OECD High Level Working Dinner, Davos 24 January 2014

COUNTDOWN 2015:

TOWARDS INCLUSIVE AND SUSTAINABLE GROWTH IN THE ASEAN ECONOMIC COMMUNITY

• How can participants of the dinner support the creation of the ASEAN Economic Community (AEC) in 2015?

• How can participants of the dinner help to make AEC contribute to inclusive and sustainable growth in Southeast Asia?

• What can the OECD do to help?

2

In light of the growing importance of Southeast Asia’s economy

2

1. AEC 2015: Opportunities and Challenges

2. OECD’s contribution

3. Areas for discussion

a. Trade and Investment

b. Connectivity and Infrastructure

c. Inclusive and Sustainable Growth

Agenda

3

1. AEC 2015: Opportunities and

Challenges

4

5

Southeast Asia remains a dynamic growth region…

Source : Economic Outlook for Southeast Asia, China and India 2014, OECD

• Real GDP growth rate in the

Southeast Asia region is

projected with an average growth

of 5.4% per annum.

Indonesia will be the fastest-

growing economy among the

ASEAN-6.

• Market of 600 million people

and a combined GDP of USD

2.2 trillion in 2012, composed

mostly of young, growing

populations and an expanding

middle class.

1

7.2

6.2

7.9

5.6

0

6.8

1.3

6.5

5.2 5.5

2.3

6.8

6

7.7

5.1

6.8

5.8

3.3

4.9

5.4 5.4

Real GDP growth of Southeast Asia (Annual Percentage Change)

2012 2014-2018

Selected challenges for Southeast Asia:

• To reduce social and economic development gaps between ASEAN member

countries, poverty reduction and human development measures remain key

challenges, particularly in the CLMV countries (Cambodia, Lao PDR, Myanmar, Viet Nam).

• Develop more efficient infrastructure and connectivity to facilitate cross-border and

intra-regional exchange.

• Reduce barriers to trade and investment.

• Strengthen institutional capacity for human capital development and

innovation in order to avoid the middle income trap.

6

… but SEA faces challenges for inclusive and sustainable growth

7

The 2015 ASEAN Economic Community offers great opportunities to support growth

ASEAN Economic Community (AEC) has the goal of the region’s full economic

integration by end of 2015, including:

• A single market and production base, which promotes a free flow of goods,

services, investment, skilled labour and a freer flow of capital

• A highly competitive economic region

• A region of equitable economic development with a narrowing development

gap

• A region fully integrated into the global economy and attractive for FDI

• Deeper regional integration within ASEAN will:

• enable a more efficient division of labour and allocation of resources in the

region, improving private sector efficiency and competitiveness.

• facilitate capital account liberalisation and exchange rate flexibility.

• provide incentives for national liberalisation efforts.

• ASEAN is well positioned in the geographic center of the world’s growth corridor,

from East Asia through ASEAN to India.

8

2. OECD’s contribution

OECD collaboration with ASEAN Secretariat:

• Investment: ASEAN-OECD Investment Programme conducts country-level Investment

Policy Reviews and regular regional investment dialogues.

• Regulatory Reform: ASEAN Regulatory Reform Agenda is positioned as one of

ASEAN’s flagship activities to foster good regulatory practices.

• Small and Medium-Sized Enterprises (SME): Evaluation of SMEs progress and SME

policies based on the SME Policy Index.

• Economic Outlook for Southeast Asia, China and India: The

Outlook, an OECD - ASEAN joint annual publication, analyses economic

growth, development and regional integration process.

• Initiative on Employment and Skills Strategies in Southeast Asia (ESSSA)

promotes co-operation and sharing of knowledge and experiences for job-rich growth.

• Connectivity/PPPs: Development of a database of risk mitigation instruments

for private investments into long-term infrastructure projects.

• In order to narrow development gaps in the area of poverty and human capital development

in the region, ASEAN needs more inclusive and sustainable growth.

9

OECD is ready to support the ASEAN economic integration process and…

10

… the new OECD Southeast Asia Regional Programme scales up OECD members’ engagement in the region…

At the 2007 Ministerial, member countries identified SEA (Southeast Asia) as a region of strategic priority. The Resolution asked the OECD to strengthen relations with the region in light of its growing importance in the world economy and “with a view of identifying countries for possible Membership.”

