Endgame with Gita Wirjawan - Klaus Schwab: Di Mana Titik Tengah Kekuasaan dan Kebebasan Individu?

Episode Date: February 28, 2024

Professor Klaus Schwab, the Founder and Executive Chairman of the World Economic Forum, talks about the future of Southeast Asia’s leadership, geo-economy, and governance. Recorded on September 4th, 2023 as part of ASEAN Business and Investment Summit 2023. #Endgame #GitaWirjawan #KlausSchwab ---------------------- About the host: Gita Wirjawan is an Indonesian entrepreneur, educator, and currently a visiting scholar at The Shorenstein Asia-Pacific Research Center (APARC), Stanford University. Gita has also just been appointed as an Honorary Professor of Politics and International Relations in the School of Politics and International Relations, University of Nottingham, UK. ---------------------- Supplementary Readings: The Fourth Industrial Revolution Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet ---------------------- Understand this Episode Better: https://sgpp.me/eps178notes ----------------------- SGPP Indonesia Master of Public Policy: [e-mail] https://admissions.sgpp.ac.id https://wa.me/628111522504 Other "Endgame" episode playlists: International Guests Wandering Scientists The Take Visit and subscribe:  @SGPPIndonesia   @VisinemaPictures 

Something has changed. History is truly at a turning point. We will not go back into an overall rules-based, the cooperating global system. It will be a rivalry. Professor Klaus Schwab, the founder and executive chairman of the World Economic Forum. This is the panel of people have been waiting for.

Some of the biggest leaders in politics and business gathered. World leaders, corporate giants, top academic. They're all coming together in Davos, Switzerland today. It's the start of the 54th World Economic Forum. Karsop says it's crucial that leaders meet in person as it helps create trust between them. The future lies in being smart, which means stitch-roll, being green,

and being connected. I think the game changer would be the use of technology. One factor, for success, public-private corporation. That's the second factor. Is that the right way to think about this going forward? Yes, but... Very good morning to all of us at this very special event,

the ASEAN Business Investment Summit of 2003. I'm delighted and honored to be sitting next to Professor Klaus Schwab, who is the founder and executive chairman of the World Economic Forum. Professor, you insisted that I call you by the first name. Yeah, and you are Gita, and I'm pleased to be close. Thank you so much. I want to begin the discussion with a pretty general question. You've been making remarks about what it takes to be in a position of leadership.

You've mentioned aptly some of the attributes that are needed for somebody to be in a position of leadership. But I want to make this a little bit more colorful by way of putting this in the context of how the world has shifted in terms of the global order from a rather unipolar to a much more multipolar. You've talked about the heart, the muscles, the brain, the soul, and the good nerves. Please, Professor. No, thank you, Kitan. It's a particular pleasure for me to be together with you. I mean, I knew you in your formal capacity very well, and now you have become an intellectual. So it's a delight, it's a delight to be together.

And I want to express also my appreciation for Ashad, the Khadine chairman. We have such a good cooperation with Indonesia, so I'm delighted to be here. But to respond to your question, when we look at the world, when we met in Davos early this year, people spoke about a multi-crisis, but actually we are in a multi-transformation. And we can go into this specific details. It's a economic transformation. It's a political, geopolitical, geopolitical, geopolitical transformation. And, of course, it's also a technological, and it's even a societal transformation. Now, coming back to your first introductory question, and I think we all are interested to know,

what type of leadership do we need in this new world, which is full of complexities, full of uncertainties, full of unknowns. So you refer to it. I have met so many people around the world, so many leaders. And of course, in my own teaching career, I had to read tons of books about leadership. But actually, it comes down to five elements. Soul, brain, heart,

muscles and nerves. So what does it mean? The soul stands for really having a mission in life, having a vision about the future. Because the old-fashioned strategic planning to a certain extent is out. You cannot predict exactly any way.

exactly anymore the future. But you have to have a wishing, because people will believe in you only if you are driven by values or by a vision. Then, of course, you need the brains. You have to be a professional in your life. And you need the heart. Passion and compassion.

I think a leader is credible if he shows passion and compassion. and compassion. And the muscles, you have to translate your vision into action. And finally, in the world of today, you need good nerves. So it would be very interesting to ask the question, who is actually today a leader in the world who, let's say, corresponds to all the five criteria.

But I leave it to you because to look at, let's say, their respective leaders. Interesting, Professor. I want to share with you an observation about how Southeast Asia has fared in the last 30 years. If you were to compare with, I mean, Southeast Asia's performance with that of China in the last 30 years, from a GDP per capita standpoint, it's rather telling in the sense of, that the GDP per capita of Southeast Asia in the last 30 years has grown by about 2.7 times, whereas China's GDP per capita in the same period has grown by 10 times.

