Apec Business Leaders' SummitPrime Minister
Putra World Trade Centre
Kuala Lumpur, Malaysia
"In the last Century capitalists were certain of the success of capitalism, socialists of socialism, imperialists of colonialism, and the ruling classes knew they were meant to rule..... Little of this certainty now survives".
So wrote John Kenneth Galbraith in 1977. Twenty-one years on, his words still capture the dilemma of our time.
All of us have been affected by the emergence, sudden and unexpected, of a severe shockwave affecting growth across our region and the global economy.
After a 20 year period of growth and improving prospects for our people, none of us can ignore the immense human tragedy that the crisis has left in its wake.
All of us have a strong shared interest in renewed sustainable growth.
APEC provides a means to pursue that goal. Much is expected of us.
New Zealand could not have anticipated, when we accepted the Chair of APEC for 1999, that the coming year could be one of economic downturn.
APEC, after all, grew out of a period of rapid growth, and sustained optimism. The challenge we now face is whether goals formed in good times are durable when times get tough.
Can we deliver on the vision of APEC in the face of recession, painful adjustment and widespread questioning of the benefits of globalisation?
APEC is a young grouping. But it has already taken some far reaching decisions like the free trade goal enshrined in the Bogor Declaration. Here, in Kuala Lumpur, we hope to go further.
We must form a new consensus on restoring sustainable growth among APEC's economies.
At its heart, APEC is about bringing people and policies together through cooperation.
As we look to this task next year, we are conscious that business has a central role in driving the APEC process. Your presence here is vital to our goals.
Building the dialogue between you, the wealth generators, and we the regulators, who represent Governments, will be a key theme for New Zealand.
A number of business events are planned. These include business sessions around the Small and Medium Enterprises Ministerial Meeting in April; a Women's Leaders' Network Meeting and a Business Symposium in June, and a private sector CEO Summit in Auckland in September at the time of the APEC Leaders' Meeting.
The New Zealand Government, and our business delegation here today will also be pleased to engage you in new trade and investment opportunities in New Zealand. We hope, at the same time, you can catch the excitement of our defence of the America's Cup in yachting, and preparations for the new Millennium.
I hope many of you will take the opportunity to discover New Zealand as part of your visit.
Just as people are at the foundation of APEC, so too is the pursuit of policies which support growth, investment and development.
To be of continuing relevance APEC must deliver a credible policy response to the economic downturn.
Credible isn't a quick fix.
It is usually only in tough times, and in this region we are surely facing tough times, that societies deal with deep structural problems. I am an optimist. As such, I believe some valuable lessons, many of them in the area of business practice, not just government, will come out of these tough times.
The experience of East Asia over the past 25 years is a good example of the benefits of sustained growth in improving people's lives. Extraordinary results have been achieved and this is a cause for celebration.
Millions have raised themselves out of poverty in a shorter time and on a greater scale than at any other place or time in human history.
Average life span has increased, rates of infant and maternal mortality have dropped, and access to education and health care have improved.
But this last year has taught us all we can't take continued growth for granted.
Fortunately, APEC is well placed to support a return to growth. Each of APEC's policy "pillars" has a role to play.
First, we need continued progress on trade and investment liberalisation. The basic formula for success in the Asia Pacific region in the past of an open trade and payments system will be just as valid for our future success.
Some re-tuning is required to deal with increasingly sophisticated problems of financial interdependence. However we must stick to the long term course APEC leaders charted at Bogor in 1994.
Some argue that it is now a time to shield ourselves from change, to slow down, or reverse course. To what end? We cannot go back now, nor should we.
Many people in our respective economies are asking us 'what is our vision for the Asia Pacific region in the new millennium'?
If we cannot progressively achieve our goals over the next twenty years when will we?
We need to think carefully about how well markets in the region have been working and what is needed to make markets work better.