At the 2013 Ministerial meeting, the OECD received a mandate to establish a comprehensive Southeast Asia Regional Programme (SEARP). It would support domestic reform processes and contribute to regional integration initiatives.

The new SEARP programme will be officially launched by OECD and Southeast Asian officials at the 2014 MCM.

The substance of the Programme will be developed by Regional Policy Networks (RPNs) with experts from SEA and OECD countries.

The RPNs will draw on the work programme of substantive OECD bodies and draw upon OECD working methods in order to ensure effective policy exchange and accountability for outputs.

All efforts will be made to build on existing regional processes and networks. Engagement with regional institutions, including ADB, ADBI, APEC, ASEAN, UNESCAP and ERIA.

Country-specific reform implementation support complements the regional work.

… by focusing on policy fields related to the AEC blueprint to support inclusive and sustainable growth

SEARP will focus on four clusters, which will be implemented by six Regional Policy Networks:

Priorities in these policy areas will

be refined at the Davos working

dinner and the OECD Southeast

Asia Regional Forum (25-26

March 2014 in Bali,

Indonesia).

The fields of work will also include:

• Trade Initiative

• Gender Initiative

11

12

Tonight's table discussions provide essential input to the thematic focus of the SEARP

Investment

Business Climate

Connectivity and PPPs

Inclusive Growth

SME

Education and Skills

Connectivity and Infrastructure

Trade and Investment

Inclusive and Sustainable Growth

We welcome you to the policy discussions to shape the new SEARP

programme and develop new initiatives to foster ‘inclusive and

sustainable growth’ in the region!

Regional Networks and Cluster: Topics for the table discussion:

13

3. Areas for Discussion:

a) Trade and Investment

FDI in the region: Increasing FDI inflows (8% of global flows in

2012) FDI focus diverges in the region: • Mining: Brunei and Myanmar • Manufacturing: Indonesia, Malaysia,

Thailand and Vietnam. • Services: Singapore, Laos, Philippines

FDI landscape shaped by new developments: Emergence of new sources of FDI Boost in intra-regional investment Increase of regional production networks Greater influence of reg. integration on FDI Challenges: FDI inflows focused on five countries:

95% of FDI goes to Singapore, Indonesia, Malaysia, Thailand and Vietnam, whereas Singapore alone accounts for 51%.

Opportunities: Ease of regulatory restrictions on investment

as a driver of economic growth. 14

Trade and Investments flows are increasing in the region

TRADE in the region: ASEAN countries export destinations are

diversified. However: intra-regional trade flows in

SEA lower than in other regions. Challenges: OECD export credit ratings show still

high risk perception in selected countries. Comparative advantages in exported

goods diverge in the region and are below the level of direct competitiors.

Removal of regulatory barriers essential to spur trade in services, thereby improving supply and competitiveness.

Opportunities: Regional integration has the potential to

increase intra-regional trade. Expansion of regional production

networks would support economic growth.

Brunei Mining and quarrying 84.0% Trade and commerce 9.6%

Cambodia Finance 30.8% Manufacturing 26.1% Agriculture, fishery & forestry 20%

Indonesia Manufacturing 39.8% Mining and quarrying 17.5% Services 16.9%

Lao PDR Services 46.0% Mining and quarrying 13.3%

Malaysia Manufacturing 48.9% Finance 18.2% Mining and quarrying 16.1%

Myanmar Mining and quarrying 99.6% (2010)

Philippines Services 19.3% Real estate 11.7% Finance 10.6%

Singapore Finance 23.1% Real estate 16.7% Trade and commerce 15.7%

Thailand Manufacturing 52.8% Finance 21.4% Real estate 12.4%

Vietnam Manufacturing 39.2% Services 24.3% Real estate 17.6% 15

FDI flows to Southeast Asia (by industry, 2010 and 2011)

Destination of FDI in Southeast Asia Net inflows of 450 billion USD from 2006 to 2011

Brunei, 0.7%

Myanmar, 0.8%

Cambodia, 1.0%

Indonesia, 13.1%

Lao PDR, 0.4%

Malaysia, 9.9%

Philippines, 2.6%

Singapore, 50.9%

Thailand, 11.3%

Vietnam, 9.3%

Source: ASEAN Factsheet on the ASEAN Economic Community (AEC)

Southeast Asian share on global FDI increased from on average 4.8% between 2003 - 11 to 8.2 % 2012. The share far exceeds the SEA share on global GDP of 3.2% in 2012.

