Leveraging the power of Asia

By Cassandra Mascarenhas

In this ever-changing global economy, there will always be a new business normal and trailblazers in business must constantly resort to more efficient and effective practices to become better with less, whilst competing against the best.

Addressing this need for enlightening Sri Lanka’s corporate world on global business leaders’ best practices and what’s in store as ‘next practices,’ the Chartered Institute of Management Accountants commenced its annual flagship event, the 35th CIMA Business Leaders Summit, last evening.

The CIMA Business Leaders Summit 2012: ‘Power – form, flexibility, force’ aims to provide a platform on which intellectual engagement can take place and this year too, boasts an impressive line-up of local and international speakers, leaders in their own industries and spheres of work, to share their insights so that participants will gain valuable skills and insights to enhance their own leadership styles.

Unleashing Asia’s power

The keynote speech at the inauguration of the summit was delivered by former President and Chief Executive of Engro from 2004 until his early retirement in 2012 and current Senior Vice President of Pakistan’s Tehreek-e-insaaf political party Asad Umar who drew on his vast expertise to address the gathering on the topic ‘Leveraging the Power of Asia,’ which he described as being “one hell of a power”.

He commenced by observing that over the past three to four centuries, the world has gone through an incredible transformation with Asia being at the receiving end of this transformation for most of this time. The world about three centuries back was in a relatively equal place with per capita incomes between the rich and poor averaging at no more than 3:1.

What happened reasonably soon after the industrialisation of Europe was that the advantage of technology led to a period of colonisation during which most of the world outside Europe including Asia got colonised and the two centuries following that saw the leaders of global economies pulling further and further ahead of the rest of the world, Umar pointed out.

However, this changed following the Second World War and within half a century of the independence of Asia, Umar noted that some very interesting dynamics emerged as these countries took control of their destinies – some better than others.

“This phenomenon is unstoppable. It’s only 20 years since we have seen this modern phenomenon of Asia emerging and it’s just going to keep growing. The problems we are seeing now around developed countries reflect some basic fundamentals which cannot be denied,” he said.

The middle class in developed countries, that is now competing for jobs which are increasingly been done in emerging markets, is feeling the pressure of that competition. “Now what we need to see in Asia is to understand these dynamics and why certain Asian countries have benefitted greatly from it and how those who haven’t can do so.”

 

Understanding global competition

Asia is 60 per cent of the world population and a very large part of this population is becoming middle class with the purchasing power to afford modern goods and services. Economies are hitting the sweet spot between $ 2,000 and $ 5,000 per capita income and more and more people are getting added to the roles of those in Asia who have the ability to participate in the global economy.

“This 60 per cent of the population still has only 29 per cent of the global GDP. While there has been tremendous progress, the room for catch up is still significant and this momentum will be with us and drive increasing prosperity as we go forward. How will we ensure that this will happen?” Umar questioned.

“Asia needs to understand that the 21st century is a world of global competition and needs to compete on the basis on the knowledge, skills and hard work of your people. Your entire competitive strategy is going to be driven by the quality of your people. Education is a major part of it and it’s very instructive to look at the developed world today.”

Umar also stressed on the importance of understanding the power of trade. Asia only has 33 per cent of global trade and those economies that have done the best in Asia are those who understood the power of trade. The world is a $60 trillion economy and in order to leapfrog and make a push for development, he stated that it is essential to focus on that global economy, identify opportunities and build upon it as China, Taiwan and Japan have been doing over the past couple of decades.

Intraregional trade

“While global trading opportunities are critical, one of the most important drivers of development is intraregional trade. The world is falling back more and more on regional blocs as the primary basis on which to compete and those parts of the world integrating the regional economies are the ones doing the best. The lowest intraregional trade in the world is in South Asia and the lowest per capita incomes in the world are also in South Asia. We have an ability to find and focus on the differences between us instead of understanding that are fates are intrinsically linked. East Asians learned this lesson very well.”

What is also very interesting to note, he added, is that while the world is changing, the increasing power of Asia is not reflected in the global political framework in the world today.

“I would like Asia to become an integrated part of the global infrastructure and to be able to do so without the destruction caused when the large set of major economic powers emerged. So far the emergence of China and to a lesser extent India has been peaceful,” Umar said.

“Europe is small but increasingly integrated and although that economic union is under stress right now, that integration one of the reasons why it has continued to enjoy a more than proportional representation in the global arena although its relative economic clout has declined over the years.”

Asia is divided into blocs – and again not as a means of competition but as a means of constructive engagement, it is important to ensure that the emergence of Asia is reflected in the global political and economic infrastructure.

“In order to make a true difference, the state, business and individuals needs to play a synergistic role to achieve real sustainable development. There can be strategic interventions by governments and but in general, the private sector has to be the engine of growth for your companies to be globally competitive and for that you need a conducive environment,” he stated.

Umar acknowledged that to build great companies requires great leaders who have great vision to create these great companies and drew upon the example of Narayana Murthy, the co-founder of Infosys Technologies as one such leader.

“We need great leaders who are able to create great companies who are facilitated by the State and are empowered to grow and become globally competitive but what brings all this together? When you know that the only source of value creation are your people and therefore all state policies are directed towards that fundamental source of value creation, that’s when you find true development that is sustainable, which lifts people out of poverty and enriches their lives and brings about peace and prosperity and increasingly, as the rest of Asia gets on that bandwagon, you will see the true power of Asia unleashed.”

Ensuring flexibility

The Chief Guest at the inauguration, Governor of the Central Bank of Sri Lanka Ajith Nivard Cabraal, also addressed the gathering and shared some thoughts that mirrored the keynote speaker’s reflections.

“Asia’s time is coming. Way back in the 1700, Asia’s contribution to the global GDP was as high as 63 per cent. Over the next 200 years, the contribution contracted to just 13 per cent but from 1960 onwards it has come up to the 30 per cent mark and they now believe that by the year 2050, Asia will be around the 56 per cent mark but it’s not going to just happen, there is plenty to be done but we are on a forward trend,” the Central Bank Governor stated.

He added that it took Sri Lanka 56 years to reach a per capita income of $ 1,000 but last year, he revealed that the country recorded a per capita income of $ 2,836 and expressed his hope to surpass the $ 3,000 mark this year.  “I remember in 2005, when we were structuring the economic policies, when we talked about $ 4,000 per capita income people said it was crazy but today, no one says that. Today we are seeing new trends that would have not been thought possible in the past,” Cabraal pointed out.

He noted that we have seen the world undergoing massive changes, adding that in the past, one would not see so many shocks coming their way in such a short period of time but over the past five years there have been crises relating to food, oil, banking and global financial shock with one overlapping the other. “Flexibility is essential if you want to be in a position to move forward. All over the world we need to ensure that there is certain flexibility in our work.”

Day two of the Business Leaders Summit which will be held today and will consist of the conference proper will feature several eminent speakers including International Business Growth Specialist from Singapore Tim Wade, President’s Counsel Dr. Harsha Cabral, US author and executive educator Susan Bloch, Nokia India Director – Retail Kannan Gopalakrishnan, Laugfs Holdings Chairman W.K.H. Wegapitiya, PFI & Associates Singapore Managing Director Peter Fleming and Solbridge International School of Business, Republic of Korea Associate Dean Professor Rao Kowtha.

 – Pix by Upul Abayasekara