,
and some distorting tax fiscal policies. The panelist highlights that the new tradearchitecture has uncertain public and private benefits and costs and reduces trust andresults in a lot of uncertainty.
That panelist says that in reflection upon the emerging trade architecture in the IndoPacific Region, it is yet to be established that the Indo-Pacific is a region. Not very muchtrade flows from the Indian Ocean into the Pacific Ocean, and most of the trade is stillwith the Pacific Rim. The panelist also observes that there is a fracturing of existing
trading groups, which could be viewed from various perspectives: the US led Washington
Consensus built on the Bretton Woods after World War II, the Quad, AUKUS, the Frencharrangement, and IPEF. The panelist states that the US led the Indo-Pacific economic
framework and had every opportunity to get an agreement at the APEC Seattle meeting
last month, but failed to do that for domestic reasons, and that US policy is now causing
tension even for so-called allies. The panelist believes the direction of this grouping will
depend on the roles of India and Japan.

The panelist observes that China's Belt and Road is increasingly prominent andemphasizing inland development, Central Asia, even Russia connections. The panelist
points out that last year saw negative foreign direct investment in China, which is verysignificant, and that Chinese trade with the Global South is now bigger than with theWest, which is also a big structural change.
In ASEAN, the panelist notes that supply chains have been rethought and reconfigured
post-COVID to be more ASEAN-contained. The panelist states that while China has adifferent role, its large and growing trade surpluses into the ASEAN region remain atension.
The panelist notes that in a recent meeting of BRICS, the group was enlarged to a sortof BRICS Plus. The panelist recalls that there was a non-aligned movement in the 50s
and 60s, but we are now seeing some of the middle powers growing their economies andpresent strength in regional agreements and trade architecture. The panelist states thatsome of these might be quite non-traditional because in light of new strategic resources,
like lithium required for electrification in the region, we see the powers in the AsiaPacific may be as dispersed as Australia, Chile, and Myanmar. The panelist points out
the possibility of the countries getting together in a sort of a post-OPEC resource
controlling group.
As the panelist sees it, small countries are facing hard choices as they are under growingpressure to join one of the two bigger blocks. They are having to practice quite careful
diplomacy and trade negotiation to maintain a balance as Chinese economic ties areimportant, but security and diplomatic ones remain important.
Finally, the panelist asserts that keep perspective needs to be maintained as there has
been no major decoupling yet. US-China bilateral trade comes to nearly $1 trillion - thebiggest economic coupling in the world ever - and this is a long way from the old Cold
War when there was little economic connection and trade between the two blocks.

[Discussion]Moderator
The moderator starts the roundtable discussion with a focus on whether exchange ratemechanisms should be discussed in trade negotiations, while stating that exchange rates
must be market-determined to avoid unfair product pricing and impacting productcompetitiveness.
Discussant A
I used to be New Zealand Reserve Bank Governor at one stage, so I understand how
important exchange rates are and how smaller countries can find themselves being
pushed around by exchange rates or monetary policy in other countries. But we need toremember that exchange rate mechanisms have been a very important part of the trade
regime. It would be good to see trade agreements with some confidence that exchange
rates will be set by undistorted market mechanisms. But then again, the Flying Geese
Model sparked off a lot of the East Asian growth and seemed to rely temporarily on misvalued exchange rates.

Discussant B
The US is very concerned about currency manipulation. I think this is included in the
USMCA. The US is keen to include currency chapters or items with an eye on currency
manipulation. But very few agreements have a currency chapter or currency item.
Discussant C, is this correct?
Discussant C
I think Discussant B is right. During the TPP negotiations, exchange rate mechanisms
was an issue that was raised by the US, but most of the central bank representatives
discussing the financial chapter of the TPP were opposed. You cannot have an exchange
rate mechanism established by a select group of countries, especially when negotiations
involve 16 economies or fewer. This is a global issue and it is best left to financial
institutions, so I don't think exchange rate mechanisms should be included in trade
agreements.
Moderator
I would now like to talk about two points made by Discussant B; the implementation ofcommitments under regional FTAs, and the WTO. Regarding the first point, RCEP
should have a secretariat for monitoring core commitments. Regarding the WTO, it isvery important because middle and small powers’ interests can be better handled by
WTO, I believe. In particular, the dispute settlement mechanism is not functioning at all.
Do you have any comments on those two points?
Discussant D
I think the implementation of agreements depends on various issues. Of course, the firstone is the institutional setup under the agreements or facilitated by them. Many
agreements, trade agreements, and trade arrangements are not really equipped with
sufficient implementation mechanisms, so it might take some years for the agreements
to be implemented fully or substantially.
The second factor is capacity to implement the agreements. Many countries or many
economies in trade agreements still have difficulties in this respect, so I think technicalcooperation and assistance is also important in order to provide help to these countries.
The third is the capacity of the private sector in the countries or economies themselves.
Maybe some agreements might be quite future-oriented, meaning some private sectors
might find it too early for them to be involved and benefit from the agreements. So,
technical cooperation and some assistance may accelerate the implementation ofagreements.
Discussant E
I would like to pose a question to Discussant B regarding his remarks on MPIA. I would
like to know why the membership is confined to very few countries. Is it because ofresistance in terms of how the new agreements are being implemented and the fact there
are already dispute settlement provisions in some of the forthcoming free trade
agreements or trading arrangements? Is it because of the faith people have in rehashingin WTO reforms that has seen dispute settlement panel appointments become
operational?
Discussant F
RCEP is crucial for the region and China is seemingly not welcome to apply to join the
CPTPP, so I think China will investigate strengthening the role of RCEP.

RCEP will help to restructure East Asia supply chains as we are experiencing a processof restriction and labor-intensive goods moving out of China. But East Asia will continue
to play a major role in supporting Asia-Pacific. To make RCEP stronger, it needs better
implementation, and I think we should have a review of implementation. The third year
should have renegotiations to upgrade the RCEP, especially to expand its coverage.
Discussant B
Regarding MPIA China is a member, and the EU, Canada, and Australia are the major
members. Japan joined MPIA in March this year, but it was hesitant to join partly
because of the US position on MPIA. If I understand correctly, for the US, MPIA will not
solve the real problem of a dispute settlement mechanism.
So MPIA may discourage efforts to reshape the WTO. But an increasing number ofcountries are joining MPIA. In Japan, they thought it could complement the WTO andso I think that's why Japan joined MPIA.
I have a question for Discussant F. China is working hard to get Chinese companies to
use RCEP, meaning there is a big campaign to explain the benefits of RCEP to Chinesecompanies. Do you think that's one reason that Chinese companies are very interested
in RCEP?
Discussant F
For two years, the Chinese government, through trade associations, has set up trainingclasses on the provincial and city level, with state-owned and private sector participation.
I have been invited to give lectures and to explain IPEF and RCEP. Companies now seemto understand how to use it and are exploring opportunities. Special attention is being
given to restructuring and how to develop a new relation between China and RCEP.
Discussant G
I have talked with policymakers, and there is a keenness to figure out what sort of RCEP
utilization is taking place, particularly in India.
We are perhaps now in a position where we can start collating some data. Discussant B,
this is perhaps a good time to start working on what sort of utilization is taking place in
RCEP. The data may not be very encouraging, but the trends will help us understandthe impact RCEP has had post-COVID.
Japan joined MPIA just prior to its G7 presidency, but MPIA is creating more problems
than it solves as I see it. The supply chain for critical minerals is now a very important
issue both within and outside Asia. There is at least one important issue that the US is
tracking separately; Indonesia's nickel processing policies were challenged in the WTO
and the decision favored the US. But the decision was taken to a basically non-existing
Appellate Body. It was thrown into a void, and Indonesia is not a member of MPIA.
Membership status is being used to evade very important trade-related questions andpractices. The whole process of the WTO reforms and the Appellate Body is getting either
put on the sidelines or delayed in MPIA business, so a lot of trade practices are slipping
under the radar.
Discussant B
Regarding Discussant G’s point about the use of RCEP. For Japan, we have information
about the number of certificates of origin issued for trade with RCEP countries. The

