while, the transportation machinery industry, in other words, the auto vehicle industry followed. At that time, in contrast to advanced countries, it was impossible to export finished goods from the developing countries. Therefore, in order to secure the local market, we had to start by building plants.
As a result we were able to make a contribution to the locals by providing job opportunities and acquiring a large amount of foreign currency. As the local plant smoothly expanded is production scale, the quality also improved. The product range was reinforced further and we were able to achieve a competitive cost and now, we have become the trade point for neighboring countries and the re-exportation point m he whole world. This was a development which Dr. Pakkasem introduced as the "Asian Miracle".
In addition, the reason why the East Asian economy has successfully attained its high growth is because of the liberalization of trade, deregulation of foreign currency, and the reasonable exchange rate. We have benefited from the fixed exchange rate system. Each of these factors have been contributed to the promotion of the exportation industry. But I think that 1995 was a turning point for the local industry.
During the 5 years from 1988, as vice president and being responsible for overseas management, I have had opportunities to fly from country to country. I have become keenly aware that we were able to efficiently expand our business by skillfully taking advantage of the imported technology and at the same time continuously export new products to new markets. But in 1996, there was a sign that the growth rate would eventually slow down.
There are various reasons for this. Though I will not refer to them now, I would just like to emphasize the fact that at that time the developing countries had an unreasonable amount of loans. In addition, it happened to be in July 1997, starting with the Thai baht, the currency of every country made sharp declines one after another. This all must be familiar to you.
The reason I said "it happened to be" is that it was the very year Hong Kong was returned to China. I think this was a very big coincidence. Whether this has a profound meaning or not I will put aside, but it is a fact that the extremely unstable condition is still continuing today. What I am most concerned about is that though they say that there has been no currency devaluation, it is possible that the influence will spread out to Hong Kong and China. It is most important to be interested in what will happen to the Peg system and the Hong Kong currency. Here the most notable feature of globalization, the alliance of regional economies into blocs comes up. In other words, the so-called global triangular economy zone which consists of NAFTA, EU and AFTA has become very tangible. This is what has speeded up the growth of the global economy.
However, on the contrary, the present Asian currency crisis has serious impact on the global crisis and it has ended up in realistically indicating that the bloc economy is linked and the two are moving together. That is, the benefit we are blessed with and the risk we have to take both come with the globalization, and we must recognize again how we have carried out our business up to now. Previously the IMF had responded to the Asian currency crisis by supporting the macro-economies with financing funds. In addition to that, they are now dealing with the structural reformation by liquidating financial institutions. ASEM which will be held in April is said to be mainly discussing such topics, and to determine a medium-term response. We me very interested in where this will lead. As an economic crisis starts to appear in each country, various problems become tangible. I would like to give an example from the site level. APEC, which was previously held in Osaka, focused its discussion to planning the tariff as 0 or 5 % by the year 2003 . However, as soon as the Thai currency crisis came up, the import duties were raised in order to cope with the currency decline of Thailand and Malaysia. For instance, on October 15th, the Thai government carried out a special tariff of 10%. In other words, all import duties were raised to 10% on all items, Among them, the import duties for items such as watches and cameras were raised from 5% to 30%. On October 17th, the Malay government also raised the import duties for small size electrical equipment such as refrigerators and freezers, across the board by 5%, from 25% to 30%. Especially the import duties for the microwave oven was raised from 5% to 30% all at once. Please note that now almost 90% of the microwave ovens in the world are produced in Southeast Asia. These facts will seriously effect our plans. We have been working out not only individual business plans, but an AFTA plan for the future where companies of the ASEAN countries and Japan can carry out an even division of labor at the local site.
However, I take a quite optimistic view of Asia's future. Without doubt, this crisis is a very big problem for Asian countries. But by reshaping the financing system, sorting the infrastructure and switching to a more value-added technology-intensive economy. I consider this economic recession together with the economy fluctuation, as a growing
