Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 9 - Evidence - Meeting of April 10, 2014
OTTAWA, Thursday, April 10, 2014
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:31 a.m. to study security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, we are reconvened as the Standing Senate Committee on Foreign Affairs and International Trade, continuing our study on security conditions and economic developments in the Asia Pacific region, the implications for Canadian policy and interests in the region and other related matters.
In our session this morning, we're pleased to welcome Dr. Syed Sajjadur Rahman, Part-time Professor, School of International Development & Global Studies, University of Ottawa. Thank you for appearing before us. Our usual procedure is to have you give an opening statement and then we go to questions. Welcome to the committee.
Syed Sajjadur Rahman, Part-time Professor, School of International Development & Global Studies, University of Ottawa, as an individual: Thank you for the invitation to appear before your committee.
You have by now heard from many experts. They have provided you with a detailed analysis of the Asia-Pacific region and its links with Canada and given you lots of facts. What I would like to do is share with you three sets of conclusions about the region and the Canadian links with it based on my interpretation of those facts.
These conclusions are the product of a life-long involvement, interest and experience in the region that includes a 21-year stint at CIDA, now part of DFATD. One of the positions I held at CIDA was in fact as the head of the Asia branch. Asia, as they say, is in my blood. I was born in Bangladesh and have literally walked the streets in virtually all Asian countries.
The first set of conclusions is about three common regional trends. I am using the broad definition of the region here, one that includes all parts of Asia. Let me start with trends in economic growth.
I am sure you have heard many times that Southeast Asia is the fastest growing region in the world, but the most interesting aspect at this time is that the growth trend that started in that sub-region has now spread to South Asia. Virtually all countries have bought into the export-oriented, market-based economic models. Even Burma is inching towards it. The days of the state-dominated economy are long gone.
Most Asian economies are middle-income countries and are now integrating into the global economy at a rapid pace. Like Canada, these economies are preoccupied with creating quality, value-added jobs and reducing regional and individual inequalities.
Turning to governance trends, most Asia-Pacific countries have adopted a pluralistic form of government. While this form has always existed at the local level, they are now re-emerging at the national level. Countries like Indonesia and the Philippines are experiencing growing pains in dealing with questions like accountability, democratic practices and rule of law. Others like India and Singapore are mature democracies.
Asia-Pacific is also a physically fragile region, frequently suffering from environmental calamities like tsunamis, cyclones and floods. In fact, this is the most disaster-prone region in the world. Global warming has exacerbated this situation. Island countries like Indonesia and the Philippines are particularly vulnerable. Massive portions of countries like Vietnam, Bangladesh and the Maldives are going to go under if the sea level continues to rise.
Equally worrisome in terms of fragility is the trend that rapid changes in governance structures and emphasis on economic growth with inadequate attention to sustainability has given rise to further fragilities like weak or inadequate institutions and man-made environmental "bads" such as pollution.
Let me now turn to my second set of conclusions about an increasingly integrated Asia.
People often talk about South Asia and Southeast Asia like they are two solitudes. This is not the case. They are increasingly part of one integrated Asia. Economic integration is being driven by demand and supply for goods and services. Ernst & Young, in a report on Asia, suggests that:
Asia has become the world's workshop over the last decade. Over the next 10 years, Asia will also become the world's fastest-growing consumer market. Rising incomes will propel millions of Asians into the middle class, affecting not only intra-regional trades of RGMs but also global trade as well.
RGMs in Asia-Pacific are well positioned to benefit from expected trade growth in the region. Through vertical specialization, the contributions of these economies are increasingly complementary, enabling every country in the region to thrive.
This complementarity is not only in terms of trade but also in terms of intra-regional investments. Here is one example. It is estimated that South Asia will spend $2.9 trillion in infrastructural developments over the next few decades. Guess who is going to build most of this infrastructure.
Integration will also be driven by the emergence of regional hegemonies as India and China become economic and geo-political superpowers. An "Asia for Asians" model is emerging, and countries are increasingly following independent policy tracks.
Dealing with physical fragilities demands an integrated approach. When a tsunami strikes, it does not affect only one country. A rise in seawater levels will affect many countries as well. Therefore, common efforts will be needed to adapt and mitigate. ASEAN is already working on early warning systems for the region, and Canada is involved in this.