largest number of certificates of origin has been issued for Japan's exports to China
followed by Korea, China and Korea are the two countries Japan didn't have anagreement with until RCEP. So Japanese companies are benefiting a lot from RCEP in
their exports to China and Korea.
For Japanese imports, we have information about use of RCEP and any other agreementin our imports from RTA members. I think China and Korea are using RCEP because
these are two countries that Japan did not have an FTA or RTA with until RCEP. Again,
the Japanese companies are benefiting from RCEP.
Moderator
Let’s move on to a question from the audience. “Some say that globalization is dead andconcurrently we see multilateralism, pluralism, militarism, and unilateralism of sorts.
If we are serious about peace and prosperity in the rule-based architecture, how do weavoid the trap of military industrial academia media complex in the midst of geopoliticaland geoeconomic tension and nurture mutual trust in the process? With or without thepresence of the Global South, how do we build into the non-exclusive schemes in the longrun?”
Discussant F
We have to understand we are living in a new age. People call the past 30 years a processof super globalization, and after such fast globalization there are many problems
emerging. It is natural to slow down and to rethink and readjust.
Also emerging is strategic competition, especially between the US and China. COVID19 has also made every country rethink their security concerns, supply chains, and othermatters. Things may happen suddenly, so they have to have different policy
arrangements and preparations. People also are thinking about whether opening up
100% is good or bad, and whether they can benefit from this super globalization.
So we are facing quite different conditions from the past. We used to think the globe wasflat, so you can go anywhere, businesses shortened their supply chains and had a longdivision of production and so on. Now, we have to reconsider this and adjust ourselves.
In this complex and different age, we have to keep the world heading in a positive
direction. So I think that’s why we are discussing regional roles today. We are keeping a
spirit of multilateralism and global integration, but focusing on Asia-Pacific and East
Asia in particular.
I mentioned before that it's not a trade issue, it's about confidence and trust. So, we haveto use many different regional architectures and to rebuild basic confidence and trust to
improve our bilateral and trilateral relations. Like China, Japan, and Korea, it's not easy,
but every side hopes to resume the leaders meeting. We can't think that we can go back.
Discussant H
Discussant B raised the issue of the weaponization of strategic materials and issues
related to security and trade nexus.
With regard to trade and security, big powers employ very readily use the term “security
sensitive” and deem that something should be subject to export controls. The question I
am raising is: how can a line be drawn? Take semiconductors for example. They are
security sensitive, but at what level are semiconductors tradable for commercial use? A
delineation needs to be agreed. I would like to hear your views on this.

Strategic materials are very often used as a means of protecting domestic industry tocombat economic sanctions, and so forth. Is it possible to have any agreement? When you
put limitations on the international flow of strategic materials, how we can mitigate thisphenomenon? I would like to hear your views on this.
Discussant A
Has globalization peaked or is it over? No, but it's different now. We used to traditionallyjust measure border crosses of goods and services, but if we look at people movements,
it's just huge flows going across borders now. So I think we need to rethink our definitionof globalization.
On the question of weaponization and trade security, New Zealand has one small steel
plant. It has been caught by US national security exemptions and pays a large tariff to
get into the US. This is very hard to justify.
On Discussant H's points about technologies or semiconductors, if you go back to WorldWar II, there was a big development of input-output mapping. The American forerunnerof the CIA mapped the German economy on an input-output basis to identify which partsof the economy were most vulnerable to being turned off. One of the first things they
identified was the ball bearing industry. There were two plants: one was in Cologne,
which got bombed, and one was in Sweden, which the Swedes were pressured to close.
Ball bearing plants are a little like semiconductors today. Identifying key bottlenecks inthe economy has come back into business and teachers are under increasing pressure toeducate our students on how to weaponize our economy against other economies.
Discussant D
In the past, we've seen that most tensions have to end or be resolved by conflict or open
conflict. In the first wave of globalization in the 1870s to the early 20th century, tensions
were increasing and it led to WWI. This led to the League of Nations. The same thingalso happened in the 1930s when the tensions from the Great Depression also led to theopen conflict of WWII.
Countries then realized that it is better to cooperate. We should not repeat history. I
think there are two things that are very different now. First, now we have all
instruments at the global level required in order to resolve problems and tensions morepeacefully. The second one is that there are middle powers now. There are independent
countries and economies that can voice their aspirations and interests, which might bea channel for more constructive dialogue at the global level.
The Global South is a middle power and an example of how the rest of the world can play
an important role in preventing major power rivals falling into open conflict.
I need to highlight the rise of nationalism and right-wing domination in various
countries. We need to address this in a democratic way with more public involvement at
the domestic and national level.
Regarding Discussant H’s questions, I agree with Discussant A on how weaponization of
trade policy can be addressed in various forums.
We at least need to take security perspectives into account in various forums. We attempt
to separate economic and geopolitical or security issues into different forums, but there’s
no communication between them. Perhaps we need to have more comprehensive way inorder to address the problems at the same level. During hyper-globalization, economic
issues tend to dominate security issues, but now it’s the other way around. Perhaps weneed to put them at the same level.
Discussant B
The typical indicator that we use to measure globalization is trade to GDP ratio. And
after the global financial crisis, it stopped growing and is now decreasing, partly becauseof COVID and partly because of geopolitical tensions. The trade to GDP ratio for China
is in a sharp decline. China is a big trading country, and that is reflected in the slowing
down of globalization. The IMF called this ‘Slowbalization.’
The ratio between trade in goods and GDP is declining significantly, but trade in services
to GDP ratio is not declining. Looking at different indicators gives a different impression
about globalization.
It is difficult to define products and technologies that are national security sensitive or
national security non-sensitive. But this is an important issue that needs discussion in
many forums. I think transparency is important when discussing national security
sensitive products and technology.
Moderator
The moderator expresses that this was a very good discussion on trade issues, and statesthat confidence-building and trust-building are very important certainly in this area andmaybe all over the world. The moderator believes that a starting point might be to build
up common understanding of globalization or the merits of international free trade, andalso economic security is a very important issue to be tackled. Political science andeconomics should be combined to pursue the best outcome, a good balance between
security and economy.
The moderator asserts that cooperation should be pursued and that the spirit ofcooperation is very important, so an interdisciplinary approach towards this complex
issue should be discussed next time.

