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Speeches and Statements by the Prime Minister

“The Future of Asia: Be Innovative” - Speech by Prime Minister Shinzo Abe at the Banquet of the 21st International Conference on the Future of Asia

Thursday, May 21, 2015

[Provisional translation]

Introduction

Every year, in this stunning season abounding in new greenery, leaders from around Asia gather here in Tokyo to discuss the future of Asia.  It was 20 years ago that this marvelous symposium began.
The first Conference on the Future of Asia, a milestone event, brought together eminent members including then-Prime Minister Dr. Mahathir bin Mohamad, who also graciously joins us this year.  Former Prime Minister Mr. Lee Kuan Yew, one of this symposium’s founding members, sadly passed away this year.
Former Prime Minister Mr. Goh Chok Tong also kindly joins us today.  As I begin my remarks, I would like first of all to offer a prayer, together with all of you, for the repose of the soul of Former Prime Minister Lee.
I too attended Mr. Lee’s state funeral the other day, taking time between my obligations during Diet deliberations.
I stepped off the airplane in Singapore to torrential rain.  I felt that downpour to be like the tears of grief of the people of Singapore and Asia upon losing such a great leader.
As the ceremony finished and we made our way outside, we found that the rains had stopped completely.  It was certainly a case of capricious weather peculiar to the tropics.
But I recalled the pleasure of meeting with Mr. Lee last year.  Japan will contribute even more proactively to the peace and prosperity of Asia and the world.  Mr. Lee highly evaluated my approach of “Proactive Contribution to Peace” and gave it his warm encouragement.  Mr. Lee was someone who always looked ahead to the future.
Outside the ceremony hall, I felt as if I could hear Mr. Lee’s words emanating from Singapore’s bright blue skies, saying, “Now, keep your chins up and move forward, towards the future.”

2015

The year 2015.  It is quite certain that this year will be a major turning point for the future of Asia.
This is because the ASEAN Economic Community will finally be launched.
The countries of Asia are highly diverse in their political systems, their cultures, their peoples, and their religions.  And it is surely this diversity that has given birth to Asia’s dynamism.
This Asia will move forward in integrating their economies while embracing that diversity.  That is a major challenge.
I believe Dr. Mahathir already foresaw such a future a quarter century ago. Seven years ago, the countries of Asia founded the Economic Research Institute of ASEAN and East Asia (ERIA) and ERIA started moving in earnest towards deepening economic ties extending beyond national boundaries.  Building upon the accumulated tremendous efforts of these ancestors, Asia is now poised to take a major step forward towards a single economic zone.
I recall the words of former President Soekarno, the father of Indonesian independence.
“What harm is in diversity, when there is unity in desire?”
Many Asian countries achieved their independence after World War II.  They also attained economic development that can properly even be called miraculous.
Looking back on these 70 years of history, it was prosperity that was the seedbed for peace, and peace that gave rise to prosperity.  Those are lessons that we share in common.
In order to secure Asia’s long-lasting peace and prosperity, we must create an economic zone that is free, fair, and dynamic.  We share in common this goal at which we will take aim in the future.
Therefore, what lies before us is the much larger economic integration of RCEP and FTAAP, extending beyond Southeast Asia.
In this regard, the ASEAN Economic Community that will be launched this year is a tremendous milestone.  On the TPP Agreement as well, the goal is now finally near in negotiations.
I am confident that 2015 will certainly be a year of special mention within the history of Asian economic integration.

Be innovative

We now stand at a historical crossroads.  What future awaits us beyond Asian growth?
Unfortunately, it will not necessarily be only good news.
Failure to meet the continuously expanding demand for energy will put the brakes on our high rate of growth.  And even in Asia, the wave of a graying population is about to surge.
As a result, Asia must be innovative.  We must use innovation to confront the issues that lie in store for us.  This is what I wish to convey to you tonight.
Whether a blessing or a curse, Japan has grappled with the problem of energy constraints for many years as an island nation having only scarce resources.  Having begun to face the issue of an aging population quite early on, we have also improved our medical services.
Japan intends to share those technologies and experiences openhandedly with other Asian nations.  Moreover, I would like to bring about further innovation by working together, through the amalgamation of young minds from around Asia.

