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Speeches and Statements by the Prime Minister

Speech by Mr. Yoshihiko Noda, Prime Minister of Japan, on the Occasion of the 18th International Conference on the Future of Asia

Thursday, May 24, 2012

Your Excellency Mr. Lee Kuan Yew, former prime minister of Singapore,
Your Excellency Mr. Mahathir Mohamad, former prime minister of Malaysia,
Distinguished guests,
Ladies and gentlemen,

It is my great honor to have the opportunity today to talk about the future of Asia and the role of Japan in the presence of senior statesmen and other prominent people who have laid the foundation of the "Asia-Pacific Century" and who are playing the central roles in political and economic affairs in their countries.

First of all, I would like to express my appreciation once again for the kind support and encouragement that Japan has received after the Great East Japan Earthquake of last year.

A little more than one year after the earthquake, we are still midway through restoration and reconstruction efforts in the disaster-affected areas, yet bright signs are starting to appear.

One bright sign can be seen in the coast of the disaster-affected areas. The volume of cargoes handled at tsunami-damaged ports in the Tohoku region has recovered to the pre-earthquake level. Moreover, regarding the fishery industry, which is a core industry of the disaster-affected areas, the value of fish catches landed at ports in Miyagi Prefecture, for example, recovered to around 80% of the pre-earthquake level.
Although the Japanese economy as a whole was severely damaged, immediately after the earthquake, with the supply chains of manufacturing industries disrupted, the economy has achieved strong recovery supported by reconstruction-related demand among others. According to data announced the other day, in the most recent quarter, Japan's GDP recorded a high growth rate of 4.1% on an annualized basis.
Restrictions on imports of Japanese products and travel to Japan that were introduced immediately after the earthquake have been relaxed or removed in many countries. I strongly hope that countries still retaining such restrictions will review and relax them in light of the latest situation in Japan.

(1. Asia-Pacific Century in the Context of World History)

Thinking about the future of Asia, let me first reiterate that we, who live in Asia now, are unusually fortunate in the long history of human civilization.
Since the beginning of human civilization, its center of gravity has been moving westward.
The first civilizations were born in the Yellow River valley, the Indus valley, Mesopotamia and Egypt, and then European civilization flourished through the Greek and Roman periods and thereafter. After the era of the British Empire, the center of gravity moved to the United States in the 20th century.
Now that the U.S. is pivoting toward the west side of the Pacific, the Asia-Pacific Century is dawning in earnest.

(2. Affluence Led by the Middle Class)

The most notable feature of the Asia-Pacific Century is increasing affluence on an unprecedented scale.

According to the most up-to-date forecast, the combined GDP of Asian emerging countries is expected to reach US$20 trillion in five years, creating a huge economic area that rivals the United States and the European Union. Given that the combined GDP was just around US$2.5 trillion at the beginning of the 21st century, their growth is amazing.

The increasing affluence will trigger an explosive expansion of the middle classes. Over the next decade, more than one billion people will form a new middle class, and a virtuous circle to be created by their strong purchasing power is certain to act as a powerful engine of the global economy.

(3. Japan as a Looking Glass into the Future of Asia)

However, a rosy future in which affluence will spread to every corner of Asia is not so such a simple as to be automatically realized without effort on our part.

To realize prosperity, it is essential to prepare for various risks that lurk along the way forward. What risks should we bear in mind and how should we guard against them?

Clues to these questions can be found in the string of challenges faced by our country a little more than a year after the Great East Japan Earthquake.

Recovering from the earthquake damage. Reformulating the energy policy in the wake of the nuclear power plant accident. Putting the struggling middle class back on its feet. Responding to the aging society with a falling birthrate that proceeds at an unprecedented speed. My mission is to face up to these challenges and find a solution to each of them.

I would presume that many people have realized that some of these challenges are common to Asia ― that is to say, any Asian country may have to be confronted with these challenges 10 years or 20 years from now.

The threat of Mother Nature was too great to be underestimated even in Japan, and the earthquake and tsunami disaster deprived many people of peaceful life in their home towns. In Asia, which is prone to natural disasters, it is essential to learn from the lessons of the Great East Japan Earthquake and strive to build disaster-resilient towns.

Sooner or later, Asia, which is the world's largest fossil fuel-consuming region, will face a situation in which resource and energy constraints limit the growth, so long as it continues the conventional resource-intensive growth. It is an urgent task to materialize "low-carbon growth."

As H.E. Mr. Lee Kuan Yew, former prime minister of Singapore, has been warning, Asia is certain to be overwhelmed by the aging of society in 2020 and beyond. We must make an early start in fully preparing for social problems to be caused by the aging of society.

Can Asia contain such risks and maintain a robust and vigorous society? Japan is a looking glass that offers a glimpse of the future of Asia as a whole: We must tackle the challenges earlier than any other Asian country.

(4. Japan's Challenge as a Model for the Whole of Asia)

One typical such challenge is the "Comprehensive Reform of Social Security and Taxation System".

In the postwar period, Japan achieved an economic growth of an unprecedented scale thanks to the presence of a strong middle class supported by solid social security systems, such as universal health insurance and universal public pension. However, as the aging of society is progressing at excessive very rapid rate, we must waste no time in drastically reforming our social security systems so as to make them sustainable.
Although the arrival of an aging society has long been expected, this problem has been put off.

By carrying out this reform, I would like to pioneer a "politics that makes decisions," without putting off problems. I am fully committed to carrying out this integrated reform as one of my top priority tasks precisely because I regard it as a challenge that must be tackled through "politics that makes decisions."

Unless Japan overcomes this long-pending homework and sets forth a clear solution, the same challenge will be left for other Asian countries destined to follow the same path of aging society in 2020 and beyond.

I am resolved to implement this reform by all means and present an Asian model of sustainable aging society.

(5. To Lay the Foundation of Regional Prosperity)

To realize an affluent future for Asia, Asian countries must work together to build a common foundation for prosperity in addition to their own measures .

Achieving both "fiscal consolidation" and "economic growth" at the same time is the very prerequisite of prosperity. In particular, when the population ages, there will be enhanced awareness regarding the need to create a favorable environment for promoting economic growth as a challenge that is common to the entire region.
I am sure that the Free Trade Area of Asia-Pacific (FTAAP), which aims at high-level economic partnerships, will grow in importance as a foundation to promote economic growth in the region.

To realize the FTAAP, we will continue consultations toward participating in the Trans-Pacific Partnership (TPP) negotiations with the countries concerned. At the same time, we will seek the China-Japan-ROK Trilateral FTA on which the leaders reached a consensus to launch negotiations by the end of this year at the recent Japan-China-ROK summit as well as a Regional Comprehensive Economic Partnership (RCEP), centered on ASEAN, in parallel.

I hope that these endeavours will stimulate each other so that a dynamism will be in place where all of them will be further invigorated.

As such, Japan intends to take the lead in the rule-making of trade and investment in the region by using various forums, and to lead the discussions.

It is also important to accelerate low-carbon growth by pooling cutting-edge knowledge collected from various countries. The East Asia Low Carbon Growth Partnership Dialogue, which was held in Tokyo last month, represents a pioneering initiative for that purpose. As a country with the most advanced energy-saving technology in the world, Japan will continue to play the leading role in this field.

(6. To Bring Stability Essential for Prosperity)

To pursue prosperity, ensuring region-wide stability is essential. To that end, it is important to deal with disputes based on common rules.

Open regional cooperation is the foundation of regional rule-making. One example of such cooperation is an initiative by Japan and ASEAN to enhance regional connectivity. By extending this initiative through Myanmar, where reform is proceeding, to rapidly growing South Asia, we can expect further regional development.

Another important effort that contributes to regional stability is an agreement on concrete measures to strengthen the Chiang Mai Initiative in order to prevent the financial crisis that started in Europe from spreading to Asia.

Japan will continue to play an active role in ensuring regional stability by enhancing the security of the Asia-Pacific region through multi-layered efforts to establish an order and rules in the region, taking advantage of various forums, including the East Asia Summit and APEC.

(7. Conclusion)

Tomorrow, I will visit Okinawa to host the 6th Pacific Islands Leaders Meeting. We will hold meaningful discussions with a view to ensuring the peace and prosperity in the Pacific islands region.

There are a number of challenges that various countries must work together to overcome, while performing their respective responsibilities, in order to further promote the Asia-Pacific Century firmly underpinned by prosperity and stability.

Intellectual exchanges as represented by this forum on "the Future of Asia" can provide an opportunity to recognize such challenges anew and promote regional cooperation. I will conclude my speech by paying respects to the efforts being made by all people involved and expressing hope for further development.

Thank you for your attention.


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