Let me now turn to the third and final set of conclusions about the implications of these trends and the emergence of one Asia for Canadian links to the region. I have been studying this relationship since the mid-1980s and have actually written books on this.
My major conclusion is that distance matters. It makes relationships tougher to establish, maintain and nurture. The diaspora can be useful but, remember, people came over to make a life here, not to look back. Canada will have to be circumspect in what it plans to do and how, and we are going to have to compete.
In terms of economic links, we need to find the most efficient, mutually beneficial partnerships, given the distance. This may mean looking at Asia as a whole rather than parts of it. Costs will obviously be a major determinant. Buying manufactured goods from there makes sense because they are less costly than making them here.
What about the other way around? We will need to look for products that are knowledge and capital intensive, less costly to transport, or use alternative communication and transportation vehicles like the Internet. Examples could be education services or high-end designs.
Natural resources are interesting, especially for the Chinese and Indians. In fact, these countries now invest more in Canada than Canadians in those countries. Canadian mining companies are major investors in global exploration for non-renewable resources. This represents an interesting possibility, in that Canadians are world leaders in some extractive technologies.
What about development links? As these economies become middle-income countries, scope for traditional development assistance becomes narrower and appropriate only for the few remaining low-income countries. You can count them on your hand — Afghanistan, Bhutan, Laos, Nepal. Even Bangladesh is going to be out of this process fairly soon. Literally, the low-income countries in that region will diminish even further.
The concept of working with middle-income countries will have to be one of genuine development partnerships. Given the emphasis on economic growth in many of these countries, these partnerships will have to include the private sector. The donor governments may see their role limited to that of being facilitators and network builders. Development partnerships will also need to include participation in global efforts to combat climate change.
Finally, let me talk about governance and its link to diplomacy. Canada should encourage and support democratic processes. How it does so is going to be important. Experience indicates that changes in governance processes cannot be imposed from external sources; rather they must be generated internally.
Countries like Canada can play an advocacy role, but would be much better doing this as part of a like-minded group. This is going to be more of a diplomatic effort rather than provision of development assistance. These conclusions suggest that promoting development will not be simply providing development assistance but will encompass trade and diplomacy as well.
I will stop here and I look forward to your questions.
The Chair: You covered a broad area succinctly, and with conclusions that are helpful.
I have a list of senators that is growing quickly.
Senator Housakos: Thank you to the witness for an informative presentation this morning. From the four countries we're zeroing in on — Singapore, Indonesia, Philippines and Burma — which one of these, in your opinion, would have the most economic potential for Canada to exploit, or should we look at that region as well as the Southeast Asian region as a whole? I've always felt that if you are going to be successful in trade strategies, you have to zero in on a particular market area and countries where the potential obviously is the greatest.
So should we be looking at this region globally or focusing on certain countries more than others?
Mr. Rahman: We need to distinguish between two things. One is the trade strategy aspect and the other is the investment strategy. On the trade side, we have to remember the distance points I made. It is far costlier to physically send goods from here to there, especially when there are alternative suppliers within the region. If we are going to do that, we will have to look for efficiencies of scale. Obviously, demand has to be there, but the efficiency of scale is important. From that perspective, my argument would be that one would look at the region as a whole rather than by segments or sectors.
Although, one could argue, in certain circumstances, it's kind of the flip argument. A friend of ours works for a computer company in Canada that does work for Samsung in Korea. Samsung is the lead here, and the Canadian supplier is the subcontractor of computer designs and so on. That's a possibility. If you can find niche markets of that sort, you can actually hone a strategy.
On the investment side, the scenario is more interesting. Canadians are one of the major investors in extractive industries globally. Canadians have a comparative advantage. They know this field very well so in investments, it might make sense for Canadian investors to concentrate on countries where there are non-renewable natural resources and opportunities.
Senator Housakos: Clearly, our economic relationship with these regions in the last few decades has been based on the fact of cheap labour. These economies have become slowly developing economies based on low-cost labour and in exchange, of course, Canada has been selling our natural resources. And you're absolutely right; Canada's expertise we're looking to exploit further is our resource extracting capabilities. These countries are slowly aspiring to become developed countries and become full, active members of the global economic structure. They would like to have that economic benefit trickling down to social benefits for their people and become middle, upper class functioning economies. When you try to achieve those two goals, are they compatible? Can you have, quickly enough, the social development achievements while maintaining your economic growth, which has been based so far on low-income workers?
