Active with Southeast Asia - OECD

ACTIVE WITH

SOUTHEAST ASIA

Southeast Asia and the OECD A mutually beneficial partnership Southeast Asia is one of the most dynamic and diverse regions in the world, with extensive natural resources, an expanding middle class, a young and dynamic population and a diversified economy. With an average growth rate of 5% over the past 15 years, it is also one of the main drivers of global growth. The formalisation, in 2015, of an integrated ASEAN Economic Community (AEC) by the Association of Southeast Asian Nations (ASEAN) is generating even more opportunities for growth and employment across the region. The OECD and Southeast Asia have a long-standing and mutually beneficial relationship that has steadily developed since the late 1990s. Building on two decades of engagement, the OECD Southeast Asia Regional Programme (SEARP) was inaugurated at the 2014 OECD Ministerial Council Meeting, to bring the relationship to a new, more strategic, whole-of-government level. Since its launch, the Programme has served as a forum to share best practices and promote regional integration through Regional Policy Networks, supporting successive chairmanships of ASEAN on issues relevant to the ASEAN Economic Community (AEC). In 2016, substantial contributions were made to the priorities of ASEAN, most notably through the support provided to various Action Plans and policy frameworks on the participation in Global Value Chains (GVCs), Access to Finance for the Micro, Small and Medium Enterprises (MSMEs) and Special Economic Zones. The Economic Outlook for Southeast Asia, China and India was also presented at the ASEAN Business and Investment Summit in Vientiane, Lao PDR, in September 2016. Beyond the SEARP, the OECD also works with individual Southeast Asian countries to deliver country-specific tools, such as Thailand’s Country Programme and the Joint Programme of Work with Indonesia. These provide such countries with an opportunity to enhance their participation in OECD bodies and adhere to its instruments. The OECD looks forward to deepening this partnership with Southeast Asia as a region, working closer with its diverse countries, which face common, but also distinct challenges. I am confident that this mutually beneficial and strategic collaboration will continue to deliver better policies for better lives in Southeast Asia, and across the OECD and Partner countries. ANGEL GURRÍA, OECD Secretary-General

CONTENTS

Contents THE OECD AND SOUTHEAST ASIA 2

Fighting transnational corruption

46

Regional and country-level approaches

Improving tax transparency and compliance

47

Raising the bar on corporate governance

48

4

Southeast Asia – a dynamic region with significant economic potential Southeast Asia at a glance

7 8

EMPLOYMENT AND SOCIAL DEVELOPMENT 49

The OECD Southeast Asia Regional Programme

10

Seeking best practices of social and health policies

50

The OECD Southeast Asia Regional Forum

14

Tackling gender inequality

52

Social cohesion

53

SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH 16

Supporting SME development and entrepreneurship

54

Maintaining economic resilience

17

Promoting effective consumer policy

55

Supporting green growth initiatives

20

Fostering skills through education and training

56

Promoting regional development and urbanisation

21

Managing international migration

58

Increasing agricultural productivity and food security

22

Promoting development and effective co-operation worldwide 23 Better data for better policies

26

SMOOTH FUNCTIONING OF MARKETS 28

INDUSTRY AND INNOVATION 59 Building a knowledge economy

60

Developing first-class shipbuilding and steel capacity

62

Enhancing chemical safety

63

Boosting tourism

64

Enhancing co-operation on international investment

29

Promoting trade and upgrading in global value chains

31

ENVIRONMENT AND ENERGY 65

Fostering sound competition

33

Towards a cleaner and healthier environment

Developing a robust financial system

35

Conservation and sustainable use of biodiversity

Strengthening connectivity, capital investment and public-private partnerships Improving financial literacy and inclusion

66

and ecosystems

67

36

Combating climate change

68

37

Improving water management

69

Strengthening global partnerships on clean energy PUBLIC AND CORPORATE GOVERNANCE 38

and energy efficiency

70

Good regulatory practice and regulatory reform

39

Budgeting and public expenditures

41

ANNEXES 72

Public procurement

42

Adherence to OECD instruments

73

Increasing performance in the public sector

43

Partnership in OECD bodies and programmes

74

Promoting open government

44

Participation in OECD Asian networks

75

Enhancing public sector integrity

45

Dialogue and data

75 CONTENTS . 1

THE OECD AND SOUTHEAST ASIA

With over 600 million people and a combined GDP of USD 2.46 trillion in 2015, the Southeast Asian region is one of the main drivers of global growth.