When I talk of markets, I am not just talking about financial markets. We need to look at all markets to ensure that business can compete freely, the costs are kept to a minimum and that they are operating under sound legal frameworks.
The challenge for Governments is to lift their game in the areas of competition policy and regulatory reform.
APEC's ECOTECH agenda also has a critical role to play. ECOTECH is not an aid programme but an essential tool for economies to build markets. New Zealand will be seeking to enhance APEC's ECOTECH work next year, particularly in strengthening financial markets.
The second challenge of dealing with the threat of financial contagion is more complex. It would be naive to imagine a clear consensus emerging in the next few days on many of the highly technical issues concerning the international financial architecture.
Political and market opinion is still working through such questions as orderly capital liberalisation, responses to contagious instability, and the respective roles of the IMF, national polices and the private sector in ensuring strong and stable capital markets.
But we can identify some areas where there is an emerging consensus, for example, on the need to strengthen institutional frameworks, transparency, and information disclosure, particularly with respect to highly leveraged capital flows.
I agree with the ideas put forward by Prime Minister Howard of Australia in this regard.
There are no single magic solutions that will apply equally to all of us as we seek to restore sustainable growth.
Nor does any one economy hold a monopoly on wisdom in the area of reform. New Zealand has some experience in moving from a highly regulated to an open economy.
There is much we can learn from each other about what has worked and what has not in terms of providing the stable and enduring conditions in which governments, business and investors can have confidence.
New Zealand has not escaped the economic crisis in the region. Far from it. But without our economic reforms, New Zealand would have been much worse off.
In that sense there is opportunity, as well as risk, in the current downturn.
This is a meeting where we must give an unmistakable signal to financial markets that APEC is firmly committed to maintaining an open trade and investment system.
That is why the outcome achieved yesterday on Early Voluntary Sectoral Liberalisation is so important. It is a clear signal that all APEC members are prepared to move forward in opening markets.
Next year, as Chair, New Zealand will have a special responsibility for advancing APEC's agenda.
We want APEC to make a strong contribution to the resumption of broad-based multilateral trade negotiations in the World Trade Organisation.
We also wish to encourage development of the APEC Food System. The food sector plays a critical role in the lives of everyone in the region. Enhanced rural infrastructure, new technology, and trade in food products will act to improve the food security and welfare of our region.
ABAC's Food System proposal to Leaders is consistent with the Bogor goals and are fully supported by New Zealand.
We must continually bear in mind that access to markets is critical to the economic recovery of all of the economies which have been hit by financial turbulence.
If there is a perception that our economies might be blocked from trading their way out of difficulty over the long-term, if financial markets sense that a return to protectionism is in the wind, there would be a risk of igniting an even deeper crisis.
The recent decades of growth in our region were no miracle. They occurred as a result of the leadership and courage of those who opened up markets, improved their competitiveness and fostered innovation and enterprise. Hundreds of millions of people have benefited.
This city, and Malaysia itself, are prime examples of the impact of sustained economic development.
Equally, nothing in recent events has robbed us of the energy, resources, education and entrepreneurial spirit that are critical to economic development in the future.
Now, we know better than before where our weaknesses lie. By working together, and individually, we have the chance to regain and build our strength.
In the long-term an open trade and investment environment is the passport out of poverty. Let us recommit ourselves to taking the journey together to fully free and open trade and investment in the region.
New Zealand, as APEC Chair, is committed to maintaining APEC's momentum in 1999.
We want to see next year:
further substantive progress towards trade and investment liberalisation and facilitation;
a credible APEC response to the economic crisis;
reinforcement of the capacity of institutions and human resources in the region to deal with the economic challenges we all face, and
the building of broader support for APEC among the wider communities of which we are part.
We can achieve these things through leadership, cooperation and consensus.
We look forward to working with you as we take on this challenge over the coming year.
I also look forward to welcoming you to our country, where the New Zealand people are keen to share with you our enthusiasm about the future and where you will have the opportunity to discover New Zealand for yourselves.