Mr. Rahman: This is a very good question. The answer will depend on fiscal redistributive policies of the government. When a country reaches around the middle-income level or slightly higher, the hypothesis would be that this country would have the ability to look after its poor or start creating policies and actions. Examples of that would be education or health policies, or activities that provide services to the poor. So the question then becomes: Are these countries at that stage yet? When we look at the region, there are differences. Countries like South Korea, Singapore and Malaysia are clearly at that stage.
Countries like Indonesia and the Philippines are getting there. In the case of countries like Indonesia and the Philippines, the essential concept is one of decentralization of services to the local authorities for provision of the services to the poor. They're island economies. For them, decentralization is a must in order to achieve efficient administration, and they have been at it for the last decade or so. Canada has been involved in many of these efforts with them through CIDA, and its support for decentralization efforts in Indonesia and Philippines, to provide the services to the poor. Are the objectives inconsistent? They are not, but they have to be consciously followed. In other words, the economic prosperity must be translated through conscious action by the governments into social benefits.
Most of these countries at this point in time have policies that say so. In some countries, the policies are being implemented and in others the institutions are weak. The institutions that convert the policy into action are relatively weak and it will take time to take hold.
Senator Housakos: Can you give us an overview of the governance situation in some of these countries in regard to corruption? Canadian companies historically over the last few decades have felt the challenge of doing business in these areas because there is constant demand for doing business in a certain way that Canadian companies are not necessarily accustomed to.
Mr. Rahman: Corruption in public service, government occurs when you have control. If you can, for example, issue an import licence that will confer significant benefits to a businessman — and if you are that official earning $100 a month with a family to feed, and in this kind of context a joint family — then the incentives become relatively clear. There are two ways to address corruption. One is to take the controls away. That would mean that you go more toward a free-market economy, a market-based economy, but then you need to sort of put the social construct into that that there are some social goods that need to be provided. Are those economies in the process of that? The answer is yes. Most of these economies are going towards market-based economic policies, but a lot of them are in transition.
I will take the example of Singapore to illustrate this one. In Singapore, two things happened that reduced corruption to almost nothing. The first thing is that the salaries of civil servants in Singapore are comparable to salaries of civil servants here, if not more. Second, the accountability systems are so tough that the incentive to be corrupt is minimal because the risks are so high.
That's a perfect prescription for what needs to happen. In many economies, it has happened, and, in others, it has not. In my judgment, there is nothing cultural to this. It is purely a set of incentive structures that exist, at a point in time, in economies, that predicate this behaviour. My hunch is that, over time, this will reduce. In fact, in Indonesia, Canada, through CIDA, worked with its anti-corruption unit to set up mechanisms to combat this.
That would be my answer. Yes, it is there now, but my judgment is that institutions are proceeding in a fashion where, over time, as in most democratic countries, incentives to become corrupt will be reduced because the risks will be so high.
Senator Dawson: You mentioned natural disasters, and, obviously, the region is prone to major natural disasters. To a certain degree, there is not much we can do about that, but there was an earthquake last week in Chile, and they started talking about the possibility of the waves hitting the other side of the Pacific.
Are there structures or organizations that are preoccupied with the early warning system? More importantly, when disaster does strike, international cooperation has been seen as a little chaotic, sometimes, in trying to rebuild some of these regions. Some of the regions that the tsunami hit have not been brought back to life in any way, shape or form. It happened. It's over. They're not reinvesting in those regions.
Since it is a market and since they are partners, their interests, as people who buy products from us and people who produce products for us, are our interests. Where can we participate in trying to help countries recuperate from these natural disasters, and, with new technology, how can we help them to get an early warning system?
Mr. Rahman: Thank you for the question. As you rightly pointed out, there are two parts to the question. One is: Can we get an early enough warning so that we can mitigate some of the effects of the disaster — in other words, move people out of harm's way? If a disaster does happen, what rehabilitation is available afterwards? What about combatting the effects of the disaster?
On the first part, there are initiatives in Southeast Asia, at this time, towards an early warning system. The organization that's leading it is ASEAN. If I recall rightly, Canada is involved in that activity.