INVESTMENT: Strong FDI flows to the SEA region

boost growth, but there are wide disparities

Source: ASEAN Investment Report 2012

Findings: • Singapore receives more than 50% of all FDI. • Less developed Cambodia, Laos, Myanmar get only 2.2% of total FDI.

INVESTMENT: OECD products help improve the investment climate and increase FDI

OECD Investment Policy Reviews (IPR)

• Objective: Assessment of the investment climate.

• Approach: Review of the policies on FDI and the role of FDIs in the Economy.

• IPRs in Southeast Asia: Indonesia (2010), Malaysia (2013), Viet Nam (2009). Forthcoming : Myanmar, Philippines, Lao PDR

Policy Framework for Investment (PFI)

• The PFI is the most comprehensive approach for improving investment conditions ever developed.

• 10 policy areas to support governments to design policy reforms to create an attractive investment climate. • OECD conducts trainings with ASEAN on investment policy making using the PFI.

FDI Restrictiveness Index

The Index accesses regulations relevant for FDI and includes four areas of restrictions:

• Foreign equity limitations in investments

• Screening or approval mechanisms

• Restrictions on the employment of foreigners as key personnel

• Operational restrictions (branching, capital repatriation or on land ownership)

OECD research and standards on investment:

16

0.0

0.1

0.2

0.3

0.4

0.5

Source: OECD 2013. OECD staff calculations

OECD FDI Restrictiveness Index

Intra-regional trade comparison

17

TRADE: Diversified export destinations, but some countries have low number of exports with revealed comparative advantage

Region Intra regional exports

ASEAN (2011) 25.0 %

EU 27 (2011) 64.3 %

North America (2007) 51.3%

East Asia (2007) 52.1%

Source: eurostat, WTO, Comtrade, ASEAN

Intra ASEAN, 25.0%

ANZ, 2.8%

Canada, 0.5%

China, 11.7%

EU-27, 9.8%

India, 2.9% Japan, 11.4%

Republic of Korea, 5.2%

Pakistan, 0.3%

Russia, 0.6%

USA, 8.3%

Others, 21.4%

ASEAN Trade Partners (2011)

Source: ASEAN: Factsheet on the ASEAN Economic Community (AEC)

Source: OECD staff caluclations using COMTRADE data

0

50

100

150

200

250

300

Number of products exported with a revealed comparative

advantage (RCA)

Main findings:

• SEA countries differ in the export of goods with a revealed comparative advantage (RCA).

• Thailand exports the highest number of products with a RCA.

OECD trade facilitation indicators

• Purpose: Basis for governments to prioritise trade facilitation reforms and assess potential impact of reforms.

• Content: Sixteen trade facilitation indicators (TFIs), corresponding to the main policy areas under negotiation at the WTO.

• Methodology: Values drawn from publicly avail able data and subsequently fact checked with concerned governments.

Covers 133 countries across income levels, geographical regions and development stages.

18

TRADE: OECD instruments to facilitate trade and improve access to export credits

OECD Export Credits Arrangements

• Purpose: Setting minimum premium rates for transactions based on country risk.

• Content: Measuring the country risk composed of transfer/convertibility risk and cases of force majeure.

• Outcome: - Cambodia, Laos and Vietnam face a score above 4, corresponding to major challenges to access export credits. - Singapore, Brunei and Malaysia have good scores. - Remaining countries belong to middle risk countries.

The TIVA-database analyses the value added by a country in the production of any good or service that is then exported, and offers a fuller picture of commercial relations between nations. Thus, TIVA provides information business competitiveness and export performance.

Trade in Value-Added (OECD-WTO)

0

1

2

3

4

5

6

7

Source: OECD

Classifications above 3 are considered high.

