A New Paradigm for Asia-Pacific Business

Dr. Noeleen Heyzer (center), at the 9th Asia-Pacific Business Forum. From left: Mr. R. Ratnayake (Director: ESCAP's Trade and Investment Division), Dr. Michael Yeoh, CEO/Director: Asian Strategy &Leadership Institute, Dr. Rebecca Fatima Sta Maria (Secretary-General: Malaysian Ministry of Trade & Industry), Dr. Noeleen Heyzer (Under-Secretary-General of the United Nations and Executive Secretary of ESCAP), Ambassador Richard Boucher (Deputy Secretary-General: OECD), Mr. Mohamed Iqbal Rawther (Chairperson: ESCAP Business Advisory Council)

Datuk Dr. Rebecca Fatima Sta Maria
Secretary-General of the Ministry of International Trade and Industry (MITI),
Government of Malaysia

Your Excellency, Ambassador Richard Boucher,
Deputy Secretary-General of OECD;

Datuk Seri Mohamed Iqbal Rawther,
Chairperson of the ESCAP Business Advisory Council;

Sri Dato’ Dr. Michael O.K. Yeoh,
CEO/Director of Asian Strategy and Leadership Institute;

Excellencies,
Distinguished participants,
Ladies and gentlemen,

Introduction

It gives me great pleasure to welcome all of you to the ninth Asia-Pacific Business Forum in Kuala Lumpur, Malaysia.

The United Nations values our partnerships with the private sector. Business can be a generator of innovation, a driver of new technologies, a primary source of jobs, and the life-blood of economic growth.

Whilst the turbulence and uncertainty of the current global economic environment poses serious challenges, it also offers great opportunities for the companies of our region to move beyond traditional business models, to develop new markets, and to strengthen their value propositions.

Excellencies, ladies and gentlemen,

Sustainable Development is Smart Business

Our challenge, over the next two days, is to identify these opportunities and to explore ways in which they can be used – not only to accelerate growth, but also to change the nature of growth, making it more inclusive, more sustainable, and ultimately more supportive of people and our planet.

As a concept, inclusive and sustainable development is not always well understood by business. It encompasses issues which range from poverty reduction, human rights and social protection, to anti-corruption, governance, environmental concerns, economic policies and even disaster preparedness.

There are some, in our business community who maintain that development is not a business priority, that the business of business is profit at all costs. They regard social and environmental concerns as external to business – better suited to the attentions of governments and society.

My message today, is that business as usual is ill-suited to the new realities and opportunities of our changing world. There is a need for different measures of costs and returns, for instance, which include the impacts of factors such as pollution, staff well-being and community goodwill. Ethical values and trust are also measures which need to be accounted for.

There is also a need to capture alternative kinds of shareholder value, by considering the wider community of stakeholders in businesses. Modern management should seek not only to increase market share, but to increasingly widen the market itself. In an age of diminishing resources, falling demand and shrinking revenues, the interests of our ‘bottom billion’ are the interests of your bottom line.

The United Nations Secretary-General, Mr. Ban Ki-moon, put it best when he said: “The objectives and priorities of the international community and the business world are more aligned than ever before…for business to enjoy sustained growth, we need to build trust and legitimacy…for markets to expand in a sustainable way, we must provide those currently excluded with better and more opportunities to improve their livelihoods.”

This perspective is grounded in solid economic and statistical analysis, backed up by hard evidence, which leads to a simple conclusion: that sustainable development is the smart business of business.

I would like today, to focus on three key messages, which I believe should guide our discussions: regional economic integration, economic fairness, and the need for a new paradigm for Asia-Pacific business.

Excellencies, ladies and gentlemen,

Regional Economic Integration

The central theme of this year’s Forum is the increasingly important role of regional economic integration, to ensure sustained Asia-Pacific growth.

As the world continues to face economic turmoil, especially in the developed countries, regional economic integration, supported by robust South-South cooperation, has become even more important to reduce dependencies and diversify economies.

The European sovereign debt crisis continues, recovery in the United States remains elusive, and rising unemployment is met with deepening austerity. Without the comfortable cushion of our traditional export markets in the developed countries of Europe and North America, Asia and the Pacific must look to sub-regional, regional, and cross-regional opportunities to develop aggregate demand. This requires, amongst other priorities, that we develop and empower our middle- and low-income households to drive that demand.

The new business opportunities offered by the shift in global economic power to Asia, can only be realized however by lowering trade barriers, harmonizing customs procedures & technical standards, improving national and cross-border infrastructure, forging large single markets, and stepping up financial and monetary cooperation. These are the necessary areas of emphasis, not only for the work of organizations like ESCAP, but also in your own national and regional advocacy with your Governmental partners.

We look forward to the creation of the ASEAN Economic Community by 2015, on which much progress has already been made. Regional economic integration is not an end in itself, but an essential tool to reduce poverty and build shared prosperity – contributing to a narrowing of income gaps within and between countries, and the acceleration of the economic development of our least developed countries.