Canada's relationship with ASEAN, in a development sense, has been, I must say, exemplary. We have done some outstanding work with them in terms of building up their capacities and so on. You can sense that this region is ready for this type of thing because there are, at this point in time, early warnings that happen, so people do get warning. Do they get sufficient advanced warning? Is the communication system sufficient to provide that warning across a populous? That's a question that needs to be answered.
On the reconstruction and rehabilitation side, Canada has been significantly involved in almost all reconstruction efforts. For the aftereffects of the tsunami in Aceh, Thailand or other places, Canada has been one of the first movers in this respect, and it is actually known for the work it did.
In terms of dealing with reconstruction on a national basis in these countries, perhaps the greatest examples of that are the Indonesians post-tsunami. After the devastation in Aceh, they set up this thing called a reconstruction/ rehabilitation facility, which was arm's length from the government. It is run by an extremely efficient administrator and has a very definite life cycle. You end at that point in time, but all contributions and donor contributions went to that organization, which set up extremely hard accountability systems. By all accounts — and I have had the opportunity to work with this organization — they have done an outstanding job. There are models, within the region, that deal with these types of issues, and these models are evolving and getting fairly efficient. In South Asia, in countries like Bangladesh and India, it's actually even better. The early warning systems are much better, and their ability to deal with these disasters is way better. Countries like Bangladesh now basically tell donor communities, "Don't worry. We will take care of it ourselves." So it is significantly improving.
Senator Dawson: Crisis equals opportunity. We hear that expression quite often, but, very often, it's opportunity for the wrong people in the sense that there is an opportunity to make money in rebuilding. There's an opportunity when you have a crisis and don't have a control system against corruption.
[Translation]
The French expression is "on passe le râteau", cleaning up.
[English]
We'll try to get as much money out of crisis as we can. Is there a role for Canada in promoting anti-corruption in that part of the world, in ensuring that those crises are not an opportunity for the wrong people to use the crisis as an opportunity to make money?
Mr. Rahman: Canada and other donors — not just Canada — can work together to set up accountability systems that ensure that the intended money is used for the purpose intended. A concrete way to set up is the example that I provided in the case of Indonesia where you set up an autonomous body that, in some senses, deals with the funds that are specifically meant for this purpose so that the fungibility of the fund is lost, and the fund is useful. Then, set up an accountability system, a reporting system that reports on these funds on a very conscious basis. We have been involved in processes like that.
Senator Ataullahjan: Thank you for your presentation this morning.
I wanted to focus on women in development programming, in your work with CIDA. We hear that women play a significant role in economic growth. Experience has shown that income generated by women more often goes to the family and leads to greater development. In your experience, what has the role of women been in Southeast Asian societies, and has there been a focus on women's development in CIDA's programs? Have they been meaningful partners?
Mr. Rahman: Let me deal with the easy part first. In terms of CIDA's programming, it's a must. All of CIDA's programs had to have a conscious gender element built into this. It has to have indicators for results that are going to be achieved on that basis, and there is a specific form that needs to be filled out and signed-off on by gender specialists at CIDA, which acknowledges that this has been well designed and is going to achieve the objectives. This gets signed-off on at the approval stage. When people like me or the minister look at it, this is one of the things we look at.
In terms of the role of women in Southeast Asian development, it is almost built into the process. The most important question is: Are women the decision makers? If not, can they be made part of the decision-making process, and, in what sense? There are many programs that CIDA has done over time where that aspect has been highlighted.
The other thing I should point out is, look at the political process in these regions and look at the woman leaders who have emerged in this process. There is Megawati Sukarnoputri in Indonesia and Yingluck Shinawatra in Thailand. In South Asia, the examples are replete. Virtually all of the countries have had strong woman leaders.
In terms of the overall process of development, in my experience, I have had the opportunity to work significantly with strong individuals in these countries who have had a significant impact on the processes they're involved in. There has been conscious programming on CIDA's part and Canada's part to encourage that process and to encourage those champions.
The other example I provide is across the region, but I will use the example of Bangladesh. The garment industry in Bangladesh grew because of the employment of women. It's as simple as that. The empowerment that goes with having income is significant, and that can, in some sense, enhance the role of women in these societies, for sure.
Senator Robichaud: As a supplementary question, you said that in Bangladesh the garment industry grew because of women. They are employed at very low wages. Were they part of the decision-making process?