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de

0 t

o 7

, w

ith

0 t

he

lo

we

st

co

un

try

ris

k.

19

3. Areas for Discussion:

b) Connectivity and Infrastructure

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Infrastructure and connectivity development facilitates trade and economic growth

• ASEAN member countries are confronted with a number of challenges with respect to their connectivity, i.e. poor quality of roads and incomplete road networks, missing railway links and incompatibility of gauges, inadequate maritime and port infrastructure including dry ports, inland waterways and aviation facilities and widening of digital divide, and a growing demand for power.

• With the Master Plan on ASEAN Connectivity towards 2015 and beyond, ASEAN member

countries are engaged in strengthening their infrastructure in order to response to the need of increasing number of cross-border exchanges. 15 Projects on connectivity cover the infrastructure development in 3 dimensions:

1. Physical infrastructure: ASEAN Highways Network, Singapore- Kunming Rail Links.

2. Institutional connectivity: ASEAN Community building programme, Operationalize all National Single Windows (NSWs), Develop ICT skill standards;

3. Free movement of ASEAN citizen: Easing visa requirement for ASEAN nationals

However, implementation of the Master Plan remains an issue of concern.

• Around USD 600 billion are required for infrastructure investments in ASEAN between 2010 to 2020 (power, transport, telecommunication and water and sanitation).

ASEAN Infrastructure Fund (AIF) has been established in 2012 to finance critical infrastructure needs in the region.

– The fund will finance about six projects a year, with a $75 million lending cap per project. Criteria for investments include their potential to cut poverty, increase trade and bolster investment.

– AIFs equity contribution will be funded by ASEAN (69%) and ADB (31%) at the total amount of USD 485.2 million.

21

Infrastructure projects need to attract further private financing…

Sources of financing for projects: • 70% financed by the public sector • 10% financed by ODA funds

Source: ADB, ASEAN Secretariat

ASEAN’s total infrastructure investment needs, 2010-2020

Sector Amounts (US$ billion)

Power 216.3

Transport 156.8

Water and Sanitation 159.4

Telecommunications 63.6

Total 596.1

PPP in SEA: Thailand, Indonesia and Philippines have

some PPP experience with mixed success in development and execution of PPP projects. Future steps: improved operating environment and institutional capacities.

20% from the private sector

22

Route Distances (KM)

Lao PDR (Vientiane – Thakek – Mu Gia)

466

Viet Nam-Lao PDR (Mu Gia – Tan Ap – Vung Ang)

119

Cambodia (Poipet – Sisophon)

48

Cambodia- Vient Nam (Phnom Penh – Loc Ninh)

254

Viet Nam (Loc Ninh – Ho Chi Minh, )

129

Myanmar-Thailand (Thanbyuzayat – Three Pagoda Pass)

110

Thailand (Three Pagoda Pass to Nam Tok) 153

Missing transport links in the Singapore Kunming rail link project

Source: Master Plan on ASEAN Connectivity, ASEAN

… to close infrastructure gaps and improve connectivity in the region and beyond

23

Pre-Qualification

Advising on conformity with market needs and

requirements

Pre-Tendering (RFP)

Testing bidder interest in the project…

Strengthen institutional

capacities

for infrastructure investment

End of OECD

involvement

OECD instruments to strengthen institutional capacities for PPP infrastructure investments

OECD PPP support on: Project Life Cycle

Upstream Policy Assistance

Capacity support to government on regulatory

frameworks for PPPs Project

Identification

Selecting viable infrastructure projects

through screening criteria – ‘marketability’

Project Specification

Selecting a suitable procurement method

(through value for money test )

Pre-Feasibility

Support government in designing optimal legal,

regulatory and guarantee-related

framework for the project

Publications: • OECD Principles for Private Sector

Participation in Infrastructure • OECD Principles for Public

Governance of Public-Private Partnerships

24

3. Areas for Discussion:

c) Inclusive and Sustainable Growth

Most Southeast Asian countries made remarkable improvements in living conditions, measured in the UNDP Human Development Index:

• Cambodia, Lao PDR and Myanmar had the strongest improvements in the region, increasing their HDI from 2000-2012 annually by on average 1.7%, 1.5% and 2.2% respectively.