It's largely attributable to four attributes. The first one being the underinvestment in infrastructure by Southeast Asia. The second, the underinvestment in education by Southeast Asia. The third would be governance related, and the fourth would be the lack of competitiveness in Southeast Asia. I want to seek your wisdom on what you think Southeast Asia can do in the next 30 years. And I say this with full optimism that we should be able to get way past 2.7 times in the next 30 years. Let's also not forget that maybe CSAN countries are a late starter. So if you compare with China and I followed China's opening up and reform policies in

79. It was a very integrated policy and actually coming back to this notion of you need a vision. There was a very strong vision, starting with German, Deng at that time, for China. And I see now a similar vision about the future of ASEAN is developing. And even if you take, I mean, the high compared to the global average, the relatively high global growth rate of let's say 5 to 6 percent, it means stabbing GDP of the ASEAN region every 12 to 13 years. So this will be a remarkable progress. But also something has changed. And if I look at this region and I would give some imperatives, which by the way are very evident also the whole, the whole

communication about those meetings here this week. I think the future lies in being smart, which means digital, being green, and being connected. Let me let me elaborate shortly on those issues. The first one is smart or digital and particularly using artificial intelligence. We have to be careful that we don't think in terms of different stages of industrial development, and now we see Asian countries focus on manufacturing and saying, no, artificial intelligence and all those technologies of the force in industrial revolution will be the next step. No, the success will be in the combination already now of the best production capabilities,

which by the way include, to a large extent today, artificial intelligence. If we talk about a green economy, people feel green that's an obligation in order only to keep our nature in a good shape and to fight climate change. No, it will be in the future a strong competitive factor, because green energy, with all the innovations which have already been made or which will be made, will be superior in terms of costs. So a country which moves very fast into green technologies acquires a competitive. advantage. And connected, I feel the future in this disintegrating world will be based on global

cooperation, but here regions will play the role of strong pillars of the system. And I'm a big believer in the, we spoke about it before coming in, I'm a big believer in mid-powers. It's not just China and the U.S. I think the new world is a very complex world. It's a multiple world, dominated maybe by two or three giants, but the middle powers like Indonesia, like Saudi Arabia, like Brazil, will play a very crucial role in this new geopolitical, geo-economic context. I want to pick up on this point because as the world is becoming much more multipolar, ironically, I've been saying a few times in the past that multilateralization is at risk to the point where we are sort of like pushed to bilateralize a little bit more than the fore. And that just intuitively requires

countries around the world to focus more on becoming more competitive and more productive. Is that the right way to think about this going forward? Yes, but let's look what happened. We had the golden age of globalization. Started probably around 89 with the fall, with the end of the Cold War, and it lasted until four or five years ago. And it was a combination of different factors.

It was on the one hand, the driving down of production costs, through global supply chains. It was lifting hundreds of millions of people out of poverty. And it was governments who eased the process by creating a plane-level field. Now, and it was business, it was mainly a demand-driven global economy, and it was business which was in the driver's sea. The situation has changed.

Today, governments are much more back in the trial of seat because governments have become more interventionists and there are several reasons. The first reason is, of course, the COVID pandemic, which caused governments to intervene much more into the economy, to protect the economy. But suddenly you should not forget, we have surveys for domination. in the new technologies. And the fourth industry revolution is different compared to the previous technological revolution

because in the first technological revolution, let's say a steam engine, you still could copy it, even you could copy a primitive computer. But today, to copy a complex algorithm or a big database, it has become very difficult. So I feel the economy is global, to come back to your question, global competition, will be driven much more by who masters the force in this revolution. Because being first mover or first adapter of those new technologies provides you with an enormous

competitive advantage. And what we see also now in the competition between the US and China is not just about which is the dominating global economy or the largest global economy. who is really mastering the force industry revolution, which provides enormous power, of course, not only in economic competitiveness, but also in using your power on a global basis. But it would be interesting.

I mean, you are an expert in this area. What is your? Kitam, what is your opinion? Well, I'm sitting here with a lot of optimism for Southeast Asia going forward. I mean, if you were to take a look at the baseline growth rate trajectory for Southeast Asia for the next 20 years, I think it's easy to assume that you should be able to get through to 5% range by way of conventional wisdom. But if you were to add on to that artificial intelligence, call it the fourth. Industrial Revolution. And if you were to refer to hundreds on this particular topic,

some might have referred to a potential economic delta of about $30 to $50 trillion. Some would even go to the extent of $100 trillion. So if we were to just be able to capture a little bit of that, I think Southeast Asia is poised for a really, really great economic future, way beyond a five percent growth trajectory baseline. I would agree with you. I'm a great optimist for this region. Based on its entrepreneurial force, I have seen so many entrepreneurial people in this region, but based also on, let's say, it's innovative capabilities. It's a young generation, not fearing technologies, new technologies.