Mr. Rahman: The majority of the workers are women. In some instances, the decision makers are women. In some large garment industries in Bangladesh, the actual heads of these firms are women.
Senator Robichaud: If I may, is that an exception or a rule?
Mr. Rahman: That would have been the exception.
The Chair: Did I understand you to mean that women, once they produce income by themselves rather than receiving something from their husbands, start to be decision-makers? They have worth, then, in the society?
Mr. Rahman: In economic terms. As Senator Ataullahjan pointed out, there is sufficient evidence for us to say that income generated by women generally tends to be spent on the family, in particular in terms of nutrition and also in the education of the children. One of the truisms in development is that if you're going to teach somebody, teach a girl, not a boy, because a girl in a contribution to society sense would contribute far more to society than a boy would.
The Chair: No rebuttals here? Okay. We'll move back to Senator Ataullahjan.
Senator Ataullahjan: I wanted to talk about the economies of the Philippines and Indonesia. They are island economies. Do they face the normal economic and political issues as do countries that are not island economies? For example, compared to Thailand and Singapore, the distances are greater. Does that impact?
Mr. Rahman: Sure, it has impacted. Take Indonesia, 1,300 islands, an archipelago. I remember travelling where it took me a day to go from one place to the other, and this was in the mid-2000s. So it matters.
Therefore, in countries like Indonesia and the Philippines, one of the central tenets has been the decentralization of the governing processes in terms of devolution of decision-making power down to the islands and the local levels. The Philippines did it first, and Indonesia has embarked on devolution now.
There are growing pains. I think you will appreciate this. While in some cases decision-making powers have been evolved, the budget powers have not. The centre still retains the budgetary distribution powers. How much of the central budget does the local unit get while the decisions are made from there? That has caused some growing pains in the sense that locals have to find their own revenue processes. In some cases, I've seen instances where they've built roads and put tolls on them in their particular area so that they can collect revenue, or a whole bunch of these local units have decided to build hospitals because people will pay.
The central point is, in these countries, success of decentralization and devolution decision-making is critical to the governance processes, and it needs to happen. I am proud to say that Canada has been involved in the Philippines and in Indonesia in helping the local governance units, whether villages or at what level, to make their plans and to prepare strategies in order for them to become better functioning governance units.
That is different than Malaysia would face. In all countries, devolution is important but, in the case of Indonesia and the Philippines, it's fundamentally important for the efficiency of the governance process.
Senator Oh: Thank you, professor. Southeast Asia is a small area, but it has 600 million in population, which is, as you say, the fastest growing economy at the moment. Can Canada take advantage of this fast growing economy by helping then build infrastructure for the next 10 or 20 years? We are great in IT, science and technology, and biopharmaceuticals and health care. This is what they need. Can the Canadian government set up a regional hub, a regional office to minimize costs, and take advantage of future investment in this area?
Mr. Rahman: Yes, they can, but it is a question of size. If you are large enough, for example, if you are Bombardier and you have that scale, yes. In that particular case, the demand for short-distance and medium-distance aircraft in this region will boom. It's already tremendous, and it will boom even further, so yes. But imagine a small- or medium-sized Canadian enterprise having to work across that distance.
That was my point about the type of products. Senator, you're absolutely right. It should be products where we have a degree of comparative advantage. The next step, in what products do we have that comparative advantage. Natural resources is one thing.
The other side is the high-end product. As economies evolve, they become more knowledge intensive and use capital knowledge to use the product. That's where Canada is at right now. In certain aspects, as you point out rightly, we have an extremely good education system. We have a good health care system. These countries over time, as we said before, will need to translate their economic prosperity into social benefits, which means constructing education and health systems that actually go down to the populace and address their needs. Perhaps there is a possibility for Canada to provide the advice — I would caution against funding — but the advice or the expertise to deal with these systems.
On a commercial basis, the others are high-end processes. Where can Canada say, "I have a unique niche that nobody else has"? One has to be careful in that because as we illustrated in the case of Samsung and others, the top leadership in some areas has transferred over to the Asia-Pacific. They are now the top leaders rather than us. We have to be careful in finding the niches in that sense.
