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Southeast Asia and the OECD A mutually beneficial partnership
Southeast Asia is one of the fastest-growing regions in the world, with vast endowments of natural resources, a diversified economy, an expanding middle class, and a young and dynamic population. The creation of an integrated ASEAN economic community beginning in 2015 will generate even more opportunities for growth and employment across the region. However, sustaining this growth, and closing the development gaps that exist within and among Southeast Asian economies, will require reforms in critical areas, such as investment, education, infrastructure and tax. Strong institutional capacity will be needed to make these reforms happen. The OECD has a long history of work with countries of the region and has defined Southeast Asia as a region of strategic priority. We are pleased that this engagement has been further strengthened by the launching of the OECD Southeast Asia Regional Programme at the 2014 OECD Ministerial Council Meeting. This new Programme will help enhance OECD engagement with Southeast Asia and foster the exchange of good practices and mutual learning among policy makers in the region and OECD countries. It will raise the political relationship to a more strategic, whole-of-government level. The Programme will help support domestic priorities and regional integration efforts by informing and supporting policy reforms. The OECD looks forward to a closer partnership with the countries of Southeast Asia. We believe that this collaboration will not only help strengthen regional growth and development prospects, but also help us address joint global challenges, where we can all gain from sharing perspectives. The partnership between Southeast Asia and the OECD will help us deliver to all our citizens better policies for better lives.
ANGEL GURRÍA, OECD Secretary-General
THE OECD AND SOUTHEAST ASIA 2 SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH 8 Maintaining economic resilience Supporting green growth initiatives Promoting regional development and urbanisation Increasing agricultural productivity and food security Promoting development and effective co-operation worldwide Better data for better policies 14 15 INDUSTRY AND INNOVATION 46 Building a knowledge economy Enhancing chemical safety Boosting tourism 47 48 49 51 9 11 12 13 EMPLOYMENT AND SOCIAL DEVELOPMENT 35 Seeking best practices of social and health policies Tackling gender inequality Supporting SME development and entrepreneurship Fostering skills through education and training Promoting effective consumer policy Managing international migration 36 38 40 42 44 45
Developing first-class shipbuilding and steel capacities SMOOTH FUNCTIONING OF MARKETS 17 Enhancing co-operation on international investment Promoting trade and upgrading in global value chains Regulating export credits Promoting sound competition Developing a robust financial system Strengthening connectivity, capital investment and public-private partnerships (PPPs) 23 Improving financial education PUBLIC AND CORPORATE GOVERNANCE 25 Regulatory reform and administrative simplification Budgeting and public expenditures Public procurement Increasing performance in the public sector Disseminating open government Enhancing public sector integrity Fighting transnational corruption Improving tax transparency and compliance Raising the bar on corporate governance 26 27 28 29 30 31 32 33 34 24 ANNEXES Adherence to OECD instruments Participation in OECD bodies and OECD Asian networks 18 19 20 21 22
ENVIRONMENT AND ENERGY 52 Towards a cleaner and healthier environment Combating climate change Improving water management Ensuring reliable, affordable and clean energy 53 54 55 56
CONTENTS . 1
2 . ACTIVE WITH SOUTHEAST ASIA
THE OECD AND THE SOUTHEAST ASIA REGIONAL PROGRAMME
THE OECD AND SOUTHEAST ASIA
The OECD and Southeast Asia have a longstanding and mutually beneficial relationship that has steadily developed since the late 1990s. In 2007, OECD Ministers identified Southeast Asia as a region of strategic priority for the Organisation and Indonesia became a Key Partner along with Brazil, China, India and South Africa. In recent years, Indonesia and the other Southeast Asian countries (Brunei Darussalam, Cambodia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam) have intensified their participation in OECD committees and working groups, peer reviews and studies and have increasingly contributed to statistical data collection and international benchmarking exercises such as the Programme for International Student Assessment (PISA). Several Southeast Asian countries have adhered to international standards and norms developed by the OECD, in such areas as tax, chemicals, and development co-operation. In order to further strengthen the OECD’s engagement with the region, in 2014 the OECD is establishing a comprehensive Southeast Asia Regional Programme.
THE OECD AND SOUTHEAST ASIA . 3
L High-level representatives from ASEAN and OECD countries at the opening of the OECD Southeast Asia Regional Forum, hosted by the Government of Indonesia in Bali on 25-26 March 2014.
6 Regional Policy Networks (RPN)
To enhance and broaden the OECD’s engagement with the region, in 2013 at the Ministerial Council Meeting (MCM), OECD Ministers called for the establishment of a comprehensive Southeast Asia Regional Programme. The Programme, to be ofﬁcially launched at the 2014 MCM, aims to strengthen engagement with the region with a view to support the regional integration process and national reform priorities. The creation of the Programme will take place as ASEAN economies strive to build the ASEAN Economic Community (AEC) by the end of 2015. The Southeast Asia Regional Programme will aim to foster the exchange of good practices and mutual learning between policy makers in Southeast Asia and OECD countries, bringing perspectives from the region to enrich the policy debate at the OECD. The Programme will help bring participating countries closer to OECD standards and practices, facilitate access to the expertise of OECD bodies and adherence to its instruments. Building on the substantial existing work with the region, an intensive consultation process was launched to shape the Programme, including with OECD Committees, Southeast Asian governments and regional stakeholders.
Connectivity and PPPs
Education and Skills
“In order to remain at the forefront of global governance, the OECD needs to develop its relations with the rest of the world and especially with its most dynamic regions. The Southeast Asian countries, which are playing an increasingly key role in the global economy, are thereby important partners for the OECD. As such, we are delighted at the launch of the Southeast Asia Regional Programme during the 2014 MCM which will allow our Organisation to establish the foundations of a powerful and sustainable partnership with this region.”
Pascale Andreani, Ambassador of France to the OECD, Chair of the External Relations Committee (which oversees the Organisation’s overall global relations) 4 . ACTIVE WITH SOUTHEAST ASIA
The Programme’s structure is designed to encourage a systematic exchange of experience to develop common solutions to regional and global challenges. It is comprised of thematic Regional Policy Networks, which will build on the work programme of substantive OECD and Southeast Asian bodies and dialogue processes. The initial areas of focus for the Networks are tax, investment, education and skills, small and medium-sized enterprises, regulatory reform, and connectivity and public-private partnerships (PPPs) to support connectivity for infrastructure development. Further work will be developed in trade, innovation and gender. Each Regional Policy Network will be composed of policy experts from Southeast Asia and OECD countries, who will jointly decide on its work programme:
POLICIES AND ADMINISTRATION: The OECD has co-operated with Southeast Asian countries on tax issues since the launch of the OECD-Korea Tax Centre in 1997. In 2013, all Southeast Asian countries were involved as hosts or participants in some of the 22 technical events in the region organised by the Committee on Fiscal Affairs on international tax issues, tax administration, and tax policy. The Regional Policy Network on Tax policies channelled and expanded on this fruitful co-operation to build up a community of best practices.
THE OECD AND SOUTHEAST ASIA
“Southeast Asia has become a growth engine of the world economy and a strategic region in the global value chain. The OECD has expertise which can further promote prosperity and stability in the region by, for example, strengthening connectivity and innovation. The resulting dynamism of the region further contributes to the OECD’s work in enhancing its global relevance. Japan, as the 2014 MCM Chair, is honoured to be engaged in launching the OECD’s Southeast Asia Regional Programme and continues to support the relationship with the region based on mutual Liking, Listening and Learning at a time when ASEAN is reaching for integration in 2015.”
Kazuo Kodami, Ambassador of Japan to the OECD Chair of the 2014 Ministerial Council Meeting
evaluating the knowledge and skills of the world’s 15-yearolds through its Programme for International Student Assessment (PISA). Results of the PISA 2012 survey were published on 3 December 2013, with ﬁve Southeast Asian countries participating: Indonesia, Malaysia, Singapore, Thailand and Viet Nam.
AND MEDIUM-SIZED ENTERPRISES (SMES) POLICIES: The OECD and the ASEAN Secretariat are working together on a comparative assessment of SME policies in the ten ASEAN member countries, with the objective of supporting policies aimed at promoting enterprise development in the ASEAN region and enhance the dialogue and co-operation on SME policies. In March 2014, the results of the ﬁrst OECD-ASEAN SME Policy Index were presented and priorities for future work were discussed. The Regional Policy Network on SME Policies will support the design and implementation of SME policies and enterprise development. REFORM POLICIES: The OECD has been engaged in issues of regulatory reform in Southeast Asia for over a decade. In 2000, the OECD and APEC signed an agreement to co-operate in order to improve regulatory practices in the region, resulting in the 2005 APEC-OECD Integrated Checklist on Regulatory Reform. Bilateral
POLICY AND PROMOTION: The OECD’s work on investment policy in Southeast Asia is well-established. The OECD has been co-operating with the ASEAN Secretariat on Investment Policy Reviews (Viet Nam 2009; Indonesia 2010; Malaysia 2013; and Myanmar, Lao PDR, the Philippines, and a second review of Viet Nam, in 2014). Through these country-level reviews, ofﬁcials from the region participate in OECD Committees, such as the Investment Committee and the Advisory Group on Investment and Development, to engage in a peer review and exchange best practices with OECD Delegates. The Regional Policy Network will work to strengthen co-operation on investment policies and promotion. AND SKILLS DEVELOPMENT: The Regional Policy Network on Education and Skills will co-ordinate and streamline a host of ongoing activities through which the OECD aims to help the region to beneﬁt from a better qualiﬁed workforce. Since 2000, the OECD has been
“ASEAN will beneﬁt from learning the best practices of economic integration as experienced by other regions. In that regard, co-operation with the OECD, with its rich experience and expertise on the issue of economic integration, would be highly beneﬁcial for ASEAN’s own effort.”