Asia-Pacific Forum 2023
Day 2
[Session 2: Demographic Challenges in the Indo-Pacific Region]
Moderator
The moderator sets out the first issue as being the demographic issue of aging before
becoming rich in the Indo-Pacific region, and notes that Japan is the only country thathas a super-aging population, but China and Thailand have a population that's aging
while their per capita GDP is close to or below world average.
He states that other issues to be looked at in this session are societal aging posing labor
supply problems and the availability of resources for social services. The moderator
expresses the opinion that policymakers must consider the effects of population aging on
the macro economy and macroeconomic policy an issue that has been analyzed by the
keynote speaker Professor Naoyuki Yoshino. The moderator notes that population aging
reduces the efficacy of fiscal policy, requiring more fiscal resources to replicate the effects
of previous stimulus packages, and that there are also the issues of developing an elderly
care system which is important for Japan, China and Korea, and urban healthinvestments to benefit a growing urban and aging population.
The moderator states that the final issue to be looked at is the issue of population in the
Republic of Korea. He cites a December 2, 2023 article from the New York Times titled“Is South Korea Disappearing?” that underscores the serious problem confronting thecountry.
Panelist A
The panelist states that most Asia-Pacific countries are facing demographic challenges,
and statistics reveal why this is a concern: 60% of all persons aged 60 years and above
reside in the Asia-Pacific region. The panelist notes that the percentage of the population
aged 65 and above in some Asia Pacific countries has risen from 7% to 14% in the last 20
to 25 years, compared to 50 years in Europe.
The panelist notes that the number of elderly persons in the Asia-Pacific region will
double from 630 million in 2020 to 1.3 billion by 2050, pointing out that in 2020, 13.6%of the population was 65 or older, but by 2050, this will be 25%. This is coupled with arapid decline in fertility rate and a decline in mortality and increased life expectancy.
The panelists states that this could be considered a success, but the phenomenon of anaging is a huge challenge for most countries.
The panelist states that in Malaysia, more than 7.5% of the population is 65 or more,
and by 2030, Malaysia will be an aging nation.
The panelist states that the first two issues to be dealt with are age-related health issues
requiring specialized care and support, and social isolation and loneliness. In the case of
the latter, the panelists asserts that it's not just the role of governments, and that theprivate sector and NGOs need to chip in to make sure social isolation and loneliness are
addressed in a holistic way.

The third issue is financial dependence, and the panelist says statistics show that only
48% of EPF contributors under 55 years of age will have sufficient funds to live
comfortably when they retire.
The fourth issue is the lack of physical infrastructure and facilities for a sustainable
lifestyle for the elderly population. The panelist asserts that there is a lack of proper
retirement homes, and as more and more children live on their own and do not take careof their aging parents, the elderly have to find a home on their own.
The panelist notes that in the past, children always took care of their parents in old age
in Malaysia, but that this has changed drastically as many now move out of their parents'
homes when they marry. The panelist states that this has become a serious issue as there
are no sustainable retirement homes, only “old folks homes” with deplorable conditions
and abuses taking place in some.
Finally, the panelist asserts that caregivers need to be enabled to provide better care forsenior citizens.
The panelist expresses a desire to look at opportunities. He notes the huge need forphysical infrastructure and facilities provides an opportunity for investors, and there
will be a new demand for goods that will need to be met by the business community. The
panelist asserts that in terms of services, caregivers are needed, and this provides anopportunity for service providers, and that there will also be opportunities for insurance
or mutual funds.
Panelist B
The panelist notes that Singapore is aging rapidly, and that its old age support ratio willplunge in the next few years from 3.2 this year to 2.4 by 2030, which presents asignificant challenge.
The panelist explains that Singapore has been trying to address this issue really for 40
years since the former Prime Minister Lee Kuan Yew first identified the demographic
challenge in 1984, and the failure to fully resolve these issues shows how intractable thischallenge is. He explains that there were multiple efforts to combat this aging, with a lotof emphasis from the early years to the present on policies to encourage marriage andhaving children. The panelists says there was a lot of emphasis on cash incentives, but
the effects have been very marginal. These incentives are considered to have rewarded
people who would have had children anyway, rather than actually making a difference
to the fertility rate. Today it is at 1.04, one of the lowest fertility rates in the world.
The panelist states that the Singaporean government has also tried to subsidize
maternity leave for mothers and to encourage private companies to award paternity
leave for fathers, and that there have also been more recent efforts to subsidize childcare
and infant care, and to expand preschool options for children.
But realizing that the problem is intractable, he states that the government hasembarked on another strategy in the early 2000s to ramp up immigration.
The panelist explains that this has helped to maintain the pace of economic growth, but
it caused strain on public infrastructure such as hospitals, mass transit, and so on, but
it provoked a backlash which forced the government to slow down immigration. He notesthat this experience made a discourse on the optimal level of immigration difficult forthe government to pursue. Another line of policy direction has been to focus on funding.
The government has introduced schemes to help support retirement incomes. We have asimilar system to Malaysia's EPF called the Central Provident Fund. There's somethingcalled CPF Life, which gives an annuity payment to all those who are aged 65 and above.
Other schemes have focused on supplementing the incomes of the very poor so they cansave enough for retirement.
The panelist asserts that this shows cash incentives alone don’t work, and that theunderlying issues of why young parents don't want to have children now need to be
tackled.
The panelist expresses the opinion that it will be difficult to bring fertility back toreplacement level, and it seems inevitable immigration will be needed, so the pace needs
to be aligned to social tolerance. He states that there's also a need for long range planningto create the fiscal space to address the increase in funding costs for retirement, eldercare, and related infrastructure improvements.
Finally, the panelist states that productivity will be important, and Singapore's
experience shows it is difficult to accelerate productivity growth.
Panelist C
The panelist states that Korea faces serious demographic challenges: it is one of thefastest aging populations with, at 0.78, the lowest birth rate in the world (Japan’s is 1.26),
meaning Korea will be a super aged society by 2025 when the proportion of people aged
65 and over will reach 20%. The panelist nots that in 2020, for the first time, South Korea
saw a net population decline and that economically, the low fertility rate has already had
serious consequences for South Korea, most obviously a decline in the economically
active population from 37 million in 2015 that will be only 20 million in 2065.
The panelist states that South Korea will likely suffer diminishing consumption, waning
investment, and budget imbalance, and so should consider opening the domestic labormarket systematically to foreign workers who can become permanent residents and to
introduce a foreign immigration policy to resolve the ongoing demographic crisis.
The panelist explains that in 2004, South Korea began accepting low skilled foreign
workers numbering 49,000, but this had increased to 2.5 million by the end of 2019,making up almost 5% of the population. About 40% are Chinese, mostly of Korean
descent. Long-staying foreign nationals have voting rights, so migrant can influence
Korea's domestic sociopolitical scenery.
The panelist asserts that South Korea’s homogeneous ethnic identity is no longer
sustainable and that Japan has started to adopt a similar foreign workers policy so thecountries should learn from each other. The panelist asserts that South Korea needs tocollaborate with Asia-Pacific economies that have a labor surplus. In addressing thesuper-aged society, the panelist states that South Korea will face rising social welfare
costs, so a critical issue is to revamp national pension system to ensure long-termsustainability.
The panelist points out that South Korea's demographic challenges are also impacting
greatly South Korea's sociopolitical future, and there are now four distinct age cohort
groups in Korea with very different views on South Korea's political socioeconomic
system. He notes that while South Koreans over all ages support democracy in principle,