Medical services

Let me discuss this in greater detail.
“Youthfulness” encapsulates the essence of Asia.
And yet, 30 years from now, a large number of countries will have more than 20 per cent of their populations over the age of 60.  The reality of a graying society is certainly about to be near at hand in the countries of Asia as well.
Already in various Asian countries, infectious diseases that had until recently been rampant vanished as societies became affluent, while diabetes, cancer, and other lifestyle-related diseases have become increasingly prevalent.
I imagine that Dr. Mahathir, being such a skilled doctor, feels such changes in society very acutely.
Naturally, the medical services that people want also need to change.
I myself am having an endoscopy done regularly to check the state of my internal organs.  The best ways to counter lifestyle-related diseases are early detection and prevention.
The technology of medical instruments, such as diagnostic imaging and ion beams, is constantly advancing.  Moreover, it is also necessary to improve doctors’ skills continually as they utilize these kinds of cutting-edge equipment.
And therefore, I say, “Be innovative.”  Why not do so together with Japan?
Japan has now established state-of-the-art gastrointestinal endoscopy centers in Hanoi and Jakarta and is assisting in the training of young doctors.  And in Mandalay, we have built a breast cancer screening center to help women.
In 2013, I visited the National Maternal and Child Health Center in Phnom Penh.  At that hospital, which Japan built and the local people call the “Japan Hospital,” female doctors from Japan are even now working hard right alongside the local people.  Through almost 20 years of hard work, this Center has succeeded in reducing infant and maternal mortality rates by half.
Japan intends to make its greatest possible efforts to raise Asia’s healthcare standards into the future as well, using our experiences until now together with our technologies.  Over the next five years, in the health and medical fields, Japan plans to assist in developing the capacity of 8,000 young people from around ASEAN.

Energy innovation

We also need innovation in the field of energy.
Three billion people will become increasingly affluent in the years to come.  The amount of energy they will consume will naturally be truly enormous.  According to IEA forecasts, in 2040, Asia’s energy consumption is expected to increase more than 60 per cent beyond the current amount.
Should this demand be met entirely by energy imports, the international balance of payments will deteriorate by more than US$400 billion, even assuming the current low energy prices.  Although natural gas is now a valuable export for ASEAN, in 2040, it will be surpassed by an excess of imports.
And therefore, I say, “Be innovative.”
Japan refined its advanced technologies over the course of several decades after experiencing energy shocks and pollution.  We are willing to share that experience and those technologies with Asia.  We will help Asian countries to realize their energy strategies and contribute to technological development around Asia.  We will spare no effort in our cooperation.
In the energy field, over the next five years, Japan intends to move forward in developing human resources in Asia at a scale of 5,000 people.
In the area of energy conservation, one of Japan’s foremost specialties, we already have various cooperation projects developing.
In Bangkok, Japan’s latest technology has been introduced into hotels.  In those hotels, the switchover to LED lighting has achieved a 90 per cent reduction in energy usage while fitting air conditioning systems with inverters has cut that energy consumption by 40 per cent.
In the city of Putrajaya, Malaysia, we have been demonstrating a transition of public buses over to electric powered vehicles.  Should this succeed, the cities will at last be free from that exhaust gas polluting the air.
And how about using coal, which we can rightly call Asia’s resource, in a more efficient way?
Although coal-fired power plants account for some 40 per cent of the electric power generated worldwide, they are said to be a prime cause of climate change and are only rarely recommended.  However, this too can be resolved through innovation.
Japan has already achieved an efficiency significantly surpassing the world average by combusting coal at high temperatures.  This Japanese technology would reduce greenhouse gas emissions by 1.5 billion tons per year just by spreading to the U.S., China, and India alone.  This would bring about an even greater impact than if Japan were to return to the time before the Industrial Revolution, to have zero emissions.
In addition, efficiency jumps remarkably through the use of the latest technologies for the combustion of gasified coal.  Moreover, by evolving the technology such as through the fitting of fuel cells, there is a good chance of inhibiting the amount of carbon dioxide emissions from coal to the same level as natural gas fired power.
And that is not all.  By utilizing gasification technology, brown coal, which until now has been regarded as unfit for coal-fired thermal power, will become a promising resource.
President Elbegdorj, after the more than five summit meetings we have had over these two years, you are a close friend of mine, so I will say this to you frankly.
By introducing Japanese gasification technology to Mongolia, your vast resources of brown coal dormant in the ground of Mongolia will become a treasure trove.
The Japan-Mongolia Economic Partnership Agreement, which you and I led to reach agreement in principle, puts no restrictions on licensing agreements in the private sector.  The early entry into force of this EPA will most certainly accelerate technical transfer and investment from Japan to Mongolia.
In addition to Mongolia, Thailand and Indonesia also have a substantial distribution of brown coal.
I would like to meet the expanding energy demand by together bringing about further innovations in the field of coal fired thermal power, which is very distinctive to Asia.

Finance giving innovation a firm basis

But our quest for innovation will not stop at energy and medical care.  Safe and highly reliable high-speed rail systems have the power to reshape the flow of people and goods dramatically.  And advanced water treatment systems improve people’s living environments tremendously.
Yes, it is innovation that will give rise to our future.  Japan is ardent about sharing all around the world just such kinds of technologies and systems that are continuously undergoing evolution.
In order to make innovations extend to every corner of Asia, we no longer want a “cheap, but shoddy” approach.
In order to firmly ground in this Asia a mindset in which innovative things are chosen, Japan is determined to play a major role with regard to finance as well.

“Penny wise, pound foolish.”

Since as long as 400 years ago, this expression has been passed down from generation to generation in Japan, from parents to children and children to grandchildren.  It is a way of thinking in which we choose the long-lasting or high-quality item even if the price is a bit higher.  We consider the return we will get, looking at the entire lifecycle.
Of course, the converse is also true:  if you demand high-quality items, then the price will be high and it will take a while to see a return.
Until now, in the area of infrastructure finance, recipient governments’ payment guarantees for short-term risk have conventionally been requested somewhat excessively.
The Government of Japan will challenge that convention.
We will launch a new mechanism that supplies funding for projects with a relatively higher risk profile through the Japan Bank for International Cooperation (JBIC).  JBIC will actively take on short-term profit risk, thereby reforming the practice of asking local governments for guarantees.
We intend to actively make use of such funds in order to spread high-quality and innovative infrastructure throughout Asia, taking a long-term view.
I have no intention to make this a call for “quality over quantity.”  Asia has voracious infrastructure demand, reaching as much as 100 trillion yen annually.  Instead, we should seek “quality as well as quantity.”  Pursuing both ambitiously is perfectly suited to Asia.
However, public funds alone are not enough to cover demand this large.  Precisely to meet such great demand, we must think up a structure for getting a variety of funding from the private sector to flow more into Asia.
The ADB has recently boosted its loan capacity by 50 per cent and is now considering a further capital increase.  Above all, it aims to expand lending to the private sector.  Japan greatly welcomes these decisions.
We should moreover offer not only finance but also equity investments to the private sector.  JICA, in cooperation with the ADB, will establish a new funding mechanism for private sector infrastructure projects.  The ADB’s capacity for mobilizing capital for the private sector will increase to three times its capacity until now.
The Japanese government will also expand its assistance to Asian countries that are moving forward with infrastructure development in partnership with the private sector.  We will provide more than 4 trillion yen in support over the next five years.
Launching this new initiative, Japan will, in collaboration with the ADB, provide Asia with innovative infrastructure financing at a scale of 110 billion dollars—13 trillion yen equivalent—in total over five years.
We should call for even more diverse capital to enter Asia from around the world, changing this place of Asia into land where dynamic innovation comes into full bloom.

Economic integration that promotes innovation

Therefore, I believe that the form of economic integration we aim to achieve, whether it be RCEP or FTAAP, must be something brimming with private sector vitality that promotes various kinds of innovation.
In the near future, when the RCEP comes into being, we will of course achieve economic scale.  Furthermore, in terms of population, the world’s largest economic zone will emerge, as the home to half the world’s people.
Having a large population means that a great many minds will be gathered there.  This means that various innovations will easily come about.
This potential should not be nipped in the bud in the Asian market.  Excessive economic activity by the government sector must not elbow its way past the diverse ideas of the private sector.  We must not create the so-called “bad money drives out good” type of market where counterfeit and pirated products displace advanced technologies, because we Asians respect and encourage innovations here.
We should achieve our shared goals to create a dynamic economic zone, whether it be the RCEP or FTAAP, where better goods and services are properly evaluated and further innovations are induced.
For that reason, we should unite.  In Asia, shall we not work to create a fair and sustainable market that is not swayed by the arbitrary expectations of any country?

In conclusion

This year is also the 70th anniversary of the end of World War II.
Together with feelings of deep remorse over the past war, Japan has told itself in the post-war era that it must make all-out efforts for the peace and prosperity of Asia.
Moreover, not long after the war ended, when the scars of our defeat had hardly faded within Japan, we began providing assistance to Asian countries that had just become independent.
In Myanmar, sixty years ago, we built a hydroelectric power station.
The Baluchaung Hydropower Plant, which was built through the tenacity of the Japanese engineers who grappled in the dense forest with large snakes, elephants, and tigers, has been expanded and repaired repeatedly and is now in magnificent active service, supplying close to 20 per cent of Myanmar’s electricity demand.
Creating quality.  That is the Japanese way of operating.
More than half a century ago, in Indonesia, there was a project to prevent flooding, to tap water for agricultural land, and create electricity through hydropower.  Japan supported the development of the Brantas river for more than 30 years.
“It was then not clear, which one was the main objective, to build dams or to build men.”
These are the words of Suryono, the first General Manager of the Brantas River Basin Development Project.
Assistance from Japan is not one-sided.  The Japanese live under the same roof as the local engineers, and they think and move forward together.  Rather than simply bringing Japan’s technologies into a country, we foster the people there and make the technologies well-established.  This is how Japan operates.
I think, Dr. Mahathir, you can understand this better, if you would kindly recall our track record since the 1980’s, with Japan’s electric appliance and automobile manufacturers achieving successes together with Malaysia.
Many years have since gone by.
Asia, with its ongoing dynamic growth, is no longer a recipient of assistance.  It is instead our partner for growth.  In this Asia, it is also a partner generating innovation.
That’s exactly why I believe that the Japanese way of operation is now much more suited to the Asian countries than ever.
We create quality.
And we think together and move forward together with the people of Asia.
From that, I am quite certain that we will be able to create marvelous innovations that enable us to resolve the various challenges that Asia is likely to face going forward.
There is only one key phrase for carving out the future of Asia:  “Be innovative.”
Against that backdrop, Japan is ready to make its greatest possible efforts.
Thank you very much.

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