Excellencies, ladies and gentlemen,

Economic Fairness

I know the importance which business places on the analysis of ratios – of liquidity, of efficiency and of leveraging – but allow me to suggest to you today that too often we forget one of the most important ratios for business: the relatively low number of people who benefit from the way that business is currently conducted, compared to the much greater number of those who still do not.

In his new book, The Price of Inequality, Nobel laureate Joseph Stiglitz notes that in America in 2010, 93 per cent of the gain in national income went to the top one per cent. He argues: “We are paying a high price for our inequality – an economic system that is less stable and less efficient, with less growth.” His point is that high and rising levels of inequality are stifling growth and employment.

In the Asia-Pacific region, there are about 1.7 billion people who live on $2 or less a day. The Gini coefficient for our region, which measures inequality, has actually risen from 32.5 per cent in the 1990s to 37.5 percent. Until this changes significantly, the idea of sustaining growth through increased regional demand will remain elusive. This is the second focus of my message today - the importance of business in promoting economic fairness to achieve inclusive socioeconomic development.

More widely shared economic prosperity will reduce poverty, improve the lives of low-income communities, and enhance the stability and growth of national and regional economies. To stimulate strong regional demand, we have to focus on expanding opportunities for decent productive work, and providing fair and equitable ways for all people to earn a living, sufficiently secured by basic social safety nets, so that they can build personal savings and accumulate disposable income.

Our business sector, as the principal source of jobs, plays the central role in this endeavor. I know that many businesses are already looking at issues of supply chain reform – for example – to help protect operations and save jobs when disasters strike. We have seen the impact that the extension of credit and business incubation programmes can have on entrepreneurship, and we know that introducing communities to new technologies, like mobile computing and smart-phones, not only helps them to leap-frog into higher value job opportunities, but also generates substantial new revenues for business as well.

The Asia-Pacific population is also growing exponentially, with an increasing share of young people in many emerging economies. We must, therefore, focus our work on improving opportunities for young people who live in areas of concentrated poverty — such as rural communities and depressed urban neighborhoods — and ensure their access to quality training, health and financial services, while building and cultivating entrepreneurship.

Excellencies, ladies and gentlemen,

A New Corporate Sustainability Paradigm for Asia-Pacific Business

This brings me to the third, and most important part of my message - the need for a new paradigm for doing business in Asia and the Pacific.

Four months ago, governments, businesses, civil society and many other stakeholders gathered in Rio de Janeiro, Brazil, to agree on concrete measures to ensure the Future We Want.

One of the clearest messages from the Rio+20 Conference on Sustainable Development was that there is a direct role for business, in shaping inclusive and sustainable development – well beyond the limited programmes which have been the focus of traditional corporate social responsibility.

This new business paradigm is one of corporate governance, based on the concepts of responsibility, inclusivity, and sustainability. It hardwires into management an understanding that the relationship between business, society and the environment must be one of respect and mutual benefit. Unless we act collectively and responsibly, the future we get may be one that nobody will want.

Rio+20 was an important start. Over 700 voluntary commitments were made, in 28 areas related to inclusive and sustainable development, of which 181 were commitments made by business.

Twenty companies from the Asia-Pacific region were amongst those who made commitments - overwhelmingly related to environment and energy conservation. Infosys of India, for example, committed to become carbon neutral by reducing energy consumption by 50 per cent and sourcing 100 per cent of electricity from renewables. Sime Darby Behad of Malaysia pledged to improve food security and sustainable agriculture. Socentrix of Indonesia will be developing an internet-based platform to promote, monitor, manage and report socially responsible investment funds.

Asia-Pacific business pledges at Rio+20 accounted for just over three per cent of all commitments, and less than 13 per cent of business commitments world-wide. Granted these figures relate to numbers of commitments, rather than value or projected impact, but despite these excellent examples, it is clear that the culture of corporate sustainability has not penetrated sufficiently in our region. We look to our ESCAP Business Advisory Council, and to the participants in this Forum, to take a pro-active lead in this effort in Asia and the Pacific.

Excellencies, ladies and gentlemen,

Thanks & Conclusion

In conclusion, I would like to express my sincere thanks to our hosts, the Government of Malaysia, particularly the Ministries of Foreign Affairs, International Trade and Industry, and Science, Technology and Innovation. The people of Malaysia are well-known for their warmth, hospitality, innovation, and their desire for a more inclusive and secure future.

I would also like to extend my thanks to the Asian Strategy and Leadership Institute (ASLI), for its generous financial support to APBF 2012, and for the excellent arrangements for this Forum. I would like particularly to highlight the efforts of Mr. Mirzan Mahathir, Tan Sri Dato’, Dr. Michael Yeoh, and all your staff who have worked so tirelessly to ensure its success.

We are also grateful to the members of the ESCAP Business Advisory Council, Chaired by Datuk Seri Mohamed Iqbal Rawther, for their substantive inputs to and support for this Forum.

Excellencies, ladies and gentlemen,

The real value of this Forum is the platform that it provides to recognize the important role of responsible business, which can become a leading agent of change and development.

In the future we want, the future for business is one of partnership, leadership and shared, sustainable prosperity.

I wish the Asia-Pacific Business Forum 2012 fruitful discussions and every success.

I thank you.