• Singapore improved its ranking by 7 positions between 2007 and 2012.

Challenges remain:

• Further reduce multi-dimensional poverty by improving access and quality of the educational and health system in several countries.

• Improve education and job skills in the SEA region. Gains are essential for the six more advanced ASEAN economies to achieve gains in productivity and thriving technology-intensive industries.

• Strengthen inclusive growth to enable all population groups to participate from economic growth and to reduce inequality in income and opportunity.

• Foster sustainable development through the protection of the environment and rich biodiversity.

• Beside strong economic improvements, a growing middle income population demand more political inclusion and freedom.

25

Social and economic conditions improved strongly in the region but challenges remain

0.938

0.912

0.909

0.906

0.895

0.855

0.769

0.694

0.69

0.683

0.654

0.629

0.617

0.554

0.543

0.543

0.498

Human Development Scores 2012

26

Source : data.undp.org

Human development improved but still diverges amongst Southeast Asian countries

Main findings in ASEAN:

• Singapore and Brunei score well on human development.

• Myanmar, Lao and Cambodia face comparably far lower level of human development.

• Most other countries are close to the world average.

Country Percentage

Cambodia 45.9

Indonesia 20.8

Laos 47.2

Philippines 13.4

Thailand 1.6

Viet Nam 4.2

Population in multi- dimensional poverty

Source : data.undp.org

Findings: • Large multi-

dimensional poverty in several ASEAN countries.

• Further work required to improve health, education and standard of living.

27

SEA countries participating in PISA display differences in educational performances…

PISA score in Asia (2013)

0

100

200

300

400

500

600

700

Mathematics Reading Science

Source: OECD

Main findings in ASEAN:

• Singapore ranks second and belongs to the five highest-performing countries in the three fields.

• Vietnam scores above the OECD average in the three fields.

• Thailand, Malaysia and Indonesia score below the OECD average.

• Results improved compared to the 2009 PISA scores in most ASEAN countries.

• In Malaysia, the score for ‘Reading’ and ‘Science’ decreased. Indonesia received a lower score in ‘Science’.

Background: Education and skills are essential for innovation and competitiveness. PISA assesses the extent to which 15-year-old students have acquired key knowledge and skills for full participation in modern societies.

OECD Programme for International Student Assessment (PISA)

28

Southeast Asia continues to face environmental challenges

Background: The Environmental Performance Index (EPI) includes facets of environmental public health and ecosystem vitality in the countries. Thus, EPIs enable governments to measure their distance to established environmental policies. Findings: Modest performer • High developed Singapore only rank 52 out of 128 countries. • All included lower developed countries Cambodia, Myanmar and

Viet Nam. ASEAN: • Southeast Asia contains one of the richest and most diverse natural

environments in the world, namely Indonesia, Malaysia and the Philippines.

• Economic development have been accompanied by damage of the environment (overpopulation, health degradation, encroachment on natural systems, air and water pollution).

• Environmental challenges encompass: Deforestation rates are particularly high in the tropical regions of Southeast Asia. Further challenges are: limited safe water supplies; air pollution and overfishing.

Country (128 total) Rank

Strongest Performer

Switzerland 1

Norway 3

Strong performer

Malaysia 25

Brunei Darussalam 26

Thailand Philippines

34 42

Modest performer

Singapore 52

Cambodia 59

Myanmar 69

Indonesia Viet Nam

74 79

Source: WEF GCR and Yale Univeristy

Environmental Performance Index

Southeast Asian Economic Outlook with Perspectives on China and India

• Assessment of medium-term macroeconomic trends and projections. Country-specific structural policy notes and a thematic focus.

• In 2014, policy priorities for growing beyond “middle-income trap” in Emerging Asia

OECD Guidelines for Multinational Enterprises

29

OECD products to support Inclusive and Sustainable Growth

• Guidelines for responsible business conduct to promote contributions by enterprises to economic, environmental and social progress worldwide.

• The only multilaterally agreed and comprehensive standards.

•42 OECD and non-OECD adhering countries.