the four groups respond very differently to emerging international conflict and the interKorean relationship. He asserts that given these ideological differences, it is a criticalchallenge for South Korea to ensure a consensus based robust democracy in case of aserious inter-Korean conflict.
The panelist states that in addressing worsening income inequality and the relatedsocial welfare programs, politicians unfortunately tend to take an advantage of thegeneration gaps to win support by adopting populist policies at the expense of future
generations. He asserts that it is a big challenge for South Korea to implement aneffective mechanism for intergeneration dialogue to reach a national consensus. On the
low fertility rate, he states that South Korean mother’s average age at their first birth
was 33 in 2022, compared to an OECD average of 28-29.
The panelist notes that all adults in South Korea are fully aware of the health of thecountry's education system, which needs urgent reform.
The panelist finishes by saying most of South Korea's policy responses to complex
demographic challenges offer valuable lessons to other Asia-Pacific economies, while
South Korea should also learn lessons from other Asia Pacific economies.
Panelist D
The panelist notes that In Thailand, people of 60 years or older are defined as elderly.
Under such definition, the number of elderly persons in Thailand has already overtaken
the number of children. He points out that Thailand is aging rapidly, and has become oldbefore getting rich, with the new phenomenon of an increasing number of centenarians.
The panelist points out that in Japan there are currently 90,000 centenarians, whereasin Thailand, five years ago there were already around 10,000 and there are many more
people between 90 and 99 years old who may become centenarians soon.
The panelist mentions some of the challenges faced by Thailand, starting with the
problems of productivity-driven growth. Statistics on how people of different ages
perform in terms of their productivity shows that productivity peaks between 40 to 45
years old, and then rapidly decreases, meaning an aging population leads to a lessproductive economy.
The panelist points out expenditure as another challenge, asserting that pensions andhealthcare will be a big problem. In Thailand, the accumulated pension fund will peakin around five years, and will then rapidly decline until it is gone in 20 years from now
unless the government takes drastic action.
The panelist next looks at policy recommendations, with a focus on two points; how tomaintain growth, and how to reform social security funds. For growth, the panelist
asserts that the growth equation related to labor capital and total factor productivity
must be considered, and that with a declining and less productive population a lot of
migrant laborers need to be brought in, and early retirement reduced. He notes that
there are many people in Thailand who retire around 55 years old, partly due to thepension system allowing withdrawal at 55 years old, and that the workforce needs to be
reskilled, with a particular focus on upskilling the elderly population, to be productive.
He states that a quick but politically difficult action would be to reduce the number ofmilitary conscripts. Around 100,000 men aged 21 are currently conscripted every year,
but there are no external enemies, so reducing the number of conscripts would be a big

win. He adds that in terms of capital, Thailand needs more automation, AI, robotics, andother such things.
Finally, the panelist states that Thailand has to increase its total factor productivity by
investing in research and development, and by deregulation to speed things up andincrease productivity. To reform the social security fund, the panelist suggests that it
would be easy to raise the current low contribution cap that means people don't saveenough. He also believes that the fund's governance must be improved, as it has been
spending carelessly and has seen a number of scandals.

[Discussion]Moderator
The moderator starts the discussion.
Discussant A
I would like to ask you all if you think population decline is a good thing. The global
population is too high, and that's why CO2 emissions are increasing. However, we haveto do something about aging and retired people. As Discussant B said, a retirement ageof 55 is too low.
What do you think about a later retirement age? In Europe, many people are opposed toworking significantly longer. What do you think about your country?
Accumulated social pension funds and asset management are very important. I'd like toknow about their performance in other countries.
Discussant B
I think retraining is really important. Without it, the productivity of the whole workforce
will decline. In Thailand, our retirement age is 55 years as per the pension law. This is
low compared to other countries.
In Europe and developed countries, the retirement age is 60 or 65. Thailand has plentyof room to do the same. Regarding pension funds, In the case of Thailand, employees,
employers and the government should chip in with the same proportion of 5% of theworker’s wage. But in practice, the government has consistently contributed only half of
the amount they promised to. That's another reason that the pension fund in Thailand
is so weak.
Discussant C
In Singapore, the government's savings are managed by three entities: the Governmentof Singapore Investment Corporation, GIC, Temasek, and the Monetary Authority ofSingapore. Most savings for supporting long-term needs like retirement are managed by
GIC. Performance has been good in terms of the mandate given to them. The averagenominal return over the last 30 years is close to 6%, which implies that the real rate of
return was comfortably positive.
Accumulated savings have increased, but the actual payout to retirees is low and fixedby the CPF law. A lot of money then accumulates as surpluses on the government account,and the government is increasingly returning that to citizens in the form of fiscal
transfers. The net investment return contribution is the inflow of revenue from theinvestment management account, and it is now the largest source of revenue for theSingapore Government.
The long-term accumulation of savings and good management and governance has
produced extra fiscal space that other countries lack. But we still need to look at howthat accumulated savings is actually returned to the people who need it. We now have a
lot of old people retiring whose CPF contributions were very low because they were
working when salaries were low, and so their retirement incomes are insufficient.
Discussant D
Malaysia’s retirement age was 55 and was then extended to 58. It is now 60, which is too
low when life expectancy is already 70-75. Raising it is better than introducing
immigration. In Malaysia, it's not easy to have an immigration policy to bring people in
as Discussant E suggested. I think there is a very productive workforce among retirees
who should be brought back to the workforce.
On the pension scheme, we are in a situation where more than 48% have got very little
savings to fend for themselves in later years. That is for the private sector, but one of thebiggest components of our aging population is ex-civil servants. As expectations to reacha higher stage grow, the pressure on the government will be to continue to pay pensions
until death. I think the financial stress for the Malaysian Government will be whether
it can maintain a pension scheme that can be sustained.
Discussant E
In Korea, the retirement age for a college professor is 65. Government officials retire at
60, and company workers at 62. Given the labor shortage, all the retirement ages could
be increased. But new job opportunities for the retired people should not interfere withthose for youngsters. We need to protect work for youngsters, so the government should
be concerned about how to provide the elderly proper job opportunities. Also, thegovernment can create a lot of community work which is very critical for security.
For the pension fund program, in Korea we should employ the principle of more
contribution but less payment.
Moderator
What's the policy of Thailand with respect to immigration?
Discussant B
We have an ad hoc policy to accept Myanmar workers with a quota, but the quota isincreased every few years. So that there are around 5 million people immigrants workingin Thailand.
Moderator
I just want to mention that Discussant A made the remark that social integration of
immigrants and their families into the host countries is important.
Discussant G
Obviously, Australia is in a very fortunate position as it is a wealthy country, but backin the 1990s, the superannuation scheme that Australia now has was established and it
was required that each worker submit 10% of their salary. This was done by the employer.

