Japanese Finance Minister Noda proposes 'Asia Cargo Highway' to be shared with other Asian countries as a common goal of trade facilitation, creating seamless flow of goods in Asia

Sandy Yang

Sandy Yang

May 6, 2011 – Ministry of Finance Japan

HANOI, Vietnam , May 6, 2011 (press release) – 1. Introduction

Mr. Chairman, Mr. President, distinguished Governors, ladies and gentlemen,

It is my pleasure to address you at the Forty-Fourth Annual Meeting of the Asian Development Bank (ADB). I would like to express my sincere gratitude, on behalf of the Government of Japan, to the Government of Viet Nam and the people of Hanoi for their wonderful hospitality.

Japan and Viet Nam have a long history of trade partnership with each other and have been forming a close relationship. For example, a Japanese town prospered in the Vietnamese city of Hoi An in the 16th century. When Prime Minister Kan paid an official visit to Viet Nam in October last year, the two countries agreed to promote “the Japan-Viet Nam Strategic Partnership“ in a comprehensive manner, and this is an example of the close bond that they have strengthened in a broad range of fields, including trade and investment, economic cooperation and tourism.

I strongly hope that the Annual Meeting of the Board of Governors of the ADB will provide an opportunity to further strengthen the relationship between Japan and Viet Nam.

2. The Great East Japan Earthquake

As a result of the Great East Japan Earthquake, about 30,000 people are dead or missing, with nearly 130,000 people taking refuge. I would like to express my deepest gratitude for the heartfelt messages of condolences and encouragement sent to Japan from more than 140 countries/territories and nearly 40 international organizations, including the ADB, and the people all over the world. We have been greatly encouraged as well by the ADB staff members’ cooperation for their generous donation to support Japan.

As Japan is prone to natural disasters due to its geographic conditions, the Japanese government and people have taken a variety of disaster prevention measures. However, the earthquake and tsunami this time, the scale of which far surpassed the assumptions based on our past experiences, have caused widespread serious damages.

The Asia-Pacific region is particularly prone to natural disasters such as earthquakes and floods, where numerous disasters have inflicted damage in the past. About 90% of the people who were affected by water-related disasters such as tsunamis and cyclones between 1978 and 2007 lived in the Asia-Pacific region. We must redirect our attention to this harsh reality.
Natural disasters take away countless precious lives, and ruin past development efforts instantly. In that sense, disaster prevention can be considered as the most important development issue. However, at the same time, it could be often undervalued. Mainstreaming of disaster prevention in development agenda may be difficult because the results of disaster prevention efforts could be observed only when a disaster actually occurred, and also because it would be extremely difficult to measure how much prevention efforts would have mitigated the damage against the counterfactuals.

I think that the lesson we have learned from the recent disaster is that in disaster prevention, it is important not only to develop the necessary physical infrastructure but also to mainstream the importance of disaster prevention in the mindset of both policy makers and citizens. It is essential to learn about successes and failures experienced in the past disasters, and share what is learned by policy makers and citizens through education and public relations activities.

It may be the most opportune time now to think about how we strengthen the disaster prevention, as the devastating earthquakes and tsunamis draw global attention. As a country with a history of acute engagement in international cooperation for disaster prevention, Japan intends to contribute even more to strengthening the disaster prevention in the Asia-Pacific region, in close cooperation with the ADB, by disseminating our experience of the recent earthquake and tsunamis.

Regarding imports of foods and other products from Japan, some countries and territories are taking such measures as requesting radiation inspection and requiring the attachment of certificates of inspection. The Japanese government has adopted regulation on agricultural products and foods in accordance with international standards and is conducting daily inspection: agricultural products and foods that show radiation levels exceeding the regulatory limits will not be shipped domestically or exported to other countries. Regarding industrial products as well, production has been halted at factories located within a radius of 20 km from the disaster-struck nuclear power station. In addition, Japanese industrial products are manufactured under a strict quality control system. At major Japanese ports, such as Keihin Port, radiation measurement on containers and ships used for export is conducted and the results are certified. Japan intends to promptly provide the international community with accurate information with a maximum level of transparency. Therefore, I would like to ask other countries to react calmly, based on scientific facts, to the current situation in Japan.

3. Expectations for ADB

Amid the global economic and financial crisis, the recovery of developing economies has led the global economy. Currently, the Asia-Pacific economy shows strong growth. According to “the Asian Development Outlook” issued by the ADB in April this year, developing economies in the Asia-Pacific region are expected to keep growing stably at 7.8% in 2011 and at 7.7% in 2012, serving as an engine for the global economy.

(1) Reducing poverty and inequality Despite the recent strong economic growth in the Asia-Pacific region, two-thirds of the world’s poor, or around 600 million people, remain in poverty in this region, and inequality has been worsening. Food prices have been rising sharply, fueling concerns about the impact on the poor. Poverty and inequality in fragile states in the Asia-Pacific region may pose a threat to regional stability.

