Economic prosperity moving into the year of the dragon

From Vickneswari Gannason in Hong Kong

What does it mean for Asian businesses in the year of the dragon? The Asian Financial Forum, a two-day financial summit starting on Jan 16 in Hong Kong brought forth some insights to the global economy and how Asia contributes to sustainable growth.

The dragon as a creature indicates strong leadership and bold decision-making but it also resonatess with a quick temperament. How then can Asian businesses move courageously while striking a balance in year 2012.

"Here in Asia, inflationary pressure is relatively light, governments have achieved generally balanced budgets, banking systems are stable and borrowing is inexpensive," said Hong Kong SAR Government chief executive Donald Tsang. "These sound fundamentals," he noted, "provide a solid platform for growth and stability."

Drive from within

He highlighted that Asia needs to drive domestic demand and the government of each country needs to have a relook at their policy measures. "In Hong Kong amongst others, we are looking at stepping up infrastructure development because this would increase the capacity for long term sustainability."

With infrastructure development, more business opportunities can be generated and this would encourage more SMEs to be participative in Hong Kong's development.  As at December 2010, there are about 296 000 SMEs in Hong Kong. They constitute over 98% of the territory's business units and account for about 48% of private sector employment.

In encouraging a more balanced economy, Hong Kong is diversifying and concentrating on six growing industries, including medical and healthcare, education services, innovation and technology, the creative and cultural industry and green industry. These industries would be spearheaded by the corporates and SMEs alike.

Keep close to neighbours

According to Development Research Center of the State Council president (Minister) Li Wei during the plenary session ‘Insights on the global economic outlook and how Asia contributes to sustainable growth': "When Asian economic history is recollected, it would reveal two lessons on the way Asia stayed clear from the financial crisis. One, we changed and invested significantly in our private domestic market and lessened exportd and secondly, we formed closer collaborations and partnershipd with our neighbouring countries."

Such collaboration could be via government to government agreements and business to business relationshipd. "It is important for us not to forgo those near for those who are far. A Chinese proverb says, neighbours nearby better than relatives afar."  Li Wei, stressed the importance of Asian partnerships, and that this makes good business sense, as with China being forecast to be the largest economy in the world, such partnerships would strengthen the region as a whole.

In the same plenary session, Asian Development Bank president Haruhiko Kuroda said that growth in Asia in the year 2012 is viewed in a cautiously optimistic manner. "Asia currently only accounts for less than one third of the world's GDP but it is worth noting that we represent a growth rate of more than half of the global growth rate."

Better human capital and jobs

This would mean robust growth in 2012. Despite the good outlook, he highlighted potential spillover of the Eurozone crisis to Asia and the increase in commodity prices, for example oil prices due to the volatile environment in oil producing nations would pose as a downside risk.

Having said that, he highlighted there are ways to achieve sustainable growth in Asia. "One, we would need the creation of more productive jobs. Four hundred and twenty million Asians will enter the labour market by 2013 and it is necessary that the market can provide decent opportunities for the coming workforce."

Infrastructure development, building of human capital and greater investment in Asia itself would ensure sustainable growth, he added.

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