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Kelly, Assistant Secretary of State for East Asian and Pacific Affairs Testimony before the House International Relations Committee Washington, DC June 25, 2003
Mr. Chairman, I would like to take this opportunity to thank you and the members of the Subcommittee on East Asia and the Pacific, for inviting me to discuss trade and commercial policy priorities in Southeast Asia and Oceania.
Looking back, this region has seen a remarkable transformation. Just a few decades ago, it suffered from cross-border conflicts and struggled with domestic instability and poverty. Today, the region has virtually no cross-border conflicts, has more open societies and democratic institutions, and boasts some of the most dynamic economies in the world. Thirty years ago, Malaysia's per capita GDP exceeded Korea's, and today Korea's per capita GDP is more than double Malaysia's. Hong Kong and Singapore, which earned a little more than $1,000 per capita in 1971, today exceed $21,000 in per capita GDP. Over the past 30 years, these economies have made great strides in overcoming income inequality and developing a solid middle class. Even amid the deep poverty I observed on my recent trip to Cambodia, I saw the beginnings of a middle class taking shape.

However, these economies are still struggling to overcome the setbacks of the Asian financial crisis of 1997-1998 and, more recently, economic fallout from the SARS epidemic. The Asian Financial crisis revealed structural weaknesses in the region's financial and corporate sectors. Some Asian countries, such as Korea, have taken important steps to resolve the twin problems of non-performing loans and non-performing assets, and have been amply rewarded through increased growth rates. Most countries in the region have moved beyond the pegged exchange rates that exacerbated the crisis, and have seen an improvement in their investment environment.

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