It is tough. As I said, I've been studying this issue since the mid-1980s. The Asia-Pacific will be an important market for Canada, but never a primary market for Canadian companies. The U.S. will always continue to be the market, the major economic partner. The European Union may or may not remain second. We shall see.
We've talked about this for over 30 to 40 years. For those who are old enough like me, there was the famous third option, searching for alternative Canadian markets. The third option was the Asia-Pacific. This was during the 1980s and the 1970s. It has always been the case when you talk to Canadian companies, and I've talked to hundreds of them; it is a factor. How can they do business efficiently there? What's my cost efficiency point? Can I manage to do business there? That's the major thing.
Hubs are good. Maybe a constellation of funds is good if a whole bunch of small and medium-sized firms got together and formed a hub office in a particular country and spread out. That could work.
[Translation]
Senator Verner: I am going to be speaking to you in French and I would like to go back to the time when I was Minister of International Cooperation. Over the past years, there have been several changes within CIDA, one of which has been to draw up a new list of countries of focus. Five countries of focus were identified in the Asia-Pacific region.
Last November, the government announced a new action plan that focused on global markets and was informed by the notion of economic diplomacy. Just as the international development initiatives do, this plan focuses on Indonesia and Vietnam.
Do you think this new way of doing things, or new measure, will have a positive or negative effect on international assistance in the Asia-Pacific region?
[English]
Mr. Rahman: One way is to distinguish between the developing world as it existed 20 years ago and the developing world as it exists now, then base conclusions on the provision of international development assistance on that basis. But 20 years ago, most developing countries were low-income countries. Now, most developing countries are middle-income countries, with the exception of southern Africa, Haiti and Nicaragua in the Americas, and four or five in Asia. Virtually all of these countries are low-middle to middle-income countries.
How you promote development in these countries is a little different than we used to do. Traditional modes of development assistance were organized to address basic human needs, such as provisions of health, education, improvement in governance, and so forth. That is different once you move into middle-income countries. As I said in my opening presentation, the demands of the countries become different. They demand ownership of the process, so they will drive development. By and large, as perceived evidence suggests, their focus will be on sustainable economic development. If it's going to be sustainable economic development, the private sector must come into play. They are the primary generators of economic growth.
If the private sector comes into play, the question is that of private sector development or enterprise development in those countries, and how Canada or other countries can contribute to that process. That's where one must open up the traditional methods of providing development assistance to broader whole of government or whole of country considerations, and that includes trade and diplomacy. In terms of governance questions, it is more than the provision of straight development assistance. Trade, diplomacy and traditional development assistance must all mesh together.
Second, the mechanisms for providing development assistance must also be examined. Historically, we have provided development assistance in the form of grants, which are non-repayable contributions. In other words, I provide a certain sum of money to a country, to an organization to do development work in that country; I do not expect repayment.
But if you stop for a moment and think, why would I do that in Indonesia or why would I do that in a country like the Philippines? They're middle-income countries; they should be starting to take care of their own development. In that case, the World Bank has a system where they have moved countries from a grants basis to a loans basis. We used to do that; we used to provide loans to countries until about 1988 and then we dropped the concessional loans process and went to grants. I think it's time to revisit that because we now have a set of development constructs that are radically different than before. In terms of traditional aid in these countries, that's the first point. Second, we need to think how we work the private sector partnership angle. That would require, at one level, financing considerations to be addressed, and at another level, network building considerations to be addressed. All that predicates is that we have come to, in my judgment, an inflection point in that regard.
In the Asia-Pacific, that consideration is even more eminent at this point because of the emergence of China, South Korea and India as donor countries. These folks don't work the way we do. They work generally in terms of supply credits. In other words, I'll build you the bridge, I'll give you the money, you build a bridge and you pay me back over time from the revenues generated from it.
If you look across that region, a whole bunch of infrastructure in that region is being built by the Chinese, the Indians and the South Koreans.
To answer your question, the method of doing business has changed. We must think about it simply. We must not think about it from a whole of country, whole of government basis rather than a traditional aid narrative.
Senator Dawson: When you say the Chinese help to build, don't they often go build and use Chinese staff to build it?
Mr. Rahman: Yes.
Senator Dawson: And they will build a port to have access to a mine and use the product from the mine for their own needs?
Mr. Rahman: In some cases, but in other cases they will simply build it because they get paid for it. What example shall I provide? They are building the deep-sea water project in Sri Lanka. Most of the infrastructure in Cambodia is in some way being built by the Chinese.