SME Policy Index ASEAN 2013

Jointly conducted by OECD and ERIA*

Dimensions covered:

1. Institutional framework

2. Access to support services

3. Cheaper, faster start-up and better regulation for SMEs

4. Access to finance

5. Technology and technology transfer

6. International market expansion

7. Promotion of entrepreneurial education

8. More effective representation of SMEs interests

Note: ERIA - Economic Research Institute for ASEAN and East Asia

OECD SME Policy Index findings: Institutional Framework

Institutional Framework

SME definition

Intra-governmental coordination in policy formulation

SME development strategy

SME policy implementation agency or equivalent

Facilitation for a transition from informal to formal (registered) sector

Institutional Framework

Institutional Framework

Main findings in ASEAN: • Singapore performs well across the dimension (5.5)

• MYS, THA, PHL, IND, VNM have developed a solid institutional framework (average 3.7)

• In contrast, KHM, LAO, BRN and MMR are still establishing an institutional framework (average 2.3)

• Policies could be strengthened to facilitate the transition from the informal to the formal sector

0

1

2

3

4

5

6

SGP MYS THA PHL IND VNM KHM LAO BRN MMR

30

Source: OECD

OECD SME Policy Index findings: Access to Finance

Access to finance for SMEs

Legal and regulatory framework

Sound & diversified financial markets

Cadastre (including land use right)

Collateral and provisioning requirements

Creditor rights

Credit guarantee schemes

Credit bureau/registries

Microfinance facilities

Leasing

Factoring

Availability of risk capital

Access to Finance

Main findings in ASEAN:

• Collateral Requirements: Most countries have adopted flexible collateral definitions, except LAO & BRN. However, high collateral requirements are the norm (>100% loan value).

• Cadastre exist across the region: Only in the advanced group (THA, MYS & SGP) is land ownership fully documented

31

Source: OECD

0

1

2

3

4

5

6

32

• AEC presents a great opportunity for growth, but supporting policy mix must be right to achieve inclusive and sustainable growth.

• Governments, private sector and international organisations need to work together to make AEC a success in 2015 and beyond.

• The OECD Southeast Asia Regional Programme stands ready to support the AEC process as well as reforms on a country level.

Summary

33

Annex

1. Revealed Comparative Advantage in ASEAN countries

2. Medium-term policy challenges and responses for human

development in ASEAN

3. Ease of Doing Business and possible policy reforms

4. Investments with private participation

Concept: Revealed Comparative Advantage (RCA) calculates the relative advantage or

disadvantage of a country in producing certain goods or services, based on trade flows.

34

Revealed Comparative Advantage of ASEAN countries

Main export good RCA Share Second export good RCA Share Third export good RCA Share

Brunei Petroleum oils, crude 5.62 50.14% Petroleum gases 20.8 47.08% Acyclic alcohols 4.61 1.05%

Cambodia Unused postage, stamps etc 637.4 20.87% Sweaters, pullovers etc 42.9 13.63% Women's suits 55.07 7.83%

Indonesia Coal; briquettes 13.39 10.16% Petroleum gases 3.36 7.60% Palm oil, crude 34.07 6.62%

Lao PDR Gold content 73.14 21.93% Refined copper and copper alloys 44.71 21.55% Electrical energy 64.83 15.90%

Malaysia Electronic integrated circuits 4.87 13.80% Petroleum oils, refined 1.32 5.81% Petroleum gases 2.46 5.57%

Myanmar Petroleum gases 18.58 42.06% Dried legumes 230.4 11.91% Wood in the rough 97.66 8.46%

Philippines Electronic integrated circuits 14.01 39.73% Auto. data processing machines 3.44 7.09% Diodes, semiconductor devices etc 6.26 4.84%

Singapore Electronic integrated circuits 6.95 19.71% Petroleum oils, refined 4.32 18.91% Auto. data processing machines 2.02 4.17%

Thailand Auto. data processing machines 3.8 7.84% Electronic integrated circuits 1.72 4.88% Natural rubber 22.99 3.68%

Vietnam Petroleum oils, crude 0.7 6.20% Footwear, with leather body 15.81 5.24% Other furniture and parts thereof 9.18 4.05%

Main findings :

• Low export diversification: Brunei (hydrocarbon products 98%) and Myanmar (Petroleum gases 42%).