That's a big problem. Why do we have a polarization in societies in Europe and in the US? It comes one of the factors is that older people do not necessarily understand anymore. the complexity in geopolitics, in geo-economics, and particularly in technology, and then they have the feelings they lose control over their lives. Now here in this region, you have so many people who want to embrace the new world, because they see it as an opportunity to improve their lives and to make progress. So I'm a big believer, but let's not fall into the trap of

we have to first really master the third industrial revolution, which means manufacturing and then to move into the force of the rest of revolution. Because artificial intelligence is a system technology, which means every aspect of industrial, production and also distribution consumption, will be penetrated by artificial intelligence. So to use, let's say, the manufacturing revolution and to combine it immediately with the new capabilities of artificial intelligence could be the strengths of this region. Look forward to that. I want to pick up on the earlier point.

you brought up in the context of U.S. and China, right? Do you see U.S. and China being in kind of an Ali-Frasier kind of fight, or do you see this as a zero-sum game? No, I think we move into a situation of a multipolar world, as we just said, with the two, let's say, being the big elephants in the room, we will not go back to a completely, even if we do have to make efforts, into an overall rules-placed, cooperating global system. It will be a rivalry.

And the rivalry is not only in terms of competitiveness, it's in terms of values, it's in terms of systems. And but we are one humanity and we are faced with survival challenges. We as far as the climate, this change is concerned. But even in artificial intelligence, there are some people who say, if we don't keep the ghost in the bottle, it may mean even a threat to our humanity. So we have common problems and we could add migration, but there are many, many else. We could add that the world economic form is now at the moment very much engaged in finding common governance rules for artificial intelligence. So there are areas and we are working here together with many governments with the leading companies. There are areas where we absolutely

have to work together. So we will not come back to an overall integrated system, but we have to finds a touch point in this, let's say, multitude of relations where we really have to create win-win situation because we depend so much each on another. Interesting. Professor, in Southeast Asia, we've got 10 economies or governments, four of which are monarchies, some of which are trying to be democracies, and you've got two single-party countries. And then the rest are democracies, multi-party democracies. What do you think in your mind is the right kind of framework for a PPP strategy to be well executed in this part of the world?

I think today has the crucial factors. Well, let me go back to a discussion which influenced me very much. One of the wise people of a former Prime Minister explained to me, I think it was 30 years ago, what the art of governance is, particularly also looking at the differences between the U.S. Europe and this part of the region. And he mentioned, it's always to find the right equilibrium between the individual and the collective. And whatever as a government form is, I think this is today even more important, because the individual is the base for creativity, for innovation and so on. but we have to keep in mind the collective interest.

So how do you find the right equilibrium? And I think it's not so much, this is a question for every country in the world. But again, in your teaching capability as a professor, what is your opinion? I've been spending quite a lot of time with the young people who are trying to be entrepreneurs. And I've been advocating that it's important for them to think about becoming an entrepreneur despite the government, not because of the government. That creates, I think, a higher degree of resilience. You've talked a lot about resilience, right?

And I think to the extent that the young generation learns to be surviving, even better thriving, despite instead of the cause of the government, that I think will create a much more nimble type of framework. To the extent that the government becomes more proactive in providing support to entrepreneurship, then I think it becomes it's a plus and a bonus. It should actually not be despite the government, but it should be with the governments. I mean, the world economic forum is the global organization. We have this international status to foster public-private cooperation. And today we have to think in systems. If you look, for example, that solving the climate change issue. It's a very complex system related to nature, related to decarbonization of industries and so on.

But governments and business today are so intertwined, so it needs public-private cooperation. And my argument would be the countries which really have to be the best systems of public-private cooperation will see the winners of tomorrow, because they can act faster. And the recipe for tomorrow, in the old world, in the old world, it was the big fish which ate the small fish. Now in the new world, it's a fast fish which eats the slow fish. And the ASEAN countries have the capability to be the fast fish. We have China, America, the big fish. We have a lot of fast fish here.

Exactly. Exactly. But that's one, let's say, one factor for success is public-private cooperation. And it has to be as much as possible institutionalized, not in formalistic. ways, but in very flexible ways, to reach common objectives, to create a common mission, to have a common mission, and so on. But the second factor, which also speaks, let's say, against this artificial division, or not anymore, let's say, appropriate division of governments and business. Because in the past, business was

business was regarded. We just here to create prosperity and to work for the owners. But today I'm propagating what we call now stakeholder capitalism, which means a business has to create prosperity, certainly, long-term prosperity, but business is also a social. social organism and business has to take care of society and has to take care of the environment. So the objectives of business and governments, even if the roles are different in execution, but the objectives have become identical because also the government's objectives, of course,

are creating prosperity, inclusiveness, taking care of society and environment. but with stakeholder capitalism, which is the base of the functioning of the world economic, form of our values and philosophy, I think here business has to take care not only of the owners and shareholders, but of society at large environment. And I'm very pleased to see this concept, particularly because there are many family companies who have a long-term thinking, but not only family companies, to see it so well in place in this part of the world. So public-private cooperation and stakeholder capitalism together,

I think will be the pillars of success for the ASEAN countries. Wow. Professor, there are so many other things that I could seek your wisdom upon. Unfortunately, we're out of time. Pity, crap down. Thank you for the interesting discussion. much. A big hand to Professor Klaus Schwartz. Thank you so much.