In those cases, they are part of the access process. They are in some sense part of the overall Chinese economic strategy process, access to natural resources and so forth. In other cases, they'll build you a stadium or a conference hall. The reason the Chinese will do stuff like that is because it's so visible. It's a visible manifestation of their presence. Also, this is something that the countries themselves desire. In some ways, ironically what is emerging is that the countries like this kind of stuff. They like it because it caters to their demands. They're not being asked to do something that some others find interesting but they may not necessarily find interesting. It's a priority question in that sense.
Senator Demers: Thank you for being here, professor. Just listening over the last few weeks, this is something that keeps coming up. In 2014, the economic growth in the Asia-Pacific region is getting stronger. Senator Housakos mentioned corruption. We heard the other day about the army, the government. There have been riots in the streets for fighting over rice, over water, things like that.
My biggest concern, professor, respecting what the answer is going to be, is the people themselves, different religions; there's corruption everywhere. It seems there has been corruption in different areas, but such violence doesn't implicate the people. It just implicates them in having to pay, causing more taxes because of some corruption. At one time, professor, the people could actually live their own lives, didn't have to go onto the streets and fight for food and could have peace, just be in peace. We're in 2014. What is the future regarding that, professor?
Mr. Rahman: Great question. Let me take it two ways. One of the reasons many immigrants, from any region of the world, come to countries like Canada is precisely because of what you just said. I can get up in the morning. I know for certain I'm going to the office. My kids are going to go to school. I'm going to go to work. If I go to a bank, my business will be done. If I pay my taxes, my taxes will be paid in a timely fashion.
It's a sign of development. When will these countries get to that stage? There are two processes to this. This is one of my favourite topics, by the way. I'm going to do this in a very simple fashion. Things are obviously not this simple, but it can illustrate the point.
At the beginning, people are just looking for ways to feed themselves, to house themselves, to have basic sustenance. I will use South Korea as an example. That's all they want. In some cases and some instances, Singapore is another one. At that level, they are willing to give up personal liberties and personal freedoms in order to achieve those goals because they are fundamental, basic goals. In many fragile countries and low-income countries, that's the case.
So the economy evolves. It modernizes. People start earning income. People find employment. You get to a point where the basic needs are now being met. Then, people kind of say "Well, there's more to life." I'm using colloquial terms to describe this, but, in my judgment, though I could have used academic terms to do this, this is actually the process. There comes a point in time when people say, "Well, there's more to life than this. I want my space. I want my say. I want my right to be part of decisions that will decide my future." That's when democracy becomes important. People try to express themselves. Once that point comes, it's the point you're looking for. You're looking for a point where people have the ability to express themselves and the ability to decide their own future. Are Southeast Asian or Asia-Pacific economies at that point? In some cases, they are. South Korea is a classic case in point. It has had decades of, basically, highly controlled, centralized regimes, but look at where it is now. This is a country where a president can be impeached and sentenced. People are demanding their own rights and establishing their own rights to be held.
In many countries, the same process is now working. Some of the incidents in Singapore right now are an expression of that fact. In countries like Indonesia, the Philippines and the others, it's going to be an evolutionary process. The primary fact there is that democracy and the right to expression must exist. That process cannot be disturbed. Elections must happen. People's representatives must be elected, and, if that process continues over time, we'll get to the point that you want.
Senator Demers: That's a great answer, professor. Thank you.
Senator Tannas: Building on that a little bit, on the military risk for what you just spoke of — the unbroken development of democratic principles — we heard yesterday — I'm not a regular on the committee, but I was here yesterday — that, in Indonesia, there is the rise of a popular, reformist presidential candidate, a significant amount of corruption still in existence and a military that is increasingly redundant and wondering what their role is. I was thinking that it's like teenagers, whiskey and car keys, all three there in various ingredients. Could you give us a look through the region to where you see potential military risk as these countries develop, where the military is still focused inward and feels they have some big domestic role and where we might see a flare up or an interruption in what you just talked about in the democratic evolution?