• Limited export diversification: Cambodia, Lao PDR, Philippines, Singapore

• High export diversification: Indonesia, Malaysia, Thailand, Viet Nam

RCA calculation: Export share of the product of the country divided by the global export share of the product.

35

Medium-term policy challenges and responses for human development in ASEAN

Country Field Policy Focus

Brunei Human capital development Improve tertiary education attainment

Cambodia Agriculture Improve productivity of agriculture, in particular rice production

Indonesia Social security reform Education

Accelerate reform of the pension system to improve transparency and quality Widen access to education, in particular for low-income households

Lao PDR Poverty Reduce poverty through inclusive growth

Malaysia Education Improve the quality of education

Myanmar Human resource development

Upgrade education and anticipate future demands for skilled labour

Philippines Human capital development Poverty

Build holistic disaster risk reduction and management capacities to reduce vulnerability to natural hazards Create more jobs for sustainable poverty reduction

Singapore Education Strengthen lifelong learning to increase labour market flexibility

Thailand Education Upgrade human capital by improving the national curriculum and

teaching standards

Vietnam Human capital development Increase access to education and strengthen TVET to improve the

quality of human capital

Recommendations from the OECD Southeast Asia Economic Outlook 2014

36

COUNTRY RANK

ASEAN

Brunei Darussalam 59

Cambodia 137

Indonesia 120

Lao PDR 159

Malaysia 6

Myanmar 182

Philippines 108

Singapore 1

Thailand 18

Viet Nam 99

Asia Pacific

Australia 11

China 96

Hong Kong 2

India 134

Japan 27

Korea, Rep. 7

New Zealand 3

Ease of Doing Business Rank In 2013

Source: Economy ranking, doingbusiness.org, 2013 and World Economic Forum; Global competitiveness Report 2013

Top 3 Priorities for DB Problematic factors to DB

Brunei Darussalam

- Enforcing Contracts (161) - Registering Property (116) - Protecting Investors (115)

- Access to financing - Poor work ethic in national labour force - Restrictive Labour regulations

Cambodia

- Resolving Insolvency (163) - Enforcing Contracts (162) - Dealing with Construction

Permits (161)

- Corruption - Inefficient government bureaucracy - Inadequately educated workforces

Indonesia - Enforcing Contracts (147) - Resolving Insolvency (144) - Paying Taxes (137)

- Corruption - Inefficient government bureaucracy - Inadequate supply of infrastructure

Lao PDR - Resolving Insolvency (189) - Protecting Investors (187) - Getting Credit (159)

- Inadequately educated workforces - Access to financing - Inadequate supply of infrastructure

Malaysia

- Dealing with Construction Permits (43)

- Resolving Insolvency (42) - Paying Taxes (36)

- Inefficient government bureaucracy - Corruption - Poor work ethic in national labour force

Myanmar - Enforcing Contracts (188) - Protecting Investors (182) - Getting Credit (170)

- Access to financing - Policy instability - Corruption

Philippines - Paying Taxes (131) - Protecting Investors (128) - Registering Property (121)

- Inadequate supply of infrastructure - Corruption - Inefficient government bureaucracy

Singapore - Registering Property (28) - Enforcing Contracts (12) - Getting Electricity (6)

- Restrictive Labour regulations - Inflation - Insufficient Capacity to innovate

Thailand - Getting Credit (73) - Paying Taxes (70) - Resolving Insolvency (58)

- Corruption - Government instability/coups - Policy instability

Viet Nam

- Getting Electricity (156) - Protecting Investors (157) - Paying Taxes / Resolving

Insolvency (149)

- Access to financing - Policy instability - Inadequately educated workforces

Country Energy Telecommunication

Cambodia 1,863.5¹ 6.8

Indonesia 288 1,253.2

Lao PDR 501.4 1,250²

Malaysia 4,386.2 798.9

Philippines 1,177.1 1,113

Thailand 1,580.6 1,169

Vietnam 168.8 N/A

37

Investments with private participation

Source: World Bank Note: 1: 2010 Data. 2: 2009 Data

Private financing in infrastructure projects in 2012 (million US$)