The world economic order is under stress due to widening inequality, climate change, disruptive technology, rising protectionism, transactional politics and populist politics.
However, regional economic integration is thriving amid slow global growth.
More attention and investment is needed to accelerate governance reform for an inclusive, resilient and sustainable society.
Innovation in the public sector is critical to improving state performance and adaptation to emerging challenges.
Asia Pacific Economic Cooperation (APEC) is so far the largest economic cooperation mechanism in the Asia Pacific region, which shares 59 percent of world GDP, 48 percent of global trade and 53 percent of global foreign direct investment (FDI).
Vietnam, who became the member of APEC in1998, will be hosting the APEC economic leaders’ summit this week in Da Nang, a coastal city in the central part of Vietnam.
Notably, Vietnam has signed free trade agreements with 18 members of APEC, in which the US, China, Japan, South Korea, Hong Kong, Malaysia and Singapore are the main export markets.
“After more than 30 years of reform and extensive regional and international integration, Vietnam today is a highly open and dynamic economy, projected to become one of the 10 fastest growing economies in the world,” stated Vietnamese President Tran Dai Quang.
APEC economies are growing in tandem with the global economic recovery, but the growth rate is still lower than that before the global economic crisis started in 2008.
According to the International Monetary Fund (IMF), global growth is projected to grow by 3.5 percent in 2017 and 3.6 percent in 2018.
US President Donald Trump has called for free, fair and reciprocal trade. Guided by the “America First” foreign policy, the US will put more pressure on other economies to give more favourable treatment of the US in terms of trade and investment relations.
In addition to fair and reciprocal trade treatment, the US is also interested in expanding cooperation on the digital economy, services liberalisation and women’s participation in economic development.
Japan is interested in developing a regional common strategy and action plan to further liberalise trade and investment. Maintaining an open and free Indo-Pacific is also one of the core foreign policy interests of Japan.
China is willing to take the helm of advancing the liberal economic order by promoting an open multilateral economic system and facilitating trade and investment.
China is interested in linking the Belt and Road Initiative (BRI) with other regional mechanisms such as APEC.
China is also interested in setting up a cooperation framework to facilitate cross-border e-commerce. It has proposed creating the Asia-Pacific Model of E-port Network to improve information exchanges among the ports.
The main challenges of the upcoming APEC summit are how to foster open and inclusive global and regional economic governance, how to ensure open and fair regional trade arrangements, how to overcome the challenges stemming from climate change and the fourth industrial revolution and how to link trade with the realisation of the UN sustainable development goals.
Addressing at the Pacific Economic Cooperation Council General Meeting in May this year, Vietnam’s foreign minister Pham Binh Minh said: “In the increasingly uncertain and volatile global landscape, more than ever, we need a regional architecture that is transparent, open, rules-based, constructive and responsive.
“We will also need innovative forms of regulatory and trade collaborations and coherence, address next-generation trade and investment issues, capacity building and economic and technical cooperation,” he added.
Under the theme “creating new dynamism, fostering a shared future”, there are four priority areas – promoting sustainable, innovative and inclusive growth, deepening regional economic integration, strengthening competitiveness and the innovation of Micro, Small and Medium Enterprises (MSMEs) and enhancing food security and sustainable agriculture in response to climate change.
Looking ahead, the global economic centre of gravity remains in the Asia-Pacific.
However, the continued success and dynamism of the region relies on two structural reforms.
First, the region needs to speed up governance reforms at both the national and international levels to address the issue of inequality.
Second, the region must develop a reform strategy to better utilise the new drivers of growth such as the digital revolution, innovation and women empowerment and entrepreneurship.
Concerning the role of women in economic development, the APEC ministers’ meeting last month suggested three priorities.
First, promoting gender equality for sustainable, innovative and inclusive economic growth.
Second, enhancing the competitiveness and innovation of women-owned MSMEs.
Third, narrowing gender gaps in human resource development.
Chheang Vannarith is a Southeast Asia analyst based in Singapore and Cambodia.