Emerging market forum : The road to recovery

Harinder Kohli and Lin CheWei

In another sign that Indonesia has rebounded from the crises in the late 1990s, the country has started to play again an active role in global economic deliberations. A concrete example of this is the meeting of the global Emerging Markets Forum (EMF) here in Jakarta beginning Wednesday.

The decision to meet in Indonesia was made at the EMF meeting last December at the Oxford University in the United Kingdom. While Singapore has garnered headlines due to the annual meetings of the International Monetary Fund and World Bank, Indonesia has been quietly getting ready to host this unique forum designed specificaily to discuss possible actions by key emerging market economies on major issuesrelated to globalization.

The EMF is bringing together leading statesmen, senior economic policy makers, top business executives and prominent thinkers from some 30 countries from Asia, Latin America, Europe and Africa. It could havean important impact on the longer-term well being and competitiveness major emerging market countries around the world.

The world has numerous meetings that bring together people to debate economic issues and globalization. So, what is special about the EMF that led Indonesia to invite it to come to Jakarta and to President Susilo Bambang Yudhoyono's government to provide it strong support?

The answer is simple. The EMF is unique in its concept, its ojectives,its focus and its structure. The forum is focused exclusively on issues of direct interest to some 50 emerging markets countrieswith superior policies and economic prospects. These countries include: Indonesia, China, Korea, Malaysia, and India in Asia; Argentina, Brazll, Chile, Ecuador, Venezuela and Uruguay in Latin America; Czech Republic, Hungary and Poland in Europe; Algeria, Egypt, Morocco and Saudi Arabia in the Middle East; and Nigeria, South Africa and Tanzania in Africa.

The forum has twin objectives. First, to help individual Emerging Market Countries (EMCs)becomemore competitive and prosperous in today's global and increasingly competitive economy. And, second to facilitate these countries to gain a greater and more constructive voice in the international arena.

It is clear that despite its imperfections and the pains associated with it, globalization is here to stay. Each and every country and each and every business, must accept th the process of globalization is inevitable and, if anything, the process of globalization is likely to accelerate in the future. No country or business can avoid its implications.

The challenge before the national and businessleaders, therefore,is how best to benefit from globalization, while reducing the very real and significant risks and costs associated with it.

Countries and businesses must anticipate and recognize the terrible pain and suffering that inevitably accompany major economic changes and put in place mechanisms to cushion the impact on the Iosers in this process. The less well off - countries as well as people - must not feel that they are being exploited by the more powerful.

Else, the much needed political support will evaporate sooner or later. In its deliberations, the Emerging Markets Forum discusses these complex issues in a dispassionate and non-deological manner with the aim of identifying pragmatic actions that governments and businesses can take.

Despite their growing role in the world economy, the emerging market countries as a whole still do not play their due role in discussing and resolving issues in international forums.

The discussions in official forums are focused on issues chosen by the G-8 countries and/or large internationai institutions, and decisions dominated by them.

Yet, the world as a whole as well as two thirds of the giobal population that lives in the developing countries will gain much if the emerging markets were to have a greater more active and more constructive voice in the international arena. The forum hopes to play a role in correcting this anomaly, at least to some degree.

The EMF is indeperndent, and devoid of any particular ideological orientatiorn or institutional agenda. Its exclusive objective is to identify important issues related to globalization of common concern to these countries and to discuss these issues in an open and rigorous manner in an intimate setting, in order to forge a consensus on actions needed to resolve them.

To achieve this, the forum has striven hard to keep its agenda relevant, focused and realistic. The forum's Aclvisory Board of nine distinguished leaders recommended that the agenda focus on the over-arching theme of private capital flows, with the aim of no't only increasing the volume of these flows but also increasing their positive impact on the host economies.

As we have seen in Indonesia, not only are private capital flows central to economic progress in the emerging market economies, they are also a very good indicator of the effectiveness of the overall development strategy and policies of the countries.

The meet its ambitious goals, the forum brings together a powerful mix of current and former policy makers from the major emerging markets. Importantly, it also includes CEOs of a number of major private companies and investment houses, from both OECD and Emerging Market countries.

To ensurethat their deliberations are informed by the current intellectual debate on the issues,a few leading thinkers and academics are invited to prepare background papers and to attend the sessions.

And, to have an intimate environment and to facilitate a frank and open exchange of views,the sizeof the forum has deliberately been kept small. Yet, people from some 30 countries from 5 continents of the world are participating.

Participants include former Heads of Government, current and former ministers of finance and economy, governors of central banks, presidents and chief economists of major international financial institutions, and business Ieaders from within and outside Indonesia.

President Susilo Bambang Yudhoyono has invited the participants for a dialog. Coordinating Minister Boediono, Finance Minister Sri Mulyani and Trade Minister Mari Pangestu wiII be joining in the discussions. Bank Indonesia has invited the forum to hold its opening session at its premises.

During their two days of deliberations, the forum participants will discuss and debate seven topics: Global Financial and Trade Imbalances and Implications for Emerging Markets; Private Capital Flows Into Emerging Market Economies, Outward, Foreign Direct Investments from Emerging Markets and the Emergence of New Global. Players in World Economy, Building National and Regional Capital Markets in Asia and Latin America; Bilateral, Regional and Global Trade Agreements; the New Global Energy Scene and its Impact on EMCs; and finally, Private Finance for Infrastructure and Logist Development.

In addition, in a session with former President Mkapa of Tanzania the participants will explore potential for Africa-Asia Trade and Investment Flows.

Lin Che Wei, is President Director of PT Danareksa, and Harinder Kohli is Chief Executive of the Emerging Markets Forum. PT Danareksa is hosting the Emerging Markets Forum.