Mr. Rahman: If you asked me this question five years ago, I would have said Indonesia and the Philippines, but I would not say that now. People like voting. People like expressing their opinions. If we look at how the Burmese have organized themselves in terms of their parliament, the role of the military within that and the power of the military or militarily appointed representatives, et cetera, these are, essentially, in my judgment, steps in the process. The military is very powerful. Look at Marcos, Suharto and, in Thailand, waves of military chiefs becoming Prime Ministers until the famous cellphone revolution, if you like.
Right now, the scenario is at a point where the militaries have kind of carved out a niche role for themselves — "I'm not a central part, but I still want a say and want my say in this fashion." They have carved out a role either in the acquisition of economic assets or in the decision making process. My judgment is that these roles are temporary. These roles, over time, will diminish as people demand more and more of their rights.
If you look at the evolution from what it was in the 1980s to what it is now and at the role of the militaries in this kind of construct, my hunch is that, in another 20 years, you will see the military back in the barracks kind of role.
Senator Tannas: Building on that, do you see, then, signs? Can you talk about signs where, maybe, the military, in various countries, will start helping more with the heavy lifting of peacekeeping and peacemaking within the purview of the United Nations?
Mr. Rahman: Sure. Take Bangladesh as an example. In the case of Bangladesh, the military was the power. It held power from 1976 basically until about 1991. It got sidelined, and, over time, its main preoccupation has become these peacekeeping forces.
You can see the evolution of that in Indonesia and the Philippines and in other cases, where the military is being more and more used as a vehicle, as an organized force to address specific scenarios, like post-disaster rehabilitation work, where the military is being utilized for that purpose. Over time, I think that's where it will go.
At this point in time, the military still has economic power, which is kind of interesting, and that needs to be resolved.
Senator Tannas: Thank you.
The Chair: Thank you. We are at the end of our time, but I have two senators who have asked for a second round, Senator Housakos and Senator Ataullahjan. If you can put your questions succinctly, then I'll ask Mr. Rahman to answer.
Senator Housakos: I'll ask one short question, chair, in regard to Burma, which is chairing this year's ASEAN meetings. I would like to have your comments on what their objectives are in this. Is it as important in practice as it is in theory to be chairing ASEAN? Is Canada engaging appropriately enough with regard to helping Burma in this process? Is Canada engaging enough in terms of getting the most for Canada out of this process?
Senator Ataullahjan: We've spoken about this region. We've talked about the army. We've talked about the government. The one thing that nobody has touched on is the youth. In most of these countries, 50 per cent of the population is under the age of 25. Looking at the region, I know the mindset of the youth has changed. They look at the world differently. I would like you to briefly tell me what role they can play.
Mr. Rahman: Let me answer the Burma question first. It is hugely important for Burma to become the chair of ASEAN. It is almost like, from my point of view, a coming-out party. After a long while, they have consciously decided to re-engage themselves into the international flow within the region concerned. From a signal point of view, that is significant.
What can Canada do to encourage that development process? I think Canada needs to work with a like-minded group, in other words, other countries that will encourage Burma to follow democratic processes and the institution of democratic processes and, at the same time, provide what, in my judgment, is highly needed basic human needs assistance.
In terms of the youth, that's the change. We have a generation of people coming up in these countries who are not in the old sense ideologically motivated or ideologically interested, or who have an invested interest in that construct. This is a generation that is, in some ways, way more materialistic than the previous generation was. They're interested in having a good time, doing jobs, gaining income and travelling. The Internet revolution and communications revolution have opened eyes. They know what's possible and not possible, and that's what they're going after. They will look at their leaders and say, "Deliver me that. I'm not interested in your ideological constructs and so forth. Deliver me my living." That's going to cause a situation.
By the way, the demographics in this region are interesting. In a lot of countries, the youth are the majority, but there is also a question of aging that's part of the system right now, especially in the case of China and South Korea where the population is going to age. In China, that will be an especially significant problem because of the past one-child policy.
The Chair: Professor, you have certainly covered interesting ground. Thank you for giving us quite a lesson on development assistance and changes. That has been helpful to us. You were also very instructive about the military. We've just studied Turkey where the military has a different role. The kind the evolution you have been talking about in Asia certainly occurred there, as well as other countries. It's instructive that we go back and look at our reports as we deal with Southeast Asia. Thank you for your work in CIDA. You're putting your knowledge to good use by coming to our committee and by teaching our youth in university.
Thank you.
(The committee adjourned.)