Courtis: Clinton Vietnam Trip to Be Remembered 'A Long Time'; Japan's Economic Problems 'Very Particular to Japan'
DEBORAH MARCHINI, CNN ANCHOR: President Clinton is winding up his final trip to Asia as the leader of this country. He is in Vietnam. However, he just finished attending the APEC summit in Brunei. and we're here to talk a little bit about the Asian region.</s>DAVID HAFFENREFFER, CNN ANCHOR: It's been a busy time in the Asian region. Kenneth Courtis from Goldman Sachs Asia is here with us this morning. As far as Vietnam is concerned, anything of substance coming from that region out of the president, or is this mostly just sort of a PR move here?</s>KENNETH COURTIS, GOLDMAN SACHS ASIA: I think it's important. It's the 25th anniversary of the end of the war, so he addressed the past and therefore the reconciliation. And then he talked about the future and I think Vietnam in that sense is really fascinating. You know, when the war ended, they were 40 million people. Today they are about 80 million. In 20 years, they'll be the size of Japan, about 120 million. But 80, 85 percent of people in that country are under 35. So in addressing the future, he's addressing those people who don't know the war. And he's talked about openness, about free trade. They just signed a trade agreement to broaden trade, investment. And this is a country, of course, that's proud: It's beat the Chinese, it's beat the French, it's beat the Japanese and it held America to a standoff. So it's a very interesting dynamic. And I think if you think of Bill Clinton's life, it's also a very interesting dynamic. So I think we'll think a lot about this speech and remember it for a long time, and this visit.</s>MARCHINI: From an economic standpoint, what's the motivation for going?</s>COURTIS: Well, its to bring Vietnam finally back online, to complete this eight-year project, in effect, that Clinton's had. Vietnam is basically where China was in the 1980s in terms of economic reform and development. But because they've got such a dynamic and young population, if they can really embrace reform and open, this country could really do well; actually, over time, become a dynamo in Southeast Asia.</s>HAFFENREFFER: You just are back from Brunei where the APEC summit was taking place.</s>COURTIS: Right.</s>HAFFENREFFER: What did you hear there of interest?</s>COURTIS: Well, I think the really important thing this year is that they finally got together and started to focus on trade again. The last three years, it was the crisis, the political crisis in East Timor that preoccupied everyone. The year before that, it was the financial crisis. And now they're back to what APEC was all about. It was creating a free-trade region around the Pacific, and we still have those targets of 2010, 2020 for free trade throughout all of the Asia Pacific. Next year, the meeting is in China and I guess that will be the real test. It will be the first Asian trip of whoever the new U.S. president is. But I think we're starting now to get APEC back on the rails after really going off track.</s>MARCHINI: Got to ask about the region's biggest economy, Japan. There were some comments this morning from the country's top economic planner to the effect that he believes a downturn took place in the July-September quarter after the economy grew for six months. If Japan couldn't pull its way out of recession with the world booming, what's going to happen as the world economies slow down?</s>COURTIS: Japan's problems are very, very particular to Japan. It's carrying a Himalaya of debt, the debt's probably four and a half to five times GNP, if you take the government debt and the private sector debt. And it's being held up by incredible government spending. Debbie, in the last two years, Japan has spent, to hold its economy up, about the equivalent of the GNP of France.</s>MARCHINI: Wow.</s>COURTIS: I mean, it's amazing. So if that government spending slows, then the economy is going to roll over. The other thing that's holding it up a little bit has been the international economy. And the world economy is now slowing and there's no real end in sight to the slowdown that started the international economy. So the exports of cars and semiconductors and electronic-related equipment is all starting to roll over now, and that's really, really starting to squeeze Japan.</s>HAFFENREFFER: But while the problems might be inherent to Japan, they certainly will affect the region if the economy doesn't manage to pull out of its problems itself. So what impact do you see it having on the surrounding region?</s>COURTIS: That's right, because about 20, 25 percent of the exports, depending on the country, the rest of Asia, come to Japan. And if Japan rolls over again, of course those exports are going to be in trouble. It's difficult, really, to think of the rest of Asia finding itself in very healthy dynamic economic conditions without Japan being stabilized. And the rest of Asia, of course, still has many problems to fix from the crisis of '97, '98. And as the world economy slows and the terms of trade move against Asia, a lot of those problems, especially the debt problems, are coming back to the surface, as we can see in Korea and Taiwan and elsewhere.</s>MARCHINI: That's one we'll be hearing more about. Ken Courtis, Goldman Sachs Asia vice chairman, thank you so much for being with us this morning.</s>COURTIS: Thank you.