H.E. Mr. Muhamad Chatib Basri, Minister of Finance Republic of Indonesia
THE OECD AND SOUTHEAST ASIA . 5
OECD Southeast Asia Regional Programme
Policy Reviews were conducted for Viet Nam (Review on Administrative Simpliﬁcation, 2010) and Indonesia (Regulatory Reform, 2012). A country speciﬁc project with Malaysia on Good Regulatory Practices was launched in 2012. The OECD will also conduct a Product Market Regulation survey in 2013-2014 with Brunei Darussalam, Malaysia, Myanmar, the Philippines, and Thailand. The Regional Policy Network on Regulatory Reform Policies will work with regional and OECD partners to improve government capacities for efﬁcient and effective regulations.
AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT: The needs for infrastructure investment in Southeast Asia can only be met if traditional forms of public investment are supplemented with private ﬁnancing of infrastructure, for example via the use of PPPs. The Regional Policy Network for Connectivity will support the regional efforts to establish a well-connected ASEAN Community by 2015. The network’s activities will include diagnostic work, tailored advice, comparative data collection, training and other capacitybuilding activities relating to PPPs, capital investment and regional connectivity.
“Southeast Asia is a dynamic region with a vibrant economy, enormous potential and a population of about 600 million people. It is therefore not surprising that the OECD has identiﬁed this region as a region of strategic priority. At the 2013 Ministerial Council the Members of OECD further called for an establishment of a comprehensive OECD Southeast Asia Regional programme. As I could witness myself as the Chair of the Informal Reﬂection Group on Southeast Asia at the OECD Southeast Asia Forum on Bali on March 25 and 26, the countries of the region showed great interest in an increased exchange on standards, best practices and their implementation. The further economic integration of the ASEAN region would be of beneﬁt to the member countries but also to the world economy as a whole. By strengthening its engagement with this important region, the OECD will promote policies designed to achieve the highest sustainable economic growth and employment and thus contribute to the development of the world economy.”
Dr Hans-Jürgen Heimsoeth, Ambassador of Germany to the OECD Chair of the Informal Reflection Group on Southeast Asia
The OECD Southeast Asia Regional Forum, co-hosted in March 2014 in Bali by the Indonesian Ministry of Finance, brought together over 300 high level ofﬁcials and representatives from OECD and Southeast Asia governments, regional institutions, policy experts and the private sector to discuss how the Programme can most effectively foster regional competitiveness for sustained growth in the region. The event created strong momentum for the Programme’s ofﬁcial launch at the OECD Ministerial and for its work moving forward to support the region’s ambitious development goals. www.oecd.org/globalrelations/seaprogramme.htm
“The OECD’s Global Relations Strategy seeks to make the Organisation a more effective and inclusive global policy network, in particular through close co-operation with ﬁve Key Partners (Brazil, China, India, Indonesia and South Africa) and strengthened engagement with dynamic regions such as Southeast Asia. The newly-created OECD Southeast Asia Regional Programme will build on two decades of co-operation and dialogue between OECD and SEA countries.”
Marcos Bonturi, OECD Director of Global Relations
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THE OECD AND SOUTHEAST ASIA . 7
SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH
Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens. Creating resilient economic structures that can withstand external shocks, building liveable cities and lowering urban-rural divides, improving agricultural efficiency, and promoting global stability and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth.
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Maintaining economic resilience
How can economies increase resilience to soften economic shocks or recover quickly from them? Does structural reform positively impact a country’s economic resilience?
Through four series of publications, the OECD examines macroeconomic and structural policies and developments. The Economic Outlook, released twice a year, analyses recent developments in the global economy and provides economic projections for 41 economies, including Indonesia. The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries. The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education, promoting infrastructure, reforming stringent labour market regulations and capping the minimum wage. Indonesia would also beneﬁt from reducing energy subsidies, easing barriers to entrepreneurship and investment, and strengthening institutions to ﬁght corruption. The annual Economic Outlook for Southeast Asia, China and India, jointly produced by the ASEAN Secretariat and the OECD Development Centre, monitors short-term macroeconomic challenges and medium-term economic trends in the Southeast Asian region. The 2014 edition contains an assessment of national structural policy reforms, a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the “middle income trap” by unleashing productivity through investment in human capital and innovation and shifting towards a technologyintensive economy. The 2015 edition of the Outlook will include a special focus on building strong and effective institutions – from rule of law to government regulation, administration and implementation together with appropriate medium-term development plans – which are needed to realise the region’s long-term potential. “The collaboration with the OECD based on the ‘Economic Outlook for Southeast Asia, China and India’ has proven to be an intellectually stimulating venture. The Outlook itself and the ASEAN-OECD Narrowing Development Gap Indicators have become undeniable policy reference tools for the region.”
Rony Soerakoesoemah, Assistant Director of the Economic Community Department, ASEAN Secretariat
SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH . 9
Maintaining economic resilience
The Economic Surveys, published biennially for each OECD member and Key Partner country, analyse major economic challenges in those countries and propose reform options drawing on international best practices. The forthcoming Economic Survey of Indonesia, to be released September 2014, will include in-depth chapters on “Getting the Most Out of Natural Resources” and “Making Growth More Inclusive and Sustainable”. OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth, sustainability and equity, looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a country’s development process affects these objectives. The Multi-dimensional Review of Myanmar, released in July 2013, identiﬁed key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher, more sustainable and equitable development trajectory.
“Myanmar is a country under challenging conditions of triple transitions—guided to multiparty democracy, planned to market economy, and war to peace—requiring the Government of Myanmar to design multidimensional and comprehensive reforms to transform the country. OECD’s Multidimensional Review of Myanmar is one of essential guidebooks for our reforms.”
H.E. U Soe Thane, Minister of the President’s Office of Myanmar
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Supporting green growth initiatives
The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development. By integrating environmental considerations and the value of natural capital into economic decision making and development planning, green growth can help Southeast Asian economies secure a stronger and more sustainable future.
The OECD’s Green Growth Strategy is built upon three reports – Towards Green Growth; Towards Green Growth: Monitoring Progress – OECD Indicators; and Tools for Delivering on Green Growth – through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic, environmental, investment and innovation policies. Its 2013 report, Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries. It examines 74 policies and measures from 37 developing countries and ﬁve regional initiatives.. The DAC Network on Environment and Development has recently launched work to identify good practices in development cooperation that supports developing countries’ efforts to make growth more green and inclusive. A two-year multi-disciplinary project is now underway on green growth in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Thailand and Viet Nam. A synthesis paper, “What have we learned from attempts to introduce green growth policies?” was published in 2013 as the ﬁrst part of this project. The publication discusses green growth instruments, policy frameworks and indicators and seeks to draw lessons applicable to green growth policies, relying on both country-speciﬁc and cross-country analyses undertaken at the OECD. The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on: 1) key economic, social and environmental trends; 2) how green growth strategies can be best incorporated into national development plans; 3) how to achieve sustainable management of natural resources in the context of growing energy and food demands; and 4) how to manage the challenges arising from rapid urbanisation. In addition, the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on “Making Growth Green and Inclusive: The Case of Cambodia”, released in 2013. The paper identiﬁes several areas of potential improvement for Cambodia and through international co-operation in order to achieve the country’s national green growth objectives. The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale, building on the previous OECD urban green growth studies. The project’s emphasis is on integrating policies across different domains, since much of the discussion that has taken place to date is sector-speciﬁc. Several city-based case studies are under preparation in cities in ASEAN countries, China and India for 2014-2015. www.oecd.org/greengrowth www.oecd.org/greengrowth/asia.htm
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SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH . 11
Promoting regional development and urbanisation
Countries need competitive dynamic regions to achieve their economic, social and environmental objectives. The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels.
The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development. Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas. Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development. Territorial Reviews at the city and metropolitan levels aim to evaluate the economic, social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness, social inclusion and environmental sustainability. National Urban Policy Reviews provide a comprehensive assessment of a country’s urban policies by focusing on policies that explicitly or implicitly affect urban development. The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers – the only global platform convening representatives from both high-level national and local governments. Rural regions are important economically and demographically. OECD research seeks to understand growth factors in rural regions over the long term (innovation, natural resources, etc.); how rural regions contribute to national growth; and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being. The series of National Rural Policy Reviews seek to explain the shift
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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require. The OECD Development Centre is carrying out a study to better understand how developing countries can beneﬁt from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development. The comparative study will build on the experience and lessons learned from the transition of Korea’s economy, and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective. Based on these ﬁndings, the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas. www.oecd.org/gov/regional-policy/urbandevelopment.htm www.oecd.org/gov/regional-policy/oecdworkonruraldevelopment.htm www.oecd.org/dev
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Increasing agricultural productivity and food security
Boosting productivity and innovation, improving access to food, and increasing agricultural trade flows will enhance food security in the ASEAN region.
In recent years, large population groups in Southeast Asia have been exposed to risks of food insecurity. Improving long term food security remains a high priority in the region, and a number of regional initiatives are underway. The OECD provides evidence-based analysis and policy advice in support of enhanced food security, in particular through rigorous risk assessment and management, and in the areas of improved productivity and access to trade. In 2013, the OECD launched a project on transitory food insecurity in Indonesia. The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks. Together with the relevant Indonesian authorities and stakeholders, the project will analyse the sources of risk that threaten food security in the country, and the proﬁle of assessed risks and impacts of policy responses. The project is part of the OECD’s broader work on food security that includes work on other important aspects such as trade policy, agriculture productivity and innovation, agriculture’s enabling environment, and reviews of agricultural policies in countries such as Indonesia and Viet Nam. A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue. The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB). The OECD works closely with the Indonesian government on several agricultural policy projects. The ﬁrst is the OECD Review of Agricultural Policies: Indonesia 2012 – a two year project with the Ministry of Agriculture. The resulting policy dialogue between OECD and Indonesian ofﬁcials on the policy recommendations from the Review helped to identify potential further areas of engagement, in particular the notion of self-sufﬁciency that appears to drive many agricultural policy measures in Indonesia, including the new Food Law. The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation: OECD Countries and Emerging Economies. The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector. The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook. The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022, including Indonesia. The OECD has begun work on OECD Review of Agricultural Policies: Viet Nam which will be completed in 2015. It will pave the way for Viet Nam to be included in the OECD’s regular reports on Agricultural Policy Monitoring and Evaluation: OECD Countries and Emerging Economies. www.oecd.org/agriculture www.oecd.org/fisheries www.oecd.org/tad/agricultural-policies/risk-management-agriculture.htm
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Promoting development and effective cooperation worldwide
The OECD Strategy on Development, adopted in the 2012 Ministerial Council Meeting, gives fresh impetus to OECD’s founding mission of contributing to the development of all countries by sharing knowledge and policy experiences. As the Southeast Asia region’s international assistance continues to expand, the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid.