Although the Asian Development Fund (ADF) has contributed to poverty reduction to date by providing assistance to the least developed countries in the Asia-Pacific region, poverty reduction continues to be a major challenge. This year, negotiations on the 10th replenishment of the ADF (ADF11) are scheduled to be held. ADF donors need to fulfill their obligations of existing commitments duly for a success in the next replenishment. For the successful replenishment, amid the rise in the income level in Asian and the severe fiscal conditions in donor countries, it is also important for the ADB to prioritize assistance as well as do its utmost to make effective use of its internal resources, and for emerging donor countries in the region to increase contributions. Based on such efforts by the participants in the replenishment, Japan would like to contribute duly to a successful conclusion of the ADF11 negotiations.

Some countries in the Asia-Pacific region have gained better access to the capital market than before as a result of their rapid economic growth. I believe that the scope of assistance for those countries should be focused on providing appropriate policy advices and sharing of the best practices.

(2) Promoting education Needless to say, education plays an important role in achieving sustainable economic
development in the medium- to long-term. Under its long-term strategy, “Strategy 2020”, the ADB prioritizes education as one of the core areas of its operation. In comparison with other core areas, the ADB is required to put more efforts in education. We expect that the ADB will improve its capacity and devote more efforts in education sector assistance.

(3) Promoting regional cooperation and integration Trade between Asian countries has been active for centuries. For example, I have heard of news that the Kan’ei Tsuho coin, that was minted in Japan in the Edo period, discovered in Viet Nam that demonstrates circulation of the coins in Viet Nam in the 17th century.

The ADB has been engaging in the GMS (Greater Mekong Subregion) program, a framework for economic cooperation among six countries located in the Mekong River basin, including Viet Nam, with which it has been contributing to the progress in cooperation in the Mekong subregion. In development projects that may affect neighboring countries and regional-integration projects, they may face difficulties in coordinating the interests of the relevant countries concerned. We expect the ADB to play the role of an “honest broker” in the planning and implementation of the projects that require such coordination.

To achieve sustainable growth of the Asian economies, it is important to promote regional cooperation and integration by facilitating and expediting cross-border flow of goods. Japan proposes the concept of an “Asia Cargo Highway” to be shared with other Asian countries as a common goal of trade facilitation and seeks to realize it to create seamless flows of goods in Asia. Last year, at the ASEAN-Japan Summit and the APEC Finance Ministers’ Meeting, Japan announced a new initiative with a contribution up to 25 million dollars to the ADB for trade facilitation in the region. Japan will work closely with the ADB and other major players, such as the Japan International Cooperation Agency (JICA) and the World Customs Organization (WCO), to support enhancement of connectivity in Asia through further trade facilitation.

A major challenge is posed on how to make use of the abundant savings in the Asia-Pacific region for growth-oriented investment such as infrastructure development. The lesson that we learned from the Asian Currency Crisis is that in order to establish a virtuous circle of savings in the region flowing into intra-region investment, it is essential to develop regional bond markets. We highly appreciate the important contributions that the ADB has made to the establishment of the Credit Guarantee and Investment Facility (CGIF) and the ASEAN+3 Bond Market Forum (ABMF) under the Asian Bond Markets Initiative (ABMI) promoted by ASEAN+3.

We welcome the recent establishment of the ASEAN+3 Macroeconomic Research Office (AMRO), which monitors and analyzes the regional economy under the Chiang Mai Initiative multilateralization (CMIM), and the appointment of its Director. It is important for the AMRO to strengthen its surveillance function in cooperation with the ADB.

4. Toward re-election of President Kuroda

Under the leadership of President Kuroda, the ADB has played a significant role in poverty reduction, promotion of economic growth, regional integration and response to the global economic crisis in the Asia-Pacific region.

Since assuming the presidency in February 2005, President Kuroda has undertaken thorough reforms on various aspects of the ADB, introducing development effectiveness (results) framework, strengthening environmental and social safeguard policies, enhancing the governance of the ADB, and reforming the human resource management system. In addition, he formulated the ADB’s long-term strategy, “Strategy 2020”, with specific development pillars, namely infrastructure development, environment, regional cooperation and integration, financial sector development and education. With a view to enabling the ADB to proceed further toward achieving such a mission, President Kuroda successfully led the ADB to win supports for the general capital increase to triple its capital successfully for the first time in 15 years, which was agreed upon in April 2009. As for the ADB’s operations, he promoted assistance for fragile states such as Afghanistan and Pakistan. In addition, President Kuroda implemented ADB’s swift and effective assistance in the aftermath of the recent global economic crisis by mobilizing excess liquidity in the Asia Development Fund (ADF), creating new facilities, and enhancing trade finance promotion program, thereby demonstrating his superb leadership in strengthening the ADB’s support for growth and poverty reduction in the Asia-Pacific region.

The Asia-Pacific region is left with challenges to be tackled, including reducing poverty and inequality, and meeting large infrastructure needs. I believe that the strong leadership exercised by President Kuroda remains essential. At this conjuncture, last month, President Kuroda expressed his intention to run for re-election, which I strongly support. I strongly hope that the other Governors will also share my support to President Kuroda.

5. Conclusion

Mr. Chairman, Mr. President, distinguished Governors, ladies and gentlemen, Japan is facing its greatest hardship since the end of the World War II. However, we will devote ourselves wholeheartedly to the restoration and reconstruction work to recover from the devastation caused by the Great East Japan Earthquake. Although this disaster has put Japan in a very difficult situation, I would like to stress our willingness to keep supporting the ADB so that Japan can grow together with the Asia-Pacific region.

Thank you very much for your kind attention.

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