2 . ACTIVE WITH SOUTHEAST ASIA

The OECD supports Partner countries in Southeast Asia on the basis of a whole-ofgovernment approach. l

l

L OECD SecretaryGeneral Angel Gurría, Japanese Prime Minister Shinzō Abe, Ministers and highlevel representatives from Southeast Asia and Japan at the inauguration of the OECD Southeast Asia Regional Programme, during the OECD Ministerial Council Meeting in Paris on 6 May 2014.

l

l

In May 2014, the OECD Southeast Asia Regional Programme was launched to support domestic policy reforms, bring countries closer to the OECD, and support the ambitious regional integration efforts of the ASEAN Economic Community Blueprint 2025. As a Key Partner, Indonesia and the OECD have a biennial Joint Work Programme that identifies priority areas of engagement. For 2017-2018, the focus is on developing the business climate and supporting dynamic growth, improving social policies and fostering inclusive growth, implementing governance and promoting green growth. In 2015, the OECD opened an office in Jakarta to advance its relations with Indonesia and the Southeast Asia region. The OECD will launch the Thailand Country Programme in the second half of 2017. The Programme will support Thailand’s 20-Year National Strategic Plan as it strives for high-income status. The main areas of engagement will be supporting good governance, strengthening the business climate and competiveness, fostering Thailand 4.0 and promoting inclusive growth. Through membership in the OECD Development Centre, Indonesia, Thailand and Viet Nam share their policy experiences with 49 other emerging and developed economies. THE OECD AND SOUTHEAST ASIA . 3


The OECD and Southeast Asia have a longstanding and mutually beneficial relationship that has steadily developed over the last two decades. The OECD works with all 10 countries of the Association of Southeast Asian Nations (ASEAN) on a regional and country-specific level. In 2007, OECD Ministers designated Southeast Asia as a region of strategic and economic priority and Indonesia as a Key Partner.

Regional and country-level approaches “Three years into its launch, the Southeast Asia Regional Programme (SEARP) has witnessed an increasing sense of ownership by Southeast Asian countries, both in terms of the substantive work as well as in efforts to integrate the Programme into the region’s policy scene. Southeast Asia has also been steadily mainstreamed into the work of the OECD, which is striving to enhance its global relevance by securing a presence in this vibrant growth centre of the world economy. SEARP will continue to contribute to the realisation of the ASEAN Economic Community (AEC) Blueprint, so that the process of creating an integrated, competitive and resilient environment is carried out in an inclusive, sustainable and rule-based manner.”

“The Southeast Asia region has experienced one of the most dynamic and stable periods of economic growth in the world during the past two decades or so, despite difficult international conditions since the 20072008 financial crisis. Economic expansion, coupled with natural resource endowments, a rising middle-class and abundant lowcost labour, create ample opportunities for trade and investment. As a provider of evidence-based policy analysis and a platform for policy dialogue and design, the OECD is well placed to assist ASEAN Member States in their efforts to implement the ASEAN Economic Community Blueprint 2025, contributing to further enhance the integration of the region.”

H.E. Hiroshi Oe, Ambassador of Japan to the OECD, Co-chair of the Southeast

H.E. Sri Mulyani Indrawati, Finance Minister of Republic of Indonesia

Asia Regional Programme

L OECD Secretary-General Angel Gurría meets with H.E. Joko Widodo, President of the Republic of Indonesia, on 24 October 2016 at the Presidential Palace, Jakarta. Copyright Press Bureau of the Presidