Dodwell introducing 2013 APEC

December 21, 2012

On January 1, one of APEC’s founding members – Indonesia – formally takes over from relative neophyte Russia as APEC Chair and host. What better time to review the achievements of the past year and to look forward to what can be expected in 2013?

For those of us located in the heart of Asia, preoccupied with developments in east and south east Asia, Russia’s chairmanship was refreshingly – but sometimes perplexingly – unfamiliar. As we met in December 2011 in a grim and wintry St Petersburg for the informal Senior Officials meeting, the culture was palpably European and our hosts humorously reminded us that this was likely to be as far west as APEC would ever enable us to travel. No offence to our Russian friends, but the refrigerated charms of St Petersburg – and later in February in Moscow – presented a major adjustment challenge. No volume of down jackets, quilted gloves and fur-lined hats could have prepared our officials from Thailand, Indonesia, Malaysia or Vietnam for what minus 30 degrees Celsius meant.

Just as the temperatures were cold, the hospitality was hot. Vodka was as ubiquitous as the stereotypes suggest, and parties were as generous as any we can remember. The climax here for ABAC members was of course the string of three gala parties hosted by Russia’s three ABAC members in Vladivostok in September. The party hosted by Summa Capital’s Ziavuddin Magomodev – who was also ABAC Chair – to mark the end of the leaders’ meeting set new standards for hospitality. No expense was spared to leave ABAC members with an indelible memory of Russian culture, hospitality and style.

But because the Vladivostok APEC Leaders’ meeting fell so early in 2012, in deference to Siberia’s gripping winters, APEC’s sleeves-rolled-up business year was truncated, and we have since had an unusual pause in activity. Russia’s priorities for the year – trade and investment liberalization and regional economic integration; food security; supply chain connectivity; and cooperation for innovative growth – were worked on earnestly, but perhaps provided fewer firm deliverables than our Russian hosts would have liked.

As for liberalization, with recession still gripping the world economy as fiercely as Moscow’s winter, we can perhaps be thankful that APEC cooperation succeeded in preventing backsliding into protection – but this is less satisfying than being able to declare forward momentum. The recessionary backdrop was a persistent challenge that is going to get no less persistent in 2013.

The formal launch of the Policy Partnership on Food Security (PPFS) in comparatively balmy Kazan in July was an important landmark – not just providing substance to APEC’s commitment to ensuring by 2020 secure access for the whole region to nutritious and reasonably priced food, but also providing a potentially important new template for business-government collaboration.

Tackling choke points in the supply chain, and reducing costs along the chain, is a multi-year challenge for APEC, and steady progress was made over 2012. But still the target of cutting 10% of costs out of the supply chain by 2015 looks challenging.

Over the year, a number of Russian proposals on innovation stumbled – in large part because insufficient time had been allowed to introduce the ideas and rally support for them – but there was an eleventh-hour breakthrough with agreement in Vladivostok to create a new body – the Policy Partnership on Science, Technology and Innovation (PPSTI) – to drive innovation strategies forward. This will meet for the first time in April 2013, and is expected to borrow the government-business template created for the PPFS.

But inevitably, the region’s challenges have not gone away, and in certain respects they have deepened: the threat of global recession remains as acute as ever, as does the danger of backsliding into protection. Since the Vladivostok meetings, conflicts over islands in the South China Sea have tested strong regional relationships, and elections in the US, China, Japan and Korea have thrown political uncertainties into the mix. But those APEC members involved in ASEAN have had positive meetings over the autumn and are now rolling up sleeves to create by 2015 the ASEAN Economic Community. Not surprisingly, Indonesia is suggesting that APEC explores synergies with ASEAN’s integration activity as a priority in 2013.

While regional challenges remain acute, the APEC planning meeting for 2013 – the informal Senior Officials Meeting (iSOM) in Jakarta early in December – delivered more innovative ideas for 2013 than many had expected. Yuri Thamrin, Indonesia’s Senior APEC Official and for 2013 the Chair of APEC, identified three key sets of priorities for the year ahead: 1. Auditing progress towards the Bogor Goals; 2. Securing sustainable growth with equity; and 3. Improving connectivity.

Bogor Goals: our Indonesian officials surprised many by arguing that, while we still needed to strive for the Bogor Goals, these were not enough; that much had changed in the region since the Bogor Goals were drawn up in 1994, and that a new initiative was needed to embrace this change; that a “Bali Blueprint for 2030” should be drawn up for leaders in October 2013 that addressed the behind-the-border barriers to trade and investment, regulatory coherence and supply chain efficiency; that this blueprint should strive not just to reduce barriers to trade, but to move towards regional integration.

While most of the Senior Officials strongly endorsed Indonesia’s call for greater ambition, and shared their interest in borrowing best practice from ASEAN, there was surprising but substantial push-back on the need to lift eyes to the 2030 horizon. Indonesia may be hard-pressed to deliver on their “Bali Blueprint for 2030” idea.

Sustainable Growth with equity: this is intended to focus on four distinct areas: SMEs, Food Security, Financial inclusion, and Health, with elaborate action agendas laid out in all of these areas. Interesting details emerged in all areas:

  • The SME agenda is to be mixed with development of APEC’s women’s agenda, with a joint Ministerial planned for Bali in September.

  • The still-fragile Policy Partnership on Food Security is tasked to focus on the “blue economy” – sustainable development of our marine resources n their many forms – and on aligning farmers with the aims of achieving food security by 2020.

  • The Health agenda – which has barely ever attracted any attention from ABAC – is intended to focus on health financing, and the productivity benefits of maintaining a healthy workforce. There would be merit in ABAC devoting some thought to this area of important issues.

  • Financial inclusion is intended to reach into four areas: creditworthiness; financial education; access to finance; and financial regulation. ABAC has done interesting work in this area, but the Indonesian framework suggests we might take a fresh look at these aspects, and perhaps develop our ABAC work on financial inclusion.

Connectivity: Indonesia proposed focusing on three areas: physical infrastructure; education; and emergency preparedness. ABAC of course emphatically shares concern over the need to create a more encouraging framework for private sector investment in building public infrastructure – hence the creation of the Asia Pacific Infrastructure Partnership.

Despite the hiatus of the past three months, APEC officials are expected to begin 2013 at full pace. The APEC Business Advisory Council gathers in Manila on January 20, and the first senior officials cluster (SOM1) will start in Jakarta on January 25 – finishing just in time for the Chinese New Year holiday and the launch of the year of the snake.

And what do our geomancers say about the year of the snake? Traditionally, the snake augurs a good year. Snakes are charming and popular, with impeccable manners and never deliberately noisy or outspoken. They are supposed to think deeply – they are intellectuals and philosophers. This seems to fit our Indonesian hosts very well; we can hope for strong but discrete and diplomatic leadership.


[ Back ]