We have nearly $4 trillion of assets under management which are available for policy
holders in the superannuation scheme. If there is not enough there and they pass ameans test, they are eligible for an age pension from the government. And that has risen
from a basis of 65 for men and 60 for women, up to 67 now for eligibility for men.
In terms of migration, this year is close to 700,000, which is too much for the social
tolerance in Australia.
Discussant D
We have already discussed financial stress and gaps in the workforce. But in an aging
population people will grow old, so how do we maintain a lifestyle for them that puts lesspressure on the government and their families if we do not take care of their health. We
should encourage a healthy lifestyle, and that way we can also put less stress financiallyon governments and families in an aging population.
Discussant E
In Korea, the more serious problem is population decline. I think this is a truly urgent
issue. We have to establish effective immigration policy so migrants can easily integrate
into Korean society, and work together with labor exporting countries to ensure verysmooth transition.
I think for Korea, this is the most important issue. In rural areas, if there were no
migrant workers, the Korean economy will just collapse
Discussant F
I have a question to the panelists. Do you think we need some kind of regional key
principles or arrangement for immigration or just bilateral?
Moderator
Discussant F raised the issue of original arrangements for immigration andharmonization of policies in the region. Would any of the panelists like to respond tothat?
Discussant C
I think the suggestion is very good because now we have a mix of legal and illegal
immigration. A lack of proper coordination and planning, highlights the downsides ofimmigration. But if we do something like that, it should be in the context of an ASEANwide economic integration framework, perhaps added to the existing framework toensure consistency with other issues.
Moderator
We also have the mutual recognition of standards and education and qualifications.
From the Philippines’ perspective, we are heavily dependent on overseas foreign worker
remittances. Working overseas has been facilitated by the fact that our medium of
instruction is in English. We do have language electives. But for the past years, they
have been European centric. I would recommend to our government that we shift to
Asian centric elective languages.
There have been many interesting proposals in this session: increase the retirement age,manage pension funds more effectively and efficiently, immigration and healthcare, andregional arrangement for immigration.

We have to make efforts to address demographic problems in our region.
Discussant A
I would like to ask each panelist if the immigration policy in their country works well.
When I looked at Europe, the first generations are very good because they have theirown skills, but the problems start with the second generation. If immigration policy is
not working well, what are the key points for a remedy?
Discussant C
I think immigration policy is always sensitive and is difficult to optimize. As in
Singapore's case, we've gone through iterations. In the early 2000s, there was a very
aggressive policy of large-scale immigration inflows, and that didn't end very well. It
generated growth, but also a lot of costs. We have a more calibrated approach now, andwhat is happening is that the government is now trying to wean SMEs off low-costforeign workers, but this is proving difficult. There are big costs involved, and the burdenof such adjustment is borne by SMEs.
Singapore ensures longer-term stimulation by being selective in terms of the countries
from which we allow resident migration flows. Typically, this is professional workers
from countries that are similar in culture and ethnicity to Singapore. Although there
have been some downsides, generally, it has worked.
Discussant E
Recently, Korean newspapers had headlines claiming that Japan had adopted a freecollege education system for families with three children. I think that this is a very
persuasive and effective program, and that the Korean Government should adopt thatpolicy immediately. Can you share the background?
Discussant A
I have taught in Germany, Sweden, and France, where tuition fees are very low or zero.
I think this equality is important in a society: whatever your income and wherever you’re
from, you have the opportunity to go to a good university.
This is the best way to harmonize a society. The government decided to encourage people
to have more children, so if they have more than three, they will pay no tuition. This isa very good policy to get families to have many more children
Discussant E
Another thing South Korea should look at is Japan amazingly succeeding in raising thefertility rate to 1.3. South Korea’s is now 0.78. South Korea should learn how Japan has
achieved such high fertility rate in a relatively short period of time.
Discussant A
At 0.78, the country will disappear in time, so it's important to maintain the number ofchildren in Korea. I think various policies will be needed, but a good policy is to scrap
tuition fees for families with three or more children.
Discussant E
We should talk it over either in Tokyo or Seoul in depth, and Korea should learn fromJapanese experience.

[Session 3: Energy Security and Climate Change]
Moderator
The moderator notes that COP28 ended on December 12, and that COP27 was the first“global stock take” to see how each country is progressing towards net zero carbon, andalso to stay within the 1.5-degree limit. He states that this stock take is a very importantaccountability and acceleration exercise to achieve the goals decided in the Paris
Agreement of 2015.
The moderator invites Panelist A to share the Government of Australia's opinion andpublic opinion on this critical global matter.
Panelist A
The panelists asserts that climate change is certainly the most challenging global issue
today, and notes that 2023 was the hottest year in recorded history with disastrous
storms, floods, destructive wildfires, and droughts occurring much more frequently andwith far greater ferocity.
He states that continued prosperity is directly threatened, as is the very survival of the
global community, and that maintaining a global consensus on moving forward toachieve the ultimate target of net zero emissions by the year 2050 is hugely important.
The panelist notes that each country's specific pathway forward through this transitionis shaped by its own national circumstances, and that sustaining economic growth at thesame time as undertaking the important work of reducing carbon emissions as fast as
possible is also critical. He notes that as fossil fuels contribute as much as 80% of total
emissions, energy security is central to the climate change debate, before going on tostate that if combat global warming is to be combated and net zero emissions achievedby 2050, it means transitioning away from dependence on carbon-emitting fossil fuels in
the energy mix and replacing them gradually, adopting technologies, providing cheaper
renewable energy.
The panelist notes the wide spectrum of opinion about how to realize this transition,with climate change purists calling for immediate cessation of mining and production offossil fuels and the shutdown of all fossil fuel burning power plants, and climate change
skeptics rejecting the overwhelming science about global warming and calling for the
opening of new power plants and unlimited use of fossil fuels. The panelist observes thatmost countries fall somewhere between those two extremes.
He states that the transition will take time because governments must cater for
expectations for dependable, sufficient, and affordable energy at the same time astransitioning away from reliance on fossil fuels.
Speak briefly as a layman about Australia's policies and efforts in response to climatechange, the panelist states that as one of the world's largest energy producers andexporters, Australia faces particularly difficult challenges in reducing emissions andtransitioning to renewables. It needs to ensure energy security domestically, whileworking closely with major importers that depend on Australia's exports of the coal andgas. He notes that the current Australian Government was elected in part because votersbelieved that the previous government had been lagging in its responsibility to reduce
emissions and transition to renewable energy at a fast pace.