The OECD’s Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development cooperation and multilateral agencies work together to improve the quality and quantity of their development co-operation. The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation. This includes participation in DAC subsidiary bodies, which cover development ﬁnance statistics, development evaluation, gender, governance, conﬂict and fragility, and environment and development co-operation. The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative, integrated approaches to development co-operation. A key forum for such engagement is the Global Partnership for Effective Development Co-operation, established after the Busan High-Level Forum on Aid Effectiveness. Indonesia is an important partner in this work – Armida Alisjahbana, Minister of State for National Development Planning of Indonesia, co-chairs the Global Partnership – and plays a speciﬁc lead role in work on knowledge sharing, an important component of south–south co-operation. Through the Global Network of Foundations Working for Development (netFWD), the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries. The network allows foundations to engage with stakeholders ranging from policy makers to practitioners, while collectively looking into the challenges linked to project implementation,
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effectiveness, impact and sustainable results. The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments, e.g. through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs), aimed at providing guidance on how these two actors could better co-operate. netFWD collaborates with the Asian Venture Philanthropy Network – AVPN – which is growing the venture philanthropy community across the Asia Paciﬁc region Knowledge sharing in different policy areas is taking a prominent role in today’s changing global landscape of international cooperation, especially in the Southeast Asian region. Achieving sustainable and inclusive development is now at the heart of countries’ efforts as economies progress towards improving the quality of life for all. As policy dialogues move from discussion to learning on equal footing, more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions. The Knowledge Sharing Alliance (KSA), created in January 2013, is one of the outputs of the OECD Strategy on Development. It aims to leverage the OECD’s multi-disciplinary expertise, engage in conversations and mutual learning processes with emerging and developing economies, and increase impact by working closely with bilateral and multilateral and other organisations, having a ﬁeld presence and implementation capacities, and/or networks. www.oecd.org/dac www.oecd.org/site/netfwd www.oecd.org/knowledge-sharing-alliance
Better data for better policies
The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work. The Organisation also works with countries to develop their knowledge in producing and managing statistics.
Indonesia has been included, for a number of years now, in some of the most high proﬁle and important OECD databases. These include a range of short-term economic statistics, for example, international trade, monthly ﬁnancial statistics such as monetary aggregates and interest rates, balance of payments, production indices, and prices. These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle. The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world. In Southeast Asia, PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in Cambodia, Lao PDR, and Viet Nam; review and updating of the statistics law in Cambodia; facilitation of a user-producer dialogue on inclusive growth in the Philippines; and preparation of the Myanmar NSDS roadmap. At the sub-regional level, it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20. The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues. The Revenue Statistics, Trends and Policy Challenges in Asia: the Case of Indonesia and Malaysia publication will provide comparisons on ﬁscal performance and tax mix of these countries, with that of Japan, Korea and OECD countries as a whole. The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth. The current edition will be released in early 2014. The second edition of the report will be delivered by early 2015 expanding the coverage of countries.
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Better data for better policies
The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies. Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia. The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs). This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies: China, India, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. The joint OECD – WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production. The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries. The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs. It also identiﬁes improvements in core statistics that improve the quality of results, notably by encouraging links between trade and business registers and in the level of detail provided in national tables, in particular by motivating new breakdowns that better reﬂect the characteristics of ﬁrms engaged in international trade.
The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its ﬁnancial strength and performance Five non-OECD partners, including Indonesia, Malaysia and Thailand have subsequently joined the OECD’s Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis. Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences, the OECD will continue organising regional seminars in Southeast Asian in cooperation with other relevant international organisations. www.oecd.org/std www.oecd.org/statistics www.oecd.org/dev/asiapacific/abcis www.paris21.org
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SMOOTH FUNCTIONING OF MARKETS
Well-functioning markets are essential to growth and development. Southeast Asian countries have been moving towards an open, outwardlooking, inclusive economy as part of the ASEAN Economic Community plan. Making rules more open, fair, transparent and predictable for trade, investment, competition and financial sector will be key to accelerating regional integration.
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Enhancing cooperation on international investment
International investment has been a driver of Southeast Asia’s economic dynamism and integration into the global economy. Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of exportled development.
The OECD promotes investment policy reform and international investment co-operation, with a view to enhancing the contribution of international investment to growth and sustainable development. In particular, the OECD monitors investment protectionism in the context of the G20, produces statistics on foreign direct investments, and develops international instruments and tools which are used worldwide. The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable, through which governments exchange information and experiences on investment policies and emerging issues – for instance, recipient countries’ policies towards sovereign wealth funds, international investment law and the investor-state dispute settlement system. The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government ofﬁcials using the Policy Framework for Investment (PFI). Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines and Viet Nam participate in the Investment Policy Reviews. The regional component of the OECD’s investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation. This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers, while at the same time strengthening regional integration initiatives and national reforms.
The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion.
Southeast Asia was the host of the ﬁrst meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali. “The recommendations from the Reviews are candid, impartial and highly practical.”
Aung Naing Oo, Director General at the Ministry of National Planning and Economic Development of Myanmar
“The Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015.”
YB Dato’ Sri Mustapa Mohamed, Minister of International Trade and Industry of Malaysia
www.oecd.org/investment/ www.oecd.org/investment/seasia.htm www.oecd.org/investment/countryreviews.htm
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18 . ACTIVE WITH SOUTHEAST ASIA
Promoting trade and upgrading in global value chains
Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia. International production, trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries.
Today, trade in intermediate inputs makes up over 50% of goods and 70% of services trade. This change presents new opportunities for those emerging and developing countries that can reduce their trade costs. By reducing the costs of importing as well as exporting, and by deepening connectivity with the global market, they can tap into GVCs to accelerate their trade, jobs and income growth. However, the emergence of GVCs poses new challenges. Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full beneﬁts from GVCs. The ASEAN framework, and its core goal of establishing the ASEAN Economic Community by 2015, has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region. To help countries reap the full beneﬁts of GVCs, the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond. More broadly, the OECD is actively working with other international agencies to improve the effectiveness of aid for trade, and welcomes the active engagement of Southeast Asian countries in the OECD/WTO Aid for Trade Initiative. Current data show that Asia is now the largest recipient of Aid for Trade. OECD’s work underscores that GVCs impact an economy’s competitiveness and shows that in addition to openness to trade and investment , investment in knowledge-based capital (KBC) and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry).
The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia.
The OECD is compiling a regulatory database of services regulations – Services Trade Restrictiveness Index (STRI) – encompassing 17 services sectors and sub-sectors in 40 countries, including Indonesia. The project is developing a toolkit that contains two distinct but complementary instruments, which allows countries to consider speciﬁc regulatory provisions that may be restrictive and may reduce sector efﬁciency in their economy, and to contrast their own situation in a given sector with that in less restrictive and more efﬁcient jurisdictions. It provides the core information for countries to pursue desirable policy reforms, whether on a unilateral, plurilateral or multilateral basis. The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris. A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures. Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali, the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15% for many individual developing countries. The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action. The OECD also tracks donors’ efforts targeted towards assisting countries to implement trade facilitation reform. www.oecd.org/trade www.oecd.org/trade/stri
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SMOOTH FUNCTIONING OF MARKETS . 19
Regulating export credits
Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy. OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets.
The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues, such as anti-bribery measures, environmental and social due diligence, and sustainable lending. OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade. Governments provide ofﬁcial export credits through Export Credit Agencies in support of national exporters competing for overseas sales. The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues, such as anti-bribery measures, environmental and social due diligence and sustainable lending. In addition, the Arrangement on Ofﬁcially Supported Export Credits stipulates the most generous ﬁnancial terms and conditions for ofﬁcially supported export credits. These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade. Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations. www.oecd.org/trade http://oe.cd/gvc http://oe.cd/tiva
20 . ACTIVE WITH SOUTHEAST ASIA
Promoting sound competition
Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth.
In order to promote sound competition principles and build mutual understanding and cross-border convergence, the OECD has developed international best practices on co-operation between competition enforcers, on hard core cartels and on assessment of government policies for anti-competitive effects. The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition. It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector. Indonesia was one of the ﬁrst ASEAN members to introduce competition law more than a decade ago. Competition policy has played a substantial role in underpinning Indonesia’s economic achievements since 1999. Peer reviews of Indonesia, including the OECD’s 2012 Regulatory Reform Review, have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesia’s National Development Plan, in particular by promoting further pro-competitive regulatory reforms. The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015. Through targeted national and regional workshops, the OECD helps Indonesia and other ASEAN members build domestic competition capacity, which lays the foundations to improve regional enforcement cooperation and policy convergence. In particular, ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre, which serves as a hub to train and assist ofﬁcials from across the AsiaPaciﬁc in developing and implementing effective competition law and policy. In 2013, competition ofﬁcials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop, co-hosted by the Malaysia Competition Commission, on the topic of ﬁghting bid rigging. In 2014, the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on ﬁghting cartels. Indonesia’s Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECD’s Competition Committee and a regular contributor to the debates in the Global Forum on Competition. The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world. The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers. www.oecd.org/competition
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SMOOTH FUNCTIONING OF MARKETS . 21
Developing a robust financial system
The OECD promotes efficient, open, stable and sound market-oriented financial systems, based on high levels of transparency, confidence and integrity. It monitors and surveys current market developments and structural changes, publishing its key findings in the biannual publication Financial Market Trends.
