Closing Address at Asia-Pacific Business Forum 2018
Delivered at Cyberport in Hong Kong, China.
Good evening to you all. It has been a stimulating session, enriched by the power of what the private sector has brought to this 14th Asia-Pacific Business Forum in Hong Kong, held in Cyberport’s beautiful premises.
I am going to capture only a few key points of the Forum on how business through technology, innovation and financing, could help achieve the sustainable development goals by 2030. There was a broad recognition that it is really about getting the means of implementation right which include finance, innovation, science and technology.
A few key points are note-worthy:
First, governments and businesses need to work more closely together to achieve rapid economic, social and environmental transformation, and it was acknowledged that it is much needed. Leveraging this change requires responsive policies and frameworks and ensuring corporates mainstream sustainability into their business models, processes, and practices as well as harness sustainable financing. A lot of work in this area has yet to be done.
Second, the region has taken the lead in nurturing sustainable practices, but we need scale for impact to be visible, and to impact people and societies. So its reach needs to be extended and deepened across the region, given phenomenal learning opportunities not only from Hong Kong, but also several other places which have nurtured innovation. Public enterprises and governments must work closely with the private sector. That is essential because the private sector has to be involved in shaping the right policy framework but also in designing and implementing sustainable development, and then taking the responsibility to scale it up in an effective and efficient manner.
The third area which was also discussed is the financing for green and inclusive businesses. This will be crucial and critical to underpin the change needed to meet growing infrastructure needs. Everybody talked about some $1.7 trillion requirement a year across the region, but it was acknowledged that this does not include what it will take to realize social sustainable development goals. The good news is that there has been satisfactory progress in raising green finance. But it has been confined to the major hubs of Asia. We need to do more to tap investments through green financing in these hubs and improve project readiness to address the climate challenges. Markets should be engaged in the legal regulatory and policy work that securities and exchange commissions and central banks need to do. Besides development of project pipelines, this requires the development of frameworks, innovation in financial instruments, and the capacity to assess projects based on green criteria. Standardization would also help to scale up investments. This is also a lot of work to be done on measurement and monitoring of social and environmental impacts which are important in the context of sustainable development.
Fourth, private investment has to take a lead in nurturing a sustainable future. Governments can do it but there are both resource and expertise limitations. Not every country has rich reserves like Hong Kong. There is a strong business case for sustainable businesses. But many businesses are still too much focused on short-term profits. The reality is that there have been a lot of distractions and disruptions since the 2015 Sustainable Development Agenda was launched. As we all know, and as we heard from Dr. Fung, with the challenges of globalization, there are attendant risks, but of course also opportunities. All in all, I think our region responded well to the crisis and shocks. It has beaten the global recessional trends because it has been an engine of vibrant growth. However, it came with yet another attendant risk which is the growing nationalism which has resulted in growing protectionism or what today is emerging as trade wars. Private businesses cannot reverse the openness and liberalization. But I think, in Asia, businesses were very much about getting down to making money and now it has started to have a soul of its own. Businesses have managed very well despite global downturns though pace of progress on sustainable development has been impacted at the start of the 2030 Agenda for Sustainable Development. So, we have a lot of catching up to do. Backed by this very rich and ambitious agenda, learning from the crisis has forced us to rethink the role of governments, businesses, and capital in society. We have heard in one session about responsible and high social impact investments. It has called for mandatory disclosure by corporations and institutions on carbon footprint. It has called for conduct of ICBC stress tests. It has called for stock exchanges to now subscribe to sustainability and promote international standards for responsible business conduct which allows for assessing the impact not only on the company but also on people and planet. Examples included the United Nations Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises. There is a whole area of things we need to navigate through and figure out what advice is appropriate, where and in what context.