The panelist believes that the Australian government was also motivated to respond tothe views of a significant majority demanding more advances be made in addressing
global warming, especially by greater use of renewables. It has promised to address thedramatic increase in domestic energy prices due to political issues such as Russia's
invasion of Ukraine, and the aftermath of COVID-19. The new government was deeply
concerned about the impact of global warming on small island countries in the South
Pacific and committed to mitigating it. Due to the high level of carbon emissions involvedin fossil fuel mining, production, and export activities, the government has accelerated
the process already underway to strongly discourage any new coal mines opening, andto gradually phase out coal-fired power plants. To address potential shortages due tothe planned closure of some 24 coal fired power plants, the government has promised tounderwrite 22 gigawatts of new investment in solar, wind, and battery technologies. This
is in addition to the extensive wind farms already in operation and the high rate ofAustralian homes already collecting solar power from their rooftops. Per capita,
Australia has the highest rate of solar energy use in the world, and it is also keen to
explore green hydrogen production.
The panelist admits that gas remains an important part of the domestic energy mix inAustralia. He notes that in mid-2023, the government announced new regulations to
reduce greenhouse emissions from gas fields by requiring upstream gas producers toachieve carbon neutrality, but some have suggested this might impact the energy
relationship between Australia and Japan. However, Australian and Japanese
Government ministers have publicly addressed such concerns about Australia's
reliability as a major supplier of gas and other energy resources, making it clear
Australia is committed to remain a reliable long-term supplier contributing significantly
to Japan's energy security.
In the context of the climate change debate, the panelist states that this episode between
Australia and Japan illustrates the importance of sustaining long trusted relationships
and when contemplating policy changes, consulting appropriately.
Moderator
The moderator states that he would like to explore further the Australia relationshipwith Japan in terms of the energy and security, and whether it could be extended to otherAsia-Pacific economies.
He then invites Panelist B to talk about how Myanmar has energy distortion problems
and serious adaptation issues.
Panelist B
The panelist notes that regarding climate change, Asia Pacific is one of the regions to begreatly impacted by El Niño in 2023-2024. She states that Myanmar has alreadyexperienced severe flooding and extreme swings and is widely considered to be one of themost vulnerable countries to the impacts of climate change. Cyclone Nargis and Cyclone
Mocha in May 2008 and May 2023 respectively killed many people and caused heavy
economic damage. The commercial capital Yangon contributes a quarter of the country's
GDP and it is also the fourth fastest sinking coastal city in the world. Climate change isputting energy security at risk, affecting fuel supply, energy production, resilience of
current and future energy infrastructure and energy demand.
The panelist observes that the power sector in Myanmar has faced various headwinds inrecent years. Fiscal constructions, economic challenges, conflict and political factors have

impacted the stability of the entire generation and transmission system. Changing
climate conditions and energy mix calibrations due to local and global developments
caused more water resources to be utilized for hydroelectric power generation during themonsoon seasons, causing sharp drops in water available for irrigation.
The panelist explains that Myanmar has a number of power projects but most are on
hold for now or still in the exploratory phase. She adds that an intergovernmental
agreement was signed with Russia in end-2022 to collaborate in the installation of small
civilian nuclear power plants; two MoUs were also signed with Russia’s NovaWind inJune 2023 to install over 300 megawatts of wind power and that Myanmar recently
signed an agreement with China for purchasing 90 megawatts from three solar projects
in Central Myanmar.
International sanctions in response to domestic developments are also affecting aspectsof the power sector. In February 2022, the European Union imposed new sanctions on
Myanmar including on the state-owned Myanmar Oil and Gas Enterprise (MOGE). The
United States also imposed a ban on financial transactions to MOGE starting from
December 2022. One of the impacts of the sanctions is that it is now harder to maintainand repair gas power plants feeding the national grid.
The panelist states that multilateral financial institutions have also halted loans andgrants, having strong knock-on effects on the power sector. The political situation has
also dampened interest in the exploration of gas fields and power generation investments.
Official statistics show that Myanmar produced around 8% less electricity year-on-yearfrom April 2022 to March 2023, with other estimates placing it higher.
The panelist explains that energy shortages are affecting all aspects of life across
Myanmar. She explains that unstable power supplies are affecting the storage ofessential medicines and samples. Most factories and commercial buildings now use
diesel generators and increased reliance on diesel is exacerbating the impact of high fuelprices that also affect agricultural productivity, as farmers cannot afford to run irrigation
pumps. Few enterprises know of financially viable renewable alternatives. The
government has emphasized solar energy and electric vehicles as key components forenergy security and self-sufficiency but banking challenges, highly subsidized utility
rates, trade issues and the security situation are affecting investor interest.
Finally, the panelist states that the impact of sanctions on the authorities falls mainly
on ordinary citizens and businesses, and while some are trying their best to adapt in theface of manmade and climate change-linked challenges, more needs to be done by allconcerned stakeholders. She asserts that the government needs to address issues suchas supply, reliability, greater accessibility and affordability.
Moderator
The moderator states his opinion that Myanmar requires international technicalassistance as well as financial support, but that it has very good wind resources.
Panelist C
The panelist notes that the International Renewable Agency says that energy transition
is key to tackling the global energy and climate crisis, but it is not a smooth process andmay adversely affect energy security.

He states that a key example is the transition risk of climate change coming from efforts
to build a green economy. He asserts that it can be too fast or haphazard, so transition
risk materializes when changes in technology, standards, taxation and other policies
turn carbon intensive assets into stranded assets and amplify losses through financial
interconnectedness. The panelist explains that if the move towards renewable energy
and reduced carbon emissions is too fast, the supply might actually be less and lead tofinancial losses for some firms and it could affect energy security. In this case, there will
be a possible conflict which results in an energy trilemma; the conflict between energy
security, energy equity, and sustainability.
The panelist argues that if the move towards trying to protect the environment is too
fast, then it will affect access to energy and it may increase the cost for lower income
households, so it affects energy equality and energy security. This is essentially theenergy trilemma. The panelist suggests some policy responses to avoid this: Enhanceenergy efficiency, green building codes, more efficient appliances, electric vehicles andother such things. He notes that the Philippines has facilitated investment in renewableenergy technology through legislation.
The panelist states that it is important that we allow enough time to retire existing coal
power plants, so there are no stranded assets. He explains that the Philippines isconstrained by the relatively slow expansion of its power grid, and thus not able toeffectively incorporate renewable energy resources – a problem that needs to beaddressed.
Finally, he states his belief that nuclear energy is something that requires serious
consideration, particularly in the Philippines.
Moderator
The moderator invites Panelist D to discuss the Taiwanese experience and global
perspective.
Panelist D
The panelist points out that over 75% of global climate pollution comes from burning
fossil fuel, which releases the two largest pollutants: carbon dioxide and methane, andthat methane is behind nearly 45% of global warming. She adds that methane from theenergy industry comes mainly from leaking gas pipe, wafts out of coal mines, andmicrobes in rice paddies. She notes that in the past three decades, nations have had noconsensus on how and when to reduce fossil fuel emissions and whether ending relianceon fossils fuels is necessary. The Paris Agreement aims to limit the global temperaturerise to 1.5 Celsius and requires the international community to assess the adequacy ofclimate action every five years. She points out that scientists agree this is too slow andtoo little to avoid potentially unmanageable and catastrophic climate change, and that
the UNFCCC report stresses the need to expand the introduction of renewable energy
and to phase out fossil fuels,
The panelist highlights a remarkable breakthrough from COP28: 50 hydrocarbon firms
totaling 40% of oil production pledged to eliminate methane emissions from fossil fuelexploration and production by 2030. She adds that the process will be independently
verified by third parties, and that debates on international climate finance are also
taking place. However, she notes that only 23% goes to local communities for climate
adaptation and resilience, with most going to donors for emission mitigation.

