As Japan remains trapped in its bad-loan mess and Southeast Asia struggles to regain competitiveness after a regionwide financial crisis five years ago, China may appear to be the only bright spot in Asia.

But according to Frank-Jurgen Richter, director in charge of Asia at the World Economic Forum, new and important changes are taking place that demonstrate the dynamism of Asia.

“Asia is re-creating itself and is strongly advancing its economic agenda,” said Richter, 35, during a recent interview with The Japan Times in Tokyo. “Surprisingly, some Asian countries, including Japan, are increasing competitiveness.”

According to the Geneva-based nongovernmental organization’s annual ranking of most economically competitive countries, Japan has actually advanced to 13th place from 21st last year, Richter said.

WEF’s national rankings are based on three main factors: the macroeconomic situation, efficiency of the public sector, and technological strength.

Despite the gloomy economic environment and the inefficiency of the public sector, Richter said Japan has managed to increase its competitiveness with advanced technology.

Japan can still be successful, especially by pursuing advanced technology and focusing on high technology, Richter stressed, adding that Japanese firms such as Sony Corp. and Toshiba Corp. appear to be emphasizing these areas.

Richter co-edited a book published by the WEF in September titled “Recreating Asia: Visions for a New Century.” The book features essays by 33 influential opinion leaders in Asia-Pacific business and politics, including Malaysian Prime Minister Mahathir Mohamad and Sony Corp. Chairman Nobuyuki Idei.

The book is the first of its kind published by the WEF, which has organized the annual Davos summit of global political and economic leaders in Switzerland for the past 30 years. Richter was in Japan to prepare for the next summit, which will be held from Jan. 23 to Jan. 28.

China, the rising star of the region, is continuing to serve as the locomotive for Asia by constantly adapting to changes in its economic environment, said Richter, who worked in China for four years after spending two years studying in Japan.

China has developed itself by attracting foreign direct investment, and foreign investors are establishing operations to turn China into a manufacturing and export base. But now China is moving overseas, Richter said.

“Chinese companies have started investing in Southeast Asia and even try to buy cheap U.S. companies,” he said. “It’s just like Japan in the 1970s and South Korea in the 1980s.”

Richter predicts that China is, and will be, the center of Asia for a long time.

“I believe in China’s vigor, China’s entrepreneurship and China’s foresight,” he said. “A major difference between China and Japan in the last 10 years is (that the vision of) China is long-term oriented.”

In contrast to China, Japan and Southeast Asia are having a difficult time, he said.

Although Prime Minister Junichiro Koizumi is trying hard to implement economic reforms and Financial Services Minister Heizo Takenaka is working to improve the banking sector, both are being hindered by a bureaucracy that wants to maintain the status quo. The result has been lots of talk and little change.

“I believe in Koizumi’s reform but it takes time,” he said. “Japan needs a change. And Japan needs creative people who do not adapt themselves to the establishment and do different things.”

Richter predicts that, even if Japan and Southeast Asia successfully manage their current economic problems, their future will still hinge on the success of China, the dominant power in the region and, in his view, in the world.

If Japan and Southeast Asia can jump on the bandwagon of China’s economic success, they will be able to survive, he added.

As for Southeast Asia, China’s ascension is dealing a severe blow to the region, which must compete for foreign investment against China’s vast and cheap labor force.

Yet, while countries such as Indonesia and Malaysia are stuck in economic trouble, others are taking new paths. For instance, Singapore is attempting to establish itself as a center of biotechnology, Richter said.

The sense of crisis is also driving Southeast Asia to renew its efforts at regional economic integration, he said, adding that this will enable the area to exploit opportunities for trade and other economic activity.

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