The OECD also suggests reform measures related to banking, securities and institutional investors, in particular with regard to insurance companies and private pension schemes. In addition, it facilitates policy dialogue and exchange of experiences on capital market reform, insurance, private pensions, ﬁnancial education and ﬁnancial consumer protection. The OECD seeks to enhance policy analysis and dialogue on disaster risk ﬁnancing strategies for natural and man-made disasters and develop good practices where relevant. Building on long-standing work in disaster risk management and risk ﬁnancing, the OECD developed a G20/OECD Methodological Framework for Disaster Risk Assessment and Risk Financing that supports the development of effective strategies to manage the ﬁnancial impacts of disasters. The OECD is actively supporting an Asia-Paciﬁc Economic Co-operation (APEC) Finance Minister initiative on disaster risk ﬁnancing that seeks to promote information exchange and good practices among APEC economies, some of which are from Southeast Asia. An APEC seminar on disaster risk ﬁnancing in the Asia-Paciﬁc region will be held in Indonesia in June 2014. Countries from Southeast Asia will be invited to participate in this major event. Established in 1999, the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators, policymakers, experts, practitioners and scholars, as well as international organisations, to discuss the latest developments in capital market reform in Asia. The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efﬁcient ﬁnancial regulation in Southeast Asia. www.oecd.org/finance
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22 . ACTIVE WITH SOUTHEAST ASIA
Strengthening connectivity, capital investment and public-private partnerships
Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015.
The OECD Economic Outlook for Southeast Asia, China and India 2014 identiﬁed infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty. According to ADB estimates, ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure. To raise the required resources, public funds need to be complemented by privately-ﬁnanced infrastructure investments including publicprivate partnerships (PPPs). PPPs are an important tool for decision makers to strengthen economic and social development. By harnessing private sector expertise and allocating risks to the parties, governments can make great strides in ensuring value for money. The OECD Network of Senior PPP Ofﬁcials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly. The Network
The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment, providing a dialogue platform for OECD and ASEAN countries.
has developed the OECD Principles for Public Governance of PPPs, which examine institutional capacities, selection of PPP projects based on value for money and use the ordinary budget process to ensure ﬁscal sustainability. The OECD has also developed conceptual frameworks on how to manage ﬁscal risks through good capital budgeting, ensure value for money from capital procurement and set up dedicated PPP units. www.oecd.org/gov/budgeting
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SMOOTH FUNCTIONING OF MARKETS . 23
Improving financial education
The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion, foster individuals’ financial well-being, and support financial stability.
Southeast Asian countries are actively promoting ﬁnancial education as a powerful tool for economic growth and ﬁnancial stability and as a starting point for more inclusive societies. Indonesia developed a national strategy for ﬁnancial education following the OECD recommendations, as detailed in Indonesia’s contribution to the G20-OECD publication Advancing National Strategies for Financial Education. Indonesia, Malaysia and Thailand also used OECD methodology to assess the ﬁnancial literacy of their populations and develop their national strategies for ﬁnancial education. Indonesia has promoted the importance of ﬁnancial literacy at G20 level and has contributed to making ﬁnancial education policies a policy priority within ASEAN and APEC. The OECD formulates ﬁnancial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20. Established in 2008, the OECD/INFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices. Cambodia, Indonesia, Malaysia, the Philippines, Singapore and Thailand are members of the Network. Indonesia is an especially important partner, having hosted the 2nd meeting of the OECD/INFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011. Moreover, Indonesia is a member of the OECD/INFE Advisory Board, and co-Leader of the OECD/ INFE Expert Subgroup on the Role of Financial Education in Financial Inclusion. Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECD/INFE in Malaysia in 2015. Moreover, the OECD/INFE will carry out a survey on ﬁnancial education in Asia, with a focus on ASEAN countries. “Developing people’s ﬁnancial literacy is as important as developing ﬁnancial capability. It is critical that people be taught about the importance and beneﬁt of accessing ﬁnancial services.”
H.E. Dr Susilo Bambang Yudhotono President of the Republic of Indonesia, 2010
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24 . ACTIVE WITH SOUTHEAST ASIA
PUBLIC AND CORPORATE GOVERNANCE
Effective public sector management, reduced ‘red tape’ and sound corporate governance are key to promoting growth and development. Good governance of the public and private sectors requires streamlining administrations, reforming tax and fiscal relations across levels of government, combating corruption in business and public sectors, and strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises.
PUBLIC AND CORPORATE GOVERNANCE . 25
Regulatory reform and administrative simplification
Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence, as well as for individual ASEAN member state’s structural and rule of law reforms.
Regulations are indispensable to the proper function of economies and societies. They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services. At the same time, regulations are not costless. Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to ﬁll out government paperwork. Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives. The OECD has a long standing engagement with Southeast Asia on regulatory reform, both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states. Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform, 2011 Review of Administrative Simpliﬁcation in Viet Nam and 2012 Regulatory Reform Review of Indonesia. In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA), a new requirement under the “National Policy on the Development and Implementation of Regulations”. In Viet Nam, regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simpliﬁed into 63 at both levels. These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 1.4 billion. In Indonesia, regulatory reforms have included efforts to strengthen coherence between national and subnational regulations, with 37% of 13 200 subnational regulations invalidated between 2010-12. Following the 2012 Regulatory Reform Review of Indonesia, the OECD is supporting the government’s efforts to develop guidelines on public consultation in regulatory processes.
26 . ACTIVE WITH SOUTHEAST ASIA
The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations.
Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia. This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leaders’ (Honolulu) Declaration: Toward a Seamless Regional Economy. It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance. “We are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country. I would also like to urge all ministries and agencies to leverage on OECD’s expertise in providing advisory services and assistance.”
Tan Sri Dr Ali Bin Hamsa, Chief Secretary to the Government of Malaysia
“High quality regulation and simple, transparent and public administrative procedures, together with accountability shall create a favourable environment for investment, remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economy.”
Nguyen Tan Dung, Prime Minister of Viet Nam
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Budgeting and public expenditures
Maintaining fiscal discipline, allocating resources to where they are most valued, and achieving greater efficiency in government operations have a crucial impact on overall national economic performance.
The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems, comparative analysis of speciﬁc aspects of the budgeting system across countries, and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries. The results of this work are published in the OECD Journal on Budgeting. The OECD Senior Budget Ofﬁcials (SBO) meet annually to consider latest developments in international budget practice. An Asian SBO meeting, held annually in Bangkok, Thailand, is open to all countries in Southeast Asia and across the region. In addition, the OECD is developing a Regional Policy Network on PublicPrivate Partnerships and Connectivity, so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21). As an example of country-speciﬁc analysis, the recent report on Budgeting in Indonesia shows that, since the economic crisis, important improvements have been made, such as the creation of a modern legal framework for budgeting and uniﬁcation of the budget. Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting, the report suggests that further progress could be achieved by: introducing an operational expenditure-based ﬁscal rule; avoiding the concentration of spending in the last months of the ﬁscal year; and reducing unnecessary detail in its ofﬁcial budget documentation, as excessive detail could hamper reform initiatives under consideration in Indonesia. www.oecd.org/gov/budgeting
PUBLIC AND CORPORATE GOVERNANCE . 27
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Public procurement is a visible, high-spend activity that accounts for 13% of GDP and 30% of total public expenditures in OECD countries. Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries.
The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance. On the basis of these principles and depending on countries’ demands, the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-speciﬁc procurement, such as health or energy procurement. On the basis of its experience in assessing procurement systems, the OECD was requested by the G20 to develop a guide of public procurement good practices, also to be ready in 2014. The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending. India, Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings, which brings together senior procurement experts from OECD and G20 countries, as well as international organisations and the private sector, to share experiences and provide a global view of procurement best practices. In addition, the OECD is collaborating with the Asia-Paciﬁc Economic Co-operation (APEC), in particular on green public procurement. Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution, resource-efﬁcient economy. The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries, to be ready by the end of 2014, which will include data on Southeast Asia. www.oecd.org/gov/ethics/integrityinpublicprocurement.htm
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28 . ACTIVE WITH SOUTHEAST ASIA
Increasing performance in the public sector
OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money.
The OECD compiles internationally comparable data and indicators on public governance and performance in its biannual Government at a Glance publication that covers the OECD countries, as well as selected accession, partner and observer countries. It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an AsiaPaciﬁc Government at a Glance. These data would be used by politicians, experts in government, practitioners, academics, researchers and students in analysing the performance of their public sector and for designing public policies. The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector. The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries; connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations; and develops practical guidance on how to source, develop, support, scale and diffuse innovations. The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia. In addition, work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efﬁcient public sector. Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service, building capacity for effective governance. Such reviews can be done in non-member countries depending on the needs and demand. E-government can also help to “leapfrog” economic development, providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones. Case studies could be developed following the framework of the “M-Government” report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU). www.oecd.org/gov
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PUBLIC AND CORPORATE GOVERNANCE . 29
Disseminating open government
The OECD is committed to fostering public sector reforms inspired by the principles of transparency, integrity, accountability and citizen’s participation.
Building on years of experience in gathering data, providing policy advice and in setting international principles and standards in the area of good governance for its member countries, the OECD is now expanding its activities on open government in non-member countries. This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP). This initial collaboration rapidly grew in scope to cover countries in Latin America, Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Ofﬁcial Multilateral Partner Organisation. Several projects have been launched and are under discussion at the national and regional levels. In particular, following the intention of the Government of Myanmar to join the OGP in 2016, the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement. This project is the ﬁrst step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process, as expressed in the “Nay Pyi Taw Accord for Effective Development Co-operation” and in the “Framework for Economic and Social Reforms (FESR): Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Plan”, both of which identify good governance as a priority area. The project has disseminated principles and practices of Open Government and of the OGP in Myanmar; created an Open Government Network made up of policy makers and practitioners in the country; and produced the OECD Open Government Preliminary Diagnostic Assessment. Moreover, in collaboration with the Government of Indonesia and the OGP, the OECD will host a regional seminar on “Measuring Citizens’ participation to improve open government policies” within the context of the OGP Asia-Paciﬁc Regional Conference in Bali in May 2014, The OECD Open Government Review of Indonesia will be launched, together with the OECDSEA Network on Open Government and Connectivity. This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice, technical assistance and capacity building in the areas of public governance and open government. www.oecd.org/gov
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Enhancing public sector integrity
Integrity, transparency and accountability are key components to restore citizens’ trust in government, create a level playing field for business and contribute to economic performance.
For over a decade, the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efﬁciency within the public sector. Although governments play a central role in upholding core values and safeguarding public interest, other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity, accountability and transparency across societies. Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems. The ADB/OECD Anti-Corruption Initiative for Asia and the Paciﬁc provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them. The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region. In this context, the OECD in collaboration with the Asia-Paciﬁc Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014. www.oecd.org/gov/ethics www.oecd.org/gov/ethics/integrityframework
L The 12th Regional Seminar of the ADB/OECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region. Dili, East Timor, July 2013.
PUBLIC AND CORPORATE GOVERNANCE . 31
Fighting transnational corruption
Corruption is a major obstacle to economic development as it undermines good governance, sustainable development and fair business practices. The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery. This international instrument has been adopted by 40 countries around the world.
The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public ofﬁcials in international business transactions and provides for a host of related measures that make this effective. It is the ﬁrst and only international anti-corruption instrument focused on the ‘supply side’ of the bribery transaction. The OECD participated in a number of events in Indonesia, Malaysia and Thailand. These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public ofﬁcials in Malaysia. Future work with Indonesia, Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public ofﬁcials and corporate liability for the offence. Once the legislative frameworks are fully established, knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries. In addition, all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments, as well as working together with the OECD on private sector initiatives on ﬁghting foreign bribery. Thirty-one countries in the Asia-Paciﬁc region have expressed their commitment to ﬁght corruption by endorsing an anticorruption action plan within the framework of the ADB/OECD Anti-Corruption Initiative for Asia and the Paciﬁc. The Initiative supports members’ national and multilateral efforts to reduce corruption, by focusing on the effective implementation of the UN Convention against Corruption (UNCAC). Indonesia, Viet Nam, Thailand, Malaysia, Singapore, the Philippines, and Cambodia are also active members of ADB/OECD AntiCorruption Initiative for Asia and the Paciﬁc. In 2013, the Initiative launched a Thematic Review on Accounting and Auditing, Internal Control and Ethics Measures for Preventing Corruption in the Private Sector. The Review will be ﬁnalised and published in 2014. www.oecd.org/corruption www.oecd.org/corruption/asiapacific
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32 . ACTIVE WITH SOUTHEAST ASIA
Improving tax transparency and compliance
The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues. Such cooperation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices.
The OECD plays a lead role in the development of international tax standards and guidelines. In response to the G20 leaders’ call to address base erosion and proﬁt shifting (BEPS), the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues. As the OECD/G20 BEPS Project will have a global impact, the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reﬂect their needs. A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of signiﬁcance in the international tax policy landscape including, for example, wasteful tax incentives and transfer pricing comparability data. Indonesia is an Associate in the OECD/G20 BEPS Project and participates on an equal footing with OECD and other G20 countries. Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies. The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation. The project will provide a framework for collaborating in a focused and ﬂexible way and enhance co-operation between Indonesia and the OECD.
The Regional Policy Network for tax will strengthen co-operation on tax policy and administration in the region and between OECD and Southeast Asian countries.
The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries, which are hosted by Malaysia, Singapore, Thailand and the Korean Policy Centre (Tax Programme). The events bringing together tax ofﬁcials from the region as well as OECD countries to share experiences and expertise on technical, policy and administrative issues such as tax treaties, transfer pricing, exchange of information, tax administration and other important tax matters. The OECD, through its Tax and Development programme, is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing, and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region. Indonesia, Malaysia, the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Forum, gathering about 120 OECD and non-OECD jurisdictions, monitors the implementation of internationally-agreed tax transparency standards through country peer reviews. Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore, the Philippines and Indonesia. These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes. Phase 2 reviews look at the exchange of information in practice. www.oecd.org/tax www.oecd.org/tax/beps.htm www.oecd.org/tax/transparency
PUBLIC AND CORPORATE GOVERNANCE . 33
Raising the bar on corporate governance
Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia.
Southeast Asian countries have invested signiﬁcant efforts in promoting good corporate governance. However, considerable challenges remain in order for the region to fully reap the beneﬁts of capital market integration, such as the availability of a larger pool of funds. Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration. The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies, based on the OECD Principles of Corporate Governance. Given the growing importance of the region to the world economy, efforts to reform governance practices are of global relevance. The OECD has engaged actively with some countries in the region for over a decade. The Principles are intended to help countries evaluate and improve their legal, institutional and regulatory framework for corporate governance, and to provide guidance and suggestions for stock exchanges, investors, corporations and other parties involved in the development of good corporate governance. They are recognised by the Financial Stability Board (FSB) as one of the key standards for international ﬁnancial stability, and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and Codes. Raising the bar on corporate governance The Guidelines, developed based on the Principles, take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders. They help governments organise their ownership and regulatory roles, while ensuring efﬁcient and
34 . ACTIVE WITH SOUTHEAST ASIA
transparent governance of individual SOEs. Well-governed SOEs can in turn help boost national competitiveness and limit the risk of ﬁscal drainage. A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations, the Philippines directly citing the OECD instrument as a source of inspiration. In 2014, the OECD is undertaking a review of the Principles and the Guidelines. Indonesia and Singapore, along with other FSB members, participate in the review as an Associate (i.e. on an equal footing with OECD members, so as to ensure that the updated standards truly reﬂect an international perspective). Malaysia participates in the Committee as an Invitee. “The OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard, given its global acceptance by policymakers, investors and other stakeholders.”
ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group, 2012
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EMPLOYMENT AND SOCIAL DEVELOPMENT
Southeast Asian countries have increased efforts to put in place an efficient and equitable welfare model, covering a greater proportion of its population. Health, pensions, education, vocational training and consumer policy are key components to building an effective social security system. All these are essential to enhancing human capital, increasing social cohesion and achieving more inclusive economic growth.
EMPLOYMENT AND SOCIAL DEVELOPMENT . 35
Seeking best practices of social and health policies
SOCIETY OECD’s work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socioeconomic and demographic conditions.
Society at a Glance – Asia/Paciﬁc offers an overview of the state of Asia-Paciﬁc economies on social issues – such as demography and family characteristics, employment and unemployment, poverty and inequality, social and health care expenditure and trust and tolerance - to help inform policies. The report also demonstrates how social indicators can be used to measure ‘well-being’ in Southeast Asian economies. The OECD jointly published the 2011 edition with the OECD Korea Policy Centre, which includes a special focus on unpaid work and the ways to facilitate women’s access to employment in the Asia/Paciﬁc region. A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education, employment and entrepreneurship (the three “Es”). www.oecd.org/els/social/indicators/asia
PENSIONS Many of Asia’s pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades.
Pensions are a major policy issue in Southeast Asian and OECD economies alike. The OECD has developed international standards and statistical data to help monitor the pensions industry, and is currently drawing up guidelines on the security of investments in pension funds. The OECD also analyses retirement income systems around the world, providing a reference for pension comparison across the OECD and the Asia-Paciﬁc region. The biennial publication Pensions at a Glance Asia/Paciﬁc covers selected Southeast Asian economies, presenting key pension indicators such as replacement rates and pension wealth. The 2013 edition provided a reference for pension comparison throughout the region. www.oecd.org/els/social/pensions
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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending, health systems need to increase their efficiency and deliver value for money.
The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status, health care resources, and quality of care. The 2013 edition of Health at a Glance: Asia/ Paciﬁc presents a set of key indicators on health systems for 27 Asia/Paciﬁc economies. Through the OECD Korea Policy Centre, experts and policy makers in the region share policy experiences, including on policies to improve health care quality. OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efﬁcient care. Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors, such as obesity and harmful alcohol consumption is a highly cost-effective strategy. www.oecd.org/health www.oecdkorea.org
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EMPLOYMENT AND SOCIAL DEVELOPMENT . 37
Tackling gender inequality
There is now widespread consensus that gender equality matters for development, economic growth and poverty reduction.
Although the gender gap is narrowing in areas such as education and employment, gender equality remains an issue in the Southeast Asia region. According to UNESCO statistics, the gender gap in education attainment in secondary education has narrowed from 2002 to 2012. However, across countries, women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles. Improving women’s education, employment and health outcomes not only delivers beneﬁts for women but for whole communities and economies. However, there remain signiﬁcant obstacles to achieving equal outcomes for women and men on key economic and social indicators. The OECD Development Centre’s research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI). The Index highlights the importance of tackling discriminatory social norms to promote gender equality. Also, SIGI data highlights the relationship between discriminatory social norms and key development outcomes, such as maternal mortality, educational attainment, poverty reduction and food security. The speciﬁc country proﬁles reﬂect the performance of the Southeast Asian countries. The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance women’s health, education and employment in their countries. Gender equality in public life has been recognised as a driver for inclusive growth. This was reafﬁrmed by the discussions at the 2014 OECD Global Forum on Women’s leadership in Public Life, which brought together a global network of leading gender equality actors from the government, parliaments, justice institutions, civil society and businesses from over 60 countries, including Indonesia, Thailand and the Philippines.
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The OECD will work with regional partners to improve women’s economic development through the development of an OECD Southeast Asia Gender Initiative.
The path-breaking 2014 OECD publication on Women, Government and Policy-Making in OECD countries: Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on women’s access to decision-making roles. The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures. It also underlines that gender mainstreaming and strategic government capacities to adopt a co‑ordinated and whole-of-government approach were crucial to promote gender equality, and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life. This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy.
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A report on Closing the Gender Gap: Act Now was published in December 2012 as part of the OECD Gender Initiative, together with the new OECD Gender Data portal that covers OECD members and Brazil, China, India, Indonesia, Russia and South Africa. The report examined latest trends on gender equality in the three “Es” and discussed ways to best close the remaining gender gaps in these areas. www.oecd.org/gender/equality http://genderindex.org/ www.oecd.org/dev/poverty/genderatthedevelopmentcentre.htm
I Cambodian Minister of Women’s Affairs, H.E. Dr Kantha Phavi Ing, speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping women’s potential to drive jobs and growth, March 2014, Bali.
L Left to right: Ms Flaminia Bussacchini, Head of Unit, Equal opportunities and Working Conditions, DG Human Resources and Security, European Commission; Ms Helen Silver, Chief General Manager, Allianz Australia; former Secretary of the Victorian Department of Premier and Cabinet, Head of the Victorian State Public Service, Australia; Ms Geraldine Byrne-Nason, Second Secretary General, EU Affairs and Coordination Division, Department of the Taoiseach (Prime Minister), Ireland;
Mr Robert Cloarec, Chair, OECD Public Employment and Management Network, Swedish Agency For Government Employers; Ms Uschi Schreiber, Global Leader, Ernst and Young, United States; Mr Areepong Bhoocha-oom, Secretary-General, Office of the Public Sector Development Commission, Thailand; and Ms Nathalie Loiseau (not pictured), Director, École nationale d’administration (ENA), France at the OECD Global Forum on Public Governance, April 2014, Paris. EMPLOYMENT AND SOCIAL DEVELOPMENT . 39
Supporting SME development and entrepreneurship
Governments around the world, including Southeast Asian economies, have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth, employment and social cohesion. They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development.
Access to ﬁnance for micro and small companies in particular remains difﬁcult. Moving beyond microﬁnance to longer-term ﬁnancial products and services remains a major challenge and is critical to achieving greater growth. The OECD monitors closely the situation of SMEs’ access to ﬁnance around the world. Financing SMEs and Entrepreneurs 2013: An OECD Scoreboard analyses trends in access to ﬁnancing in 25 countries, including Thailand, based on annual and quarterly data from central banks and national statistical agencies. Participation in this exercise is free of charge and is open to all Southeast Asian economies. The OECD has recently developed a partnership with the Asian Development Bank in SME ﬁnance. In 2013, a joint project on “Enhancing ﬁnancial accessibility for SMEs: Lessons from Asian and OECD Areas’ Crises” was launched, which analyses policies and experiences to improve bank lending efﬁciency and to broaden the range of ﬁnancing instruments available to SMEs and entrepreneurs. The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris. The ofﬁcial OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE). The WPSMEE enables an exchange of views, lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs. Policy makers from Member
The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development.
and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development. Topics reviewed include the business environment and regulatory framework, innovation, ﬁnancing, taxation, skills and internationalisation. Thailand participates regularly in the WPSMEE, and Indonesia will be invited to join this group as a participant. Since April 2011, the OECD, the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region. The OECD-ERIA ASEAN SME Policy Index 2014: Towards Competitive and Innovative ASEAN SMEs was
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launched at the 2014 OECD Southeast Asia Regional Forum in Bali. The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia, Lao PDR, Myanmar and Viet Nam) and the ASEAN-6 countries. While Singapore and Malaysia exhibit high standards in SME policy (e.g. access to ﬁnance for SMEs, support services for start-ups), further efforts are needed in CLMV countries to reduce development
gaps. Structural reforms have been identiﬁed to enhance productivity, human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD, capacity building events for CLMV countries and country-speciﬁc policy initiatives. www.oecd.org/cfe/smes www.oecd.org/cfe www.oecd.org/globalrelations/regionalapproaches/aseansme.htm
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Fostering skills through education and training
Skills are the new global currency. Investment in education and training helps drive economic growth, alleviate poverty and enhance social cohesion. Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy.
The OECD helps policy makers foster human and social capital skills, and leverage education and training systems for dynamic and sustainable economies. Through comparative data and policy analysis it strives to promote efﬁcient and effective systems and improve learning outcomes. SEA countries have made signiﬁcant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education: in most countries in the region, primary and lower-secondary attainment is relatively high. However, major challenges remain in both quality and equity. While students in Singapore lead the world in problem solving and Viet Nam’s 15 year-old students perform at levels above the OECD average, in Indonesia, Malaysia and Thailand signiﬁcant numbers of students do not attain minimum skill levels. The disparity among countries may hinder regional economic integration. While in some countries a very high proportion of students continue to study beyond compulsory education, less than a third of students who entered primary schools go on to secondary level in Cambodia, for example. Qualiﬁed teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region, especially in remote areas. More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education, but Lao PDR has many teachers with low levels of formal schooling – 37 per cent of them have had no more, and sometimes even less, schooling than the level of students they teach. The capacity of education systems to respond to the economy’s current and future skills needs is crucial. There should be a good match between the skills required by industry and
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The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills.
those provided by schools, colleges and universities. In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains, in particular in middle income ASEAN countries. The current and planned work of the OECD in Southeast Asia has three pillars: promoting participation in international education surveys; country education policy reviews; and regional policy peer-learning. Through the Programme for International Student Assessment (PISA), the OECD has been evaluating the knowledge and skills of the world’s 15-year-olds since 2000. The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries. PISA for Development is well placed to to help countries set national learning targets, monitor progress towards them, and analyse the factors that affect student outcomes, particularly among poor and marginalised populations. Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC). TALIS studies teaching practices and environments in order to improve teaching and teachers’ capacities to provide quality education, while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market. Indonesia will participate in the third round of the survey. OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms. Country education policy reviews cover a wide range of aspects of education systems, depending on the priorities of the country. Based on an in-depth analysis of a country’s strengths and weaknesses, reviews draw upon policy lessons and
recommendations supported by international best practices. The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia. “Ultimately, education is not what we do to our children. Rather, it is what we do with them, and for them, to bring out the best in each of them, so that they grow up to embrace the best of the human spirit – to strive to be better, to build deeper wells of character, and to contribute to society.”
Heng Swee Keat, Minister of Education of Singapore
The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED), which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world. It builds on comparative analysis of policy experiences from some 50 countries from the ﬁve continents in fostering economic growth, employment and inclusion. LEED has been increasingly present in Southeast Asia to learn from the region’s innovative skills development strategies. In exchange the region has learned from the OECD’s experience in building effective partnerships and breaking down policy silos. The LEED Committee, the Programme’s governing board, invites Southeast Asian countries to join as full participants in its regular activities. www.oecd.org/edu www.oecd.org/pisa www.oecd.org/cfe/leed www.oecd.org/cfe/leed/employmentesssa.htm
EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIA
The Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECD’s Local Economic and Employment Development (LEED) Programme, in collaboration with the International Labour Organisation (ILO), ASEAN, the Asian Development Bank, and supported by the European Commission. Since 2008, ESSSA aims to help countries within the Southeast Asia region design policies, which tackle cross-cutting labour market issues, build the capacity of practitioners in implementing effective employment and economic development strategies, and develop governance mechanisms, which foster greater policy coordination and integration. ESSSA gathers policy makers, practitioners and researchers from both developed and emerging economies, including Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, the People’s Republic of China, Chinese Taipei, Mongolia, India, Japan, Korea, Australia and New Zealand. Key outcomes from ESSSA include identifying best practices of national and local initiatives, surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level.
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EMPLOYMENT AND SOCIAL DEVELOPMENT . 43
Promoting effective consumer policy
Governments have an important role to play in helping consumers understand their rights and protect their interests.
The OECD helps governments design effective consumer policies to support the development of efﬁcient, transparent and fair global markets for consumers. In 2010, a Consumer Policy Toolkit was developed to improve consumer policy making. Both member and partner governments are using the Toolkit to address speciﬁc consumer issues. The lessons learned have been codiﬁed in a Recommendation adopted by the Council in 2014. The OECD’s work on consumer policy currently focuses on e-commerce and product safety. In the ﬁeld of e-commerce, the Guidelines for the Protection of Consumers developed in 1999 are being updated; special attention is being paid to issues concerning mobile and online payments, digital content products and participative e-commerce. In product safety, a web-based global database was launched in October 2012 that draws together information on product recalls worldwide. A second database has been developed to help track policy and regulatory developments. A third database will provide a platform for sharing information on injuries. Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy. Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea. www.oecd.org/sti/consumer-policy www.oecd.org/sti/consumer-policy/productsafety
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Managing international migration
The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends.
Immigrants born in Southeast Asia represent 6% of all immigrants living in OECD countries and 40% of them are highly educated. More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012, accounting for 8% of total migration ﬂows to the OECD area. Furthermore, in 2011, 7% of international students in OECD countries are Southeast Asian nationals. Since 2011 the OECD, ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries. This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries, as well as within the region. In 2013, this meeting was organised in Bangkok and focused on “labour migration, skills and student mobility in Asia”. In 2014, the meeting was held in Tokyo and focused on “Building human capital across borders”. In January 2013, the OECD Development Centre launched the “Interrelations between public policies, migration and development” of partner countries project, which aims at enhancing partner countries’ capacity to incorporate migration into the design and implementation of their development strategies. The project is carried out in 10 low and middle-income countries, among which three are in Southeast Asia: Cambodia, Malaysia and the Philippines. It will provide empirical evidence based on quantitative and qualitative ﬁeldwork at the country level and a comparative analysis of the partner countries. www.oecd.org/els/mig/ www.oecd.org/migration/migrationatthedevelopmentcentre.htm
EMPLOYMENT AND SOCIAL DEVELOPMENT . 45
“Labour migration is not a new phenomenon. It has been a long discussed topic but we again, must bring it to the table because labour migration plays a vital role in promoting the economic growth.”
Phadermchai Sasomsub, Former Minister of Labour of Thailand Quote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia, January 2013, Bangkok
“Helping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian context.”
Yves Leterme, Deputy Secretary-General of the OECD Quote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia, January 2014, Tokyo
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INDUSTRY AND INNOVATION
In the knowledge economy of the 21st Century, science and technology and their applications to industrial and services sectors are major sources of economic growth. As costs and wages rise and competition from other low-cost economies intensifies, it has become a pressing issue for Southeast Asian countries to restructure and upgrade their industrial and services sectors.
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INDUSTRTY & INNOVATION
Building a knowledge economy
Southeast Asia is among the most dynamic regions in the world. It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks. Science and technology offer opportunities for countries to “move up the value chain” and can help address social and environmental challenges.
The OECD develops evidence-based policy advice on the contribution of science, technology and innovation to well-being and economic growth. The OECD Review of Innovation Policy: Innovation in Southeast Asia assesses regional science, technology, and innovation capabilities through detailed country proﬁles of Cambodia, Indonesia, Malaysia, Singapore, Thailand, and Viet Nam. This work covers the performance and institutional proﬁle of the innovation system and takes account of the economic environment and framework conditions for innovation. An indepth review of innovation policy in Viet Nam, produced jointly with the World Bank, will be released in 2014. An in-depth review of Malaysia will begin in 2014.
The OECD will develop an innovation initiative to support Southeast Asia’s economic growth.
Boosting innovative capacity – including intellectual property rights (IPRs) – plays a pivotal role in economic development. The National Intellectual Property Systems, Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development, notably through their impacts on innovation performance. Country studies, including one for Indonesia that was prepared in collaboration with Indonesia’s Ministry of State for Research and Technology (RISTEK), provide concrete policy recommendations. Other work includes analysis to better understand how to make innovation more inclusive. This project, which is on-going, will study how innovation policies can support developing and emerging countries’ quest for competitiveness without compromising industrial, social and territorial inclusiveness. It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas. Several emerging economies, including Indonesia, are participating in this work. www.oecd.org/sti/inno www.oecd.org/sti/sci-tech
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INDUSTRY AND INNOVATION . 47
Developing first-class shipbuilding and steelmaking capacity
While China, Korea and Japan are the world’s main shipbuilding producers (accounting for 86 % of world production in 2012), several Southeast Asian countries, including Indonesia, Malaysia, the Philippines and Viet Nam, also have significant shipbuilding sectors.
The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends. In addition, it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues. The OECD’s Steel Committee is engaging increasingly with Southeast Asian economies in its work, given the growing role that the region is playing in the global steel industry. Along with signiﬁcant growth in steel demand over the past decade, local and foreign steelmakers are now investing very heavily in the Southeast Asian region. Producers in the region expect steel demand to grow favourably in the future, supported by rising incomes, a young and growing working-age population, and signiﬁcant infrastructure investments that will require large quantities of steel. The region has traditionally been a large net importer of steel, but growth in steelmaking capacity is expected to gradually reduce the region’s dependency on imports. This development has led to concerns that the industry’s expansion might eventually lead to over-supply problems, also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia. The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia, Indonesia, Thailand, Viet Nam and other Southeast Asian economies. The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity signiﬁcantly, particularly in Viet Nam and Indonesia, where production capacity should increase to 14.5 and 10.2 million metric tonnes, respectively, by the end of 2014. www.oecd.org/sti/ind/shipbuilding.htm www.oecd.org/sti/steel
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INDUSTRTY & INNOVATION
Enhancing chemical safety
OECD supports countries’ efforts to protect human health and the environment by improving chemical safety, making chemical control policies more transparent and efficient, saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products.
The chemicals industry is one of the world’s largest industrial sectors. Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts. As many of the same chemicals are produced in more than one country (or are traded across countries), different national chemical control policies can lead to duplication in testing and assessment, thereby wasting the resources of industry and government alike. It is for these reasons that OECD and many countries from Southeast Asia (e.g., Singapore, Malaysia and Thailand), are working together to harmonise the testing and assessment of chemicals, and share the burden of testing. The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products, such as industrial chemicals and pesticides, to be shared across adhering countries. The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP). By avoiding duplicative testing MAD saves adhering governments and chemicals producers over €150 million per year. Several Southeast Asian countries, such as Malaysia and Singapore, are involved in the OECD MAD system as full adherents along with other partner countries, Argentina, Brazil, India and South Africa. Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for
INDUSTRY AND INNOVATION . 49
regulatory submissions (GLP) will be acceptable for registration or notiﬁcation of chemicals and chemical products in other MADparticipating countries. www.oecd.org/ehs/mad “As one of Asia’s leading pharmaceutical and biomedical sciences R&D centres, Singapore became the ﬁrst non-OECD member from Asia to be accepted as a member of the OECD’s Mutual Acceptance of Data framework in 2010. We continue to support the OECD’s Environmental Policy Committee’s work in protecting human health and the environment.”
Lim Hng Kiang, Minister for Trade and Industry of Singapore, March, 2011
Enhancing chemical safety
NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials, show much promise for innovation, but they inevitably raise safety concerns. The OECD has contributed to addressing these concerns, not only by looking into possible applications of manufactured nanomaterials, but also by addressing safety aspects which are essential to build public acceptance of the new technologies.
OECD countries, together with selected Partner countries have been working together to ensure that the approach to hazard, exposure and risk assessment of nanomaterials is of a high, science-based, and internationally harmonised standard. This includes Thailand for example, which has been very active in this OECD’s programme and has a well-established strategy for addressing the emerging ﬁeld of nanotechnology and nanoscience. www.oecd.org/env/nanosafety
BIOTECHNOLOGY OECD countries’ decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety, and the safety of novel foods and feed. Such OECD work helps countries to increase the efficiency of their risk/safety assessment process and to reduce duplicative effort.
The Philippines, Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds. They have contributed to the development of information and methods used in risk/safety assessments, especially for genetically-modiﬁed crops grown in tropical climates such as rice and papaya. www.oecd.org/biotrack
PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides, and develops tools to monitor and minimise pesticide risk to human health and the environment.
Given the extensive experience of governments and industry with pesticide registration and re-registration, the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly. www.oecd.org/env/pesticides
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INDUSTRTY & INNOVATION
Tourism is an important economic driver in Southeast Asia.
For emerging tourism economies such as Indonesia, tourism plays an important role in promoting economic growth, contributing over 4% to GDP and accounting for approximately 7% of total employment in 2010. In addition, international arrivals to Indonesia totalled 7.6 million in 2011, generating foreign exchange earnings of US$ 8.5 billion – an increase of 12.5% over the previous year. The OECD Tourism Committee is a unique tool for multilateral co-operation, which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action. Since 2008, Indonesia has played an active role in OECD Tourism Committee activities. The OECD ﬂagship publication Tourism Trends and Policies analyses tourism data from over 50 countries, including all OECD members and emerging tourism economies such as Indonesia. Indonesia and Malaysia have been invited to contribute to the 2014 edition. www.oecd.org/cfe/tourism
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INDUSTRY AND INNOVATION . 51
ENVIRONMENT AND ENERGY
As affirmed in the Singapore Declaration on Climate Change, Energy and the Environment, Southeast Asian countries are committed to addressing the challenges of climate change, energy security and environmental issues. Continued efforts are needed to further improve energy efficiency, lower vulnerability to the impact of climate change and promote policies to curb pollution. The OECD has been working on these issues for many years and can support Southeast Asia’s policy makers in developing and implementing adequate domestic and international policy responses.
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ENVIRONMENT & ENERGY
Towards a cleaner and healthier environment
As one of the most dynamic areas of the global economy, Southeast Asia has experienced a remarkable development over the past few decades. However, Southeast Asia faces serious environmental challenges related to pollution, climate change and depletion of natural resources following rapid economic development. The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth.
Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account. The OECD helps countries to design environmental policies that are both economically efﬁcient and environmentally effective. The Environment Policy Committee (EPOC) oversees work on resource management, climate change, policy tools and evaluation, environment and development, as well as country reviews. Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change, water management, resource efﬁciency, and biodiversity conservation. EPOC, consisting of senior policymakers from capitals, meets up to twice per year. Indonesia has actively participated in EPOC meetings since 2008. The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmental protection and economic growth. OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region. The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues. Indonesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events, with the next one focusing on “Extended Producer Responsibility for Sustainable Materials Management” to be held on 17-19 June 2014 in Tokyo, Japan. www.oecd.org/environment www.oecd.org/env/policies/database
CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITY Biodiversity is fundamental to sustaining life, providing critical ecosystem services, such as nutrient cycling and climate regulation. These services are essential to support human well-being and economic growth. Yet despite its significance, biodiversity worldwide is being lost and in some areas, such as parts of the Southeast Asian region, at an accelerating rate.
OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services. This work also supports the UN Convention on Biological Diversity. A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental ﬁscal reform, payments for ecosystems services, and markets for green products) to mobilise ﬁnance and how they can best be designed and implemented so as to more effectively achieve their objectives. Environmental and social safeguards are also examined. A 2010 OECD publication on Paying for Biodiversity: Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identiﬁes good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes, such as a pilot PES programme in the Sumberjaya watershed in Indonesia, so as to enhance their environmental and cost-effectiveness. Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes www.oecd.org/env/biodiversity
ENVIRONMENT AND ENERGY . 53
Combating climate change
As is true for many other countries, Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change, while simultaneously securing stable economic growth.
The OECD is assisting countries in their efforts to ﬁnd lasting policy solutions to climate change, and to improve the stability and performance of ﬁnance to support these actions. In recent decades, governments have been building an international framework for action on climate change, and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in. While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally, the current actions are insufﬁcient to signiﬁcantly slow the progress of climate change. OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure. This led to a 2012 report “Towards a Green Investment Policy Framework: The Case of Low-Carbon, Climate –Resilient Infrastructure”. Case studies are being developed to apply the Framework to speciﬁc countries, ﬁnancing entities, and sectors. A new report, “Mobilising Private Investment in Sustainable Transport: The Case of Land-based Passenger Transport Infrastructure”, provides a comprehensive toolkit of investment and climate policies, regulations and innovative ﬁnancial tools to scale-up private investment and shift toward sustainable transport modes. The focus is on both developing and developed countries, and is particularly well-suited for fast-growing cities in Southeast Asia context. The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure, a non-prescriptive tool to help host governments – particularly in developing countries and emerging economies – identify ways to mobilise private investment in clean energy infrastructure.
54 . ACTIVE WITH SOUTHEAST ASIA
It raises issues for policy makers’ consideration in the areas of investment policy, investment promotion and facilitation, competition, ﬁnancial market and public governance policies. The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward. Transitioning to clean energy creates opportunities for Southeast Asian countries, including “leapfrogging” opportunities to avoid locking-in carbon-intensive development pathways, due to the long lifetime of energy infrastructure In addition to OECD’s work on climate ﬁnance for mitigation activities, it also provides evidence and guidance to support the integration of climate change adaptation into policymaking. The 2010 paper “Plan or React? Analysis of Adaptation Costs and Beneﬁts Using Integrated Assessment Models” provided estimates of costs and beneﬁts of climate adaptation for countries from different regions, including Indonesia.The OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG). This expert group provides analytical input to the international climate change negotiations, and also holds regular seminars with country delegates and other experts. Many Southeast Asian countries including Indonesia, Singapore, Thailand, Philippines and Viet Nam have participated at CCXG Forums in the past. Recent topics addressed include topics of importance to countries in Southeast Asia, including the tracking and effectiveness of international climate ﬁnance, issues in establishing emissions baselines, effective and transparent functioning of market mechanisms, and the design of the post2020 climate agreement. www.oecd.org/env/cc www.oecd.org/env/cc/financing.htm www.oecd.org/env/cc/ccxg.htm www.oecd.org/daf/inv/mne/green.htm www.oecd.org/daf/inv/investment-policy/clean-energy-infrastructure.htm
ENVIRONMENT & ENERGY
Improving water management
The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to people’s health and green growth. Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users, including the environment.
The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues. Working with a multidisciplinary team drawn from across the organisation, the OECD provides a forum for the exchange of country experiences and the identiﬁcation of good practice, and helps to improve the economic and governance information base for meeting the water challenge. The OECD’s work on water is currently focused on analyses regarding water security, water management in the context of adaptation to climate change, and managing water for green growth. In the coming years, it will address current and emerging policy priorities through the following projects: Water Policies for Future Cities, OECD Water Governance Initiative, Allocation of Water Resources, Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle. www.oecd.org/water
ENVIRONMENT AND ENERGY . 55
Ensuring reliable, affordable and clean energy
The International Energy Agency (IEA), an autonomous body within the OECD, works to ensure reliable, affordable and clean energy for its 28 member countries and beyond.
Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia. Recognising the magnitude of the challenges these changes bring, the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asia’s energy landscape and support ASEAN’s objectives to promote regional energy integration, inter-connectivity, and security. In 2013, the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook, which found that ASEAN countries’ energy consumption and oil import dependency are rising quickly, demonstrating the need to fast-track energy security policy. The power sector is a key component in ASEAN’s rising energy demand, underlining the urgent need for sustainable generation and infrastructure investments. The report shows that dedicated action to increase efﬁciency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions. The IEA also works with the 10 Southeast Asian countries bilaterally, providing tailored advice on energy challenges. It currently focuses its engagement with two of the largest energy consumers in the region, Indonesia and Thailand. Indonesia is a key global exporter of oil, gas and coal. As the country consumes more of its limited resource wealth, energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry. In a country exposed to the impacts of climate change, this also involves policy decisions on how to best implement clean and sustainable energy solutions. Since 2012, the IEA and Indonesia have formalised their longstanding partnership in a joint work program outlining an indicative list of issues and items for cooperation. The IEA and the Government of Indonesia agreed to update the ﬁrst In-Depth Review (IDR) of Indonesia’s Energy Policy in 2014/15 to assess the country’s progress since the ﬁrst IDR in 2008 and to provide expert recommendations on major focus areas for Indonesia’s next government, namely gas markets, energy policy-making and governance, and meeting the fast-rising power demand on the basis of the IEA’s knowledge of best practice and lessons-learned in member and non-member states. Ongoing work further includes data and statistics, subsidies, and emergency questions. Indonesia also joined China, Brazil, India, Russia, and South Africa in the Joint Multilateral Declaration on Association at the IEA’s 2013 Ministerial Meeting, conﬁrming its intention to further enhance its partnership with the IEA under the “Association Initiative”. Thailand and the IEA have worked hard to promote sustainable energy region-wide.Thailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil, gas, and coal imports. The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops. www.iea.org
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56 . ACTIVE WITH SOUTHEAST ASIA
Instruments: facilitating international coordination and diffusion of best practices
The OECD has created several legal instruments, which derive from the substantive work carried out in the Organisation’s Committees. They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment. These instruments are of different types. They can be formal agreements ratiﬁed by countries, such as the OECD Convention on Combating Bribery of Foreign Public Ofﬁcials in International Business Transactions, and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations. They can be standards and models, for example the Standards of Transparency and Exchange of Information for Tax Purposes, or Recommendations, for Adherence to OECD Instruments Paris Declaration on Aid Effectiveness Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Declaration for the Future of the Internet Economy (Seoul Declaration) Declaration: The Bologna Charter on SME Policies Istanbul Ministerial Declaration on Fostering the Growth of Innovative and Internationally Competitive SMEs Indonesia, Malaysia, Philippines, Thailand, Viet Nam Malaysia, Singapore, Thailand (provisional) Indonesia Indonesia, Philippines, Viet Nam Indonesia, Malaysia, Thailand, Viet Nam example the Recommendation on Fighting Bid Rigging in Public Procurement. They may also take the form of Guidelines, for example the Guidelines for Multinational Enterprises. Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation. Currently, a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECD’s standard-setting activities. In particular, the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance.
ANNEXES . 57
Participation in OECD bodies and related organisations
Associate in: 2014 OECD Revision of the Corporate Governance Guidelines – Indonesia, Singapore, Malaysia (participant) Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) – Indonesia, Singapore Board of Participating Countries of the Teaching and Learning International Survey (TALIS) – Malaysia, Singapore Coal Industry Advisory Board – International Energy Agency (IEA) – Indonesia Joint Meeting of the Chemicals Committee and the Working Party on Chemicals, Pesticides and Biotechnology – Malaysia, Singapore Working Group on Good Laboratory Practice – Malaysia, Thailand (participant), Singapore Working Group of National Co-ordinators of the Test Guideline Programme – Malaysia, Thailand (participant), Singapore Freedom of Investment Project – Indonesia Member of: Governing Board of the Development Centre – Indonesia, Thailand, Viet Nam Global Forum on Transparency and Exchange of Information for Tax Purposes – Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore Global Forum Peer Review Group – Indonesia, Malaysia, Singapore Participant in: Fisheries Committee – Thailand Competition Committee – Indonesia Committee on Fiscal Affairs – Malaysia, Singapore Healthcare Quality Indicators Expert Group – Singapore Programme for International Student Assessment (PISA) – Indonesia, Malaysia, Singapore, Thailand, Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study – Singapore Committee for Information, Computer and Communications Policy – Singapore Working Party on Innovation and Technology Policy – Malaysia Steel Committee – Malaysia Business and Industry Advisory Committee (BIAC) – Indonesia Tourism Committee – Indonesia
L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul, Korea, on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region.
58 . ANNEXES
Participation in OECD Asian networks
OECD-Asian Roundtable on Corporate Governance – Indonesia, Malaysia, Philippines, Thailand, Viet Nam ADB/OECD Anti-Corruption Initiative for the Asia-Pacific – Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand, Viet Nam APEC/OECD Co-operative Initiative Regulatory Reform – Indonesia, Malaysia, Philippines, Singapore, Thailand, Viet Nam Network of Senior Budget Officials for Asia – Indonesia, Thailand OECD/ADBI Roundtable on Labour Migration in Asia – Cambodia, Indonesia, Lao PDR, Myanmar, Philippines, Thailand, Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) – Cambodia, Malaysia, Philippines, Singapore, Thailand, Viet Nam OECD Development Centre-AMRO Joint Asian Regional Roundtable – Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Viet Nam
“For many years, the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies. As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges. Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them. Our national Chamber as the key representative of the vibrant Indonesian private sector beneﬁtted tremendously from the work of OECD. It is therefore only natural that we participate as an Observer in the good work of BIAC, the Business and Industry Advisory Committee to the OECD.”
Suryo Bambang Sulisto, Chairman of the Indonesian Chamber of Commerce and Industry, KADIN Indonesia
L In September 2012, the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai, China, where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies.
ANNEXES . 59
The OECD: A Global Policy Network
The Organisation for Economic Co-operation and Development (OECD) is an international organisation helping governments tackle the economic, social and governance challenges of a globalised economy. It provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies.
The OECD Member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States of America.
Global Relations Secretariat OECD, 2 rue André Pascal 75775 Paris Cedex 16 France www.oecd.org/globalrelations GRS.email@example.com
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