The panelist points out that tariff barriers and non-tariff barriers are meant to balance
economic efficiency and geopolitical resilience and to elevate net zero industrial
competitiveness by reshoring or friend-shoring.
In conclusion, the panelist states that decision-makers often suspect that climate
friendly policy will undermine energy security and thereby cause GHG emission toplateau rather than decline, and that global climate leadership and good governance are
required to continue making possible a sustainable green earth.
Panelist E
The panelist asserts that Vietnam made a very ambitious commitment at COP26, toachieve net zero emissions by 2050, and also issued its National Green Growth Strategy,
while it also approved an action plan to implement that strategy.
For energy transformation and transition, the panelist states that Vietnam has manymaster plans, but that three or more years are needed to have a so-called Power
Development Master Plan.
He notes that there is a lot of debate about how we can achieve the monthly targets, andadds that a sufficient and reliable energy supply needs to be ensured, energy madecleaner, competitiveness promoted, and an inclusive transition plan formulated.
The panelist states that transformation in energy sector will be tremendous. He statesthat in 2020, more than 50% of Vietnam’s energy came from coal, but by 2050, it will be
only 5%. In this transition, the panelist claims that Vietnam will rely so on biomass,ammonia, and gas, but after 2035, the emphasis will be on hydrogen and ammonia.
During the transition, the panelist asserts that renewable energy will growtremendously, and by 2030, renewable energy will contribute more than a third of thecountry’s electricity, and nearly 70% by 2050.
The panelist notes that Vietnam is in a good position for an energy and electricity
transition, and has the political will and policy direction as well as huge potential,
especially in solar and wind energy. He asserts that Vietnam can be a hub for energy
transformation.
However, the panelist admits the challenges are huge. Firstly, he admits that while
Vietnam has set many targets, its electricity market is not competitive as the price isheavily regulated by the State. Secondly, regarding the implementation process, heexplains that Vietnam has only six years to achieve its target for 2030, so cannot rely on
traditional mechanisms to implement the master plan.
In addition, the panelist states that Vietnam needs international support andcooperation, and a lot of money. For new power plants, the country needs at least $134
billion. According to the World Bank, to achieve its green growth strategy by 2040,
Vietnam will need $368 billion. The panelist notes that getting the money is important,but how that money is spent is perhaps more so.
The panelist notes that Vietnam is also are a member of the Just Energy Transformation
Partnership, and without the JETP, it may be more difficult for Vietnam to implement
its master plan. He notes that the master plan and even the green growth strategy
formulated in the context of many challenges and risks have already been mentioned bymany speakers. The panelist states that when he asks international donors andVietnamese experts if they think Vietnam can achieve its ambitious goals, they mostlysay yes, but only with steadfast commitment, creativity, innovation, international
support and cooperation. Finally, he asserts that a more effective enforcement
mechanism is needed.

[Discussion]Moderator
The Paris Agreement set two goals: to achieve net zero target by 2050 and to achieve the
1.5-degree target down the road. At the COP28, the UN Secretary General urged thateach country should move beyond arbitrary red lines, entrenched positions and blocking
tactics. Every nation agrees on the basic goal of the Paris Agreement but disagree on
how to achieve it. So, how we can ensure a smooth transition from the different
perspectives of each country depending upon the degree of development, technology andso forth. What is Australia's position?
Discussant A
Australia takes the challenge of climate change very seriously. However, it's complicatedbecause we are a major producer and exporter of fossil fuels. But we are doing a great
deal to try to achieve the carbon neutral goals and could achieve 43% by 2030. The
government is actively seeking to encourage investment in renewables, underwriting
new renewables under the capacity investment scheme, which is expected to triple
renewables by the year 2030.
To control emissions, there is a safeguard mechanism whereby carbon capture,utilization, and storage can be increased so that producers and operators can earn carbon
credits against their emissions.
Moderator
Because of that policy was Australia's exporting of coal affected? How is traditional
export policy affected by the renewable energy drive?
Discussant A
There were concerns that Australia was disrupting established relationships in terms ofexport of LNG to Japan, which takes about 40% of Australia's LNG exports. We havemade it very clear at the government level that we are committed to remaining a supplierof LNG to Japan, as well as to Korea, Taiwan and China, while at the same time clearlyclosing down coal plants and reducing exports of dirtier emissions, namely coal.
We also hope to become a net exporter of renewables such as hydrogen. We are arepository of critical minerals essential in battery manufacture. We've noted that China
has threatened to protect its graphite exports. Australia has significant graphite
deposits, so we could step into the bridge. There will be adaptation, but right now I think
Australia for the foreseeable future will continue being a very significant gas exporter
while making other mitigation efforts.
Moderator
You specifically mentioned that Australia and Japan have established a close
collaboration mechanism to deal with energy issues. I would like to see energy technology

be deemed to be international public goods, and to see this technology shared among
Asia Pacific economies. So I hope Australia can display leadership on this front.
Discussant B
My observation in the case of Taiwan is that during the past eight years, we've been
having a debate between so-called Technocrats and Democrats. Some people took to thestreet and demanded a ‘No Nuke’ landscape in Taiwan. Nuclear power plants currently
account for about 9900-megawatt of our capacity, or only 8% of our primary energy
consumption and 19% of our electricity. We have a mixture of solar and wind power, but
this is dependent on nature.
In terms of sophisticated technology, it is not sufficient to meet our energy demand. If
next year’s election results in a change of government then we will have a different
nuclear policy. But our private sector is ahead of the government. Due to insufficient
power, the incentive to keep manufacturing in Taiwan is insufficient. The industry sector
is more advanced in terms of thinking about carbon price, carbon tax, and carbon
exchange and the like. In the energy sector, I think we are facing the challenge of how to
get PPP to work best, because investors always want to charge a high price for carbon
tax, but consumers do not like the idea. This PPP is something for us to think about inthe future.
Moderator
I think the Paris Agreement really aims to triple renewable energy and double energy
efficiency. It also has a single focused policy orientation away from fossil fuel-based
traditional energy schemes. Korea's previous government wanted to move away from
nuclear power generation, which used to be about 30% of our total energy mix. After the
Fukushima disaster, the previous government was very worried about the potential
consequences of the nuclear energy.
However, nuclear energy is regarded as clean renewable energy according to the newenergy taxonomy adopted by the European Union. I would like to hear more about theposition on this Philippines as well as in Vietnam.
What is your government’s position on the energy mix and how do you view nuclear
energy as part of an ideal energy mix?
Discussant C
I will first provide some background. I did research on the Bataan Nuclear Power Plant
that was mothballed in 1986. I found this was largely a political decision, and not
grounded on technical issues. So the Philippines really missed a golden opportunity tointegrate nuclear power in 1986.
The current administration is interested in reviving nuclear energy. I am actually partof a team that will look into how to effectively involve the private sector in adopting
nuclear energy. But based on our initial discussions, it will take 10 to 15 years before weare able to incorporate nuclear energy.
I personally want to avoid a situation like the one in Korea where one president scrappednuclear, and then the next president revived it. In the Philippines, if we decide toincorporate nuclear energy, the policy should last for 20 years, otherwise, a newadministration might disrupt the program, and we will be back to square one.

Moderator
I opposed the previous government’s policy drastically reducing nuclear energy. As aresult, Korea's electric power companies incurred a lot of the managerial losses andcaused a burden on the Korean economy. The new government is starting to resume
ready-to-go-power plants and will perhaps expand a couple of more. The Philippines andperhaps Vietnam are much better in terms of generating wind power and solar power,
but Korea is not that well-positioned geographically.
Discussant D
So far, Vietnam’s electricity very much relies on two sources: hydroelectricity and coalfired plants. That's why in transition, gas power plays a very significant role. It is notdirty like coal, but not clean like solar or wind, and, importantly, is very stable. But the
problem is that the price of the gas is very volatile, and we need to import. So in the longterm, solar and wind and hydroelectricity will play a key role, and then gas will bephased out.
Regarding nuclear power, 15 years ago we had a plan to develop two nuclear plants inthe center of Vietnam, but because people are thinking about the risk of nuclear power,
particularly after what happened with Japan in 2011, our nation assembly temporarily
stopped development of nuclear power. With the new power master plan, we focus on
how we replace coal development with solar wind, and other renewable energy as well
as gas in the transition up to 2050.
At the moment, many experts would like Vietnam to return to developing nuclear power,
because nuclear power is very clean, stable, and has other advantages. Right now, wehave an R&D center for nuclear power study, but everything is decided by the parliamentin the end.
Moderator
It was mentioned that Myanmar has electricity blackouts and many issues with the grid
power system and so forth. Is Myanmar planning to look for financial or technicalsupport immediately from neighbors plus Asia-Pacific economies?
Discussant E
At the moment, sourcing funds is very difficult for Myanmar, even from within ASEAN.
Myanmar has signed an agreement with Russia in 2022 for a small civilian nuclear
power plant but that has not started yet. Myanmar also signed two MOUs with Russia’s
NovaWind for two wind power projects. We also signed power purchasing agreementswith China last month, though they are on a small scale of a total of 90 megawatts. The
project with China involves work between Chinese state-owned companies and the
Myanmar Ministry of Electricity, and the private sector is also involved.
In Myanmar, we actually need 10,000 megawatts of electricity for the whole country, butthree, four years back we had a maximum of 4,500-5,000 megawatts. But security andeconomic headwinds mean that we are only producing around 2,000-2,500 megawatts. If
the projects on hold work out, they will add around 2,500 megawatts. So I would like torequest for help from everyone here in terms of technology and financing. We have a lotof hilly regions and long coastal regions for wind power plants. But we need technology
to find and develop suitable place where we can invest.
At the moment, no investor is coming due to political situation as well as the highly
subsidized electricity cost. For households, it is around 1 to 3.5 cents per unit, and forthe industry, it is 4 to 6-7 cents per unit. Power purchasing agreements are a problem
for investors. The private sector has been pushing the government to review the priceand to increase it to a certain level to attract investment and improve reliability. If you
can help to bring funding and technology to Myanmar, you can help the people,
communities and businesses, so I would like to request such help.
Moderator
There are two basic issues for smooth transitioning to decarbonization: how to ensure
the transparency, and how can we find a compromise between the conflicting public andprivate profit-making views and attitudes?
Discussant C
Regional cooperation in Asia Pacific would be important in tackling the issues that you
mentioned, the conflict between public and private interests. I think we have themechanisms to do so. Our vast experience with regard to regional cooperation can bevery useful in this regard as well.
Discussant B
It is a good start that the international community has begun a dialogue about ESG andwhat is good governance in the economic and social governance area. In these panels andforums, we have to think of ways not only to build capacity building in the domestic
realm, but also international collaboration. How do we move forward not to initiate more
green protectionism in this regard?
Discussant D
The process of greening the economy should not just rely on political commitment.
Political will is important, a top-down process is important, but, right now, we canobserve that process is very much market driven.
Many financial institutions now comply with the Equator Principles, and if you cannot
satisfy ESG criteria, it is very hard for you to get access to the capital. So this is a very
market-centric approach.
To minimize the wastage and achieve a circular economy, a market bottom-up approachis equally as a top-down approach.
There's coordination among international donors, particularly among the developed
countries. Developed countries have two approaches. One is technology for dealing withthe output. For example, you can keep a coal-fired plant with CO2 storage technology.
The other a technology approach from the input. For even Vietnam, what kind oftechnology and approach is more important than the capital cost.
Discussant F
This was a very interesting discussion on various issues. I would like to ask you how weshould treat fossil fuel as there is seemingly no agreement yet at COP28. The questionis whether or not fossils fuel can be abolished or use of them reduced. The final outcome
is unclear, but the Japanese position is that if we could eliminate CO2 from fossil fuelusing CCS or other technology, then we should be able to continue to utilize them. So theJapanese position is to reduce the use of fossil fuel and not necessarily abolish them. I
would like to hear your views on this critical COP28 issue.

Discussant G
In each country, what kind of policy instrument will be used in order to cope with the
reduction of CO2? Is there any tax policy or green bond financial policy? I'd like to knowwhat kind of policies have been adopted in each country. Which were successful? Whichare not doing so well?
Discussant C
I will attempt to combine Discussant F and Discussant G’s points of view. Let me firststate that fossil fuels also are limited in supply, and at some point they will run out. My
colleagues in the renewable energy sector are very confident that a market mechanism
will dominate and lead to a larger share for renewable energy, and this would also
include nuclear power. The key at this point is battery storage, the cost of which is coming
down and will reach a point where the market mechanism will lead to reduction in theuse of fossil fuels. So policy intervention will not be necessary anymore.
Moderator
I would like to conclude our session by making some remarks. First, I think the Paris
Agreement to achieve global net zero target by 2050 and achieve a 1.5-degree target must
be adhered to no matter what. It requires international collaboration. We should
recognize that a smooth transition to decarbonization will create millions of decent jobs.
Given the diverse and transient positions from countries in terms of differential
economic development and per capita income, the global community must assist fossil
fuel-dependent developing countries. Issues relating to smooth transition in developing
countries must be addressed in close coordination with advanced economies.
We really need to work out how to very carefully and effectively phase out all fossil fuelon a timeframe consistent with the 1.5-degree limit. We need to operationalize the loss
and damage fund and further replenish the Green Climate Fund to ensure financial
support for a smooth energy transition for decarbonization.
I believe we will enter a global burning era, not global warming. Unless we take
immediate and effective collective action, we are likely to face a global burning issue
which would be detrimental to all of humankind.

[Closing Session]
Masakazu Toyoda
The speaker thanks participants for their enthusiastic and constructive discussion overthe last two days as panelists or as moderators, and expresses optimism about the world
development and the future of the countries before going on to recap the three sessions
that took place in the forum.
Dr. Josef T. Yap
The speaker notes that he will be active in helping PIDS to co-organize the 2024 Asia
Pacific Forum, and is honored to invite everyone to travel to Manila for the forum nextyear.