In the fintech session, we discussed the financial inclusion in Asia and the Pacific and how to do it differently to what banking and microfinancing institutions have been doing. Because we have large unbanked populations in this world and we cannot go from door to door to reach out in remote areas. So, there are fascinating mobile applications and combination of other finance and technology advancement and digital financial solutions that have been evolved now to help provide saving options which are critical to mobilize the capital needed. One example is Alibaba’s money market pooling mechanism of small deposits which is now among the largest money market funds in the world. Yet for all its potential to make FinTech work for development, we need to manage associated risks. One mistake which was made in the market was that there would be a downturn in the whole advancement and confidence. So, what we need to do is to work together with all to raise awareness about “financial literacy”. Because when you deal with a client, the client needs to understand what they are buying into. This is true of the banks and fintech, and it was graphically illustrated by one of the speakers how difficult it is for them to force people to read what they are signing off. The other cyber security concern is the need for both skills and appropriate legal and regulatory frameworks to ensure fintech advances in a sustainable and responsible manner. One example is from Pakistan, where they have the campaign for the Computerized National Identity Card (CNIC) rather than use income tax numbers, to rely on 120 million national identification numbers that have been allotted to people. This is a very smart system of tracking what is the status of an individual behind national identity number. It is a fascinating world of digitization.
Let me discuss the session on artificial intelligence (AI) very briefly. This was the most fascinating session with the most competent moderator here. This session was instrumental in showing us the types of artificial intelligence range widely. Some spoke about high technology, the others spoke about defense, so on and so forth. Also, it clearly showed potential impacts. According to UBS, by 2025 the AI talent pool of China and India alone will exceed that of the United States. So, they can have another artificial intelligence war and I think Asia will win. This has, of course, the potential to change the way the public administrations are run, and optimise operations in everything from healthcare, to manufacturing, transport, agriculture, financial and retail services sectors. AI has the potential to catch diseases early, reduce the time and costs of medical care and make education more readily available. But there are also, of course, lots of other concerns. These include artificial intelligence leading to job displacements, something which is gripping Asia a lot, given that it is a fast expanding population. And of course there are concerns about its use to control social and unethical behavior or potential to enable fraud. Governments must therefore work closely with businesses to identify risks and set the parameters for how big data can be used for artificial intelligence, and more generally to maximize artificial intelligence to support inclusive development.
Technology and innovation, coupled with modern financial services, will be critical to close some of the key development gaps in Asia and the Pacific. Governments have a major responsibility to establish conducive responsive sustainable policy and regulatory frameworks. Then it is the business, of you all, in the private sector, to play a role to deliver innovative solutions and efficiencies that were previously unimaginable. So, we count on your support for sustainable development.
ESCAP is the regional commission for Asia and the Pacific. It is committed to work with member States and the private sector. I have to tell you when I was planning and designing the regional commission of May, which is going to be in a very different format, the biggest criticism I faced was that this is an intergovernmental platform. Why are you telling us that there will be other stakeholders taking over the regional commissions? And it took me few rounds of defense, arguments, explanations that actually it is out of the hands of the governments now, but with the businesses. And if we want successful sustainable development in context of our region, we want to invest, energize and ensure the ESCAP Sustainable Business Network delivers to us. So, the discussions on this forum will be built upon, and as a first step, fed into the leaders’ discussions during our upcoming 74th Session of the ESCAP Commission, where leaders like yourselves will be present. We have picked up the subject to be called “Inequality in the era of the 2030 Agenda for Sustainable Development”. We have picked up two very topical topics, one the frontier technology which has been subject of discussion here and we have benefitted from your wisdom. The second will be Asia’s role in multilateralism. Dr. Fung has articulated so successfully the challenges of globalization. The retreat of globalization does not mean retreat of Asia from multilateralism or globalization. Asia is more globally integrated today and regionally integrated. It is integrated well at trade integration level. But financial integration is still lagging. Similarly, there is a lot of scope for social integration and for sustainable development, especially for businesses to be integrated better. So, I look forward to seeing some of you there and enriching the platform of ESCAP for your benefit ultimately, because under the UN Development Reform System, the Secretary-General has already started to deliberate with member States, and the regional commissions will be further transformed into substantive think-tank bodies. While I have been in Hong Kong I have taken the time to interact with many institutions that are performing the role of think-tank. I have the privilege of meeting, of course, the leadership of Hong Kong. And I am deeply impressed by what Hong Kong has been doing, is doing, and will be doing to promote sustainable development as a government also and but also as a business proposition.