Poor Asian, Pacific Nations Urged to Revamp Economies

Paced by strong performances in China, Taiwan, South Korea and Singapore, the developing economies of Asia and the Pacific posted an average 6% growth rate in 1987, but the focus of a nine-day conference here was on the downside.

“Comforting thoughts and the region’s aura of all-but-unstoppable economic resilience tend to overlook wide variations in growth . . . as well as a number of persistent problems and serious challenges,” declared S. A. M. S. Kibria, executive secretary of the United Nations Economic and Social Commission for Asia and the Pacific.

In his opening remarks to the organization of 38 countries and territories representing more than half the world’s population and more than 70% of those in developing countries, Kibria, a Bangladeshi, pointed to unyielding pockets of poverty, malnutrition, illiteracy and underemployment.

But the annual ESCAP conference, which ended Tuesday, bore down hard on international trade issues, specifically the primary commodity trade that is a mainstay of many developing economies in the region. Kibria said that flat or slumping markets are a major problem, adding that there “are disturbing signs of a structural de-linking between the demand for primary products and the growth of the world economy.”

His advice for countries caught in the vise of weak commodity demand and growing debt burdens: Restructure the domestic economy.

“The Republic of Korea, with its vast economic revamping over the past three decades, is certainly one of the region’s most successful examples of this structural metamorphosis,” he said. “China and Thailand have also skillfully reshaped their economies in recent years and restructured both their industrial and agricultural sectors. I should like to note, however, that the restructuring task would certainly be much facilitated by an improved trading climate and greater capital inflows.”

The message of the developing countries to the representatives of the industrial world seemed clear: Any protective barriers to commodity exports, including domestic subsidies, would have to be reduced, if developing nations of Asia and the Pacific are expected to maintain progress, restructure, diversify--and service their debts.

The United States, Britain, France and the Soviet Union are affiliated as founding members of ESCAP. Japan, Australia and New Zealand are full members, the only developed nations in the group. West Germany sent a delegation.

Prices Depressed

According to an ESCAP survey circulated here, world prices for non-fuel commodity products rose nearly 10% in the first half of 1987 but still stood nearly 25% below the 1980 level, and a downward trend is expected to continue into the 1990s.

The reasons are varied, according to ESCAP, including both dwindling world economic growth and the success of some developing nations in achieving food self-sufficiency and moving into the world markets with agricultural exports. But the result, combined with huge commodity stocks piled up by subsidy programs in the industrial world, has been depressed prices.

As a region, the Asia-Pacific area has not been hurt as badly in commodity trade as some dirt-poor countries of Africa and Latin America, but some economies, heavily dependent on primary product exports, have little room to maneuver, the ESCAP survey found. Malaysia, Sri Lanka, the new Pacific island nations and lesser developed countries on the Asian mainland were cited by the survey. The last include Bangladesh and Laos, which derive more than half of their total merchandise exports from jute and coffee respectively.

The region covered by ESCAP, stretching from Iran to New Zealand, produces more than 80% of the world’s commodity exports in jute, copra, palm oil, natural rubber and coconut oil, and is a major producer of tea, nickel, tin and rice for the international market.

Some Asian exporters have sought to improve their situation by processing their commodities before shipping them abroad. Indonesia, for instance, was facing declining oil revenue and a total foreign debt of about $45 billion, both private and governmental, and now ships some plywood instead of plain lumber.

“They get the value added here,” remarked a Jakarta-based diplomat.

While many of the problems of the commodity exporters must be solved at home, as Indonesia has tried to do, the ESCAP commission, in its draft report on the conference, also called for help from the international community.

Noting that “the external environment continued to be uncertain . . . (one of) trade conflicts, continuing infringement of the rules of the international trading system and the increasing resort to protectionism,” the commission noted that the mid-term review of the Uruguay round of the (General Agreement on Tariff and Trade) multilateral trade negotiations would take place soon and “progress in negotiations towards liberalization would have a beneficial impact on the trade of countries in the region.”

Other speakers had suggested so-called commodity arrangements--non-market trading--to solve the problem. Robert Duncan, a U.S. Embassy officer from Bangkok, speaking for the American delegation here, expressed reservations, but said Washington might examine proposals on a case-by-case basis. Many industrial powers have special trading arrangements with closely allied countries.

‘See the Problem’

Jean Ripert, U.N. director general for development and international economic cooperation, told reporters that while not all the difficulties of developing countries are external, “the burden of debt for many is a terrible problem.

“Too many countries have only one solution--that is, to interrupt their development. They have to cut their investment programs, to reduce them, which if done for too many years could have dramatic consequences.

“This is how I see the problem. The problem of servicing the debt is linked with the difficulties they have in exporting some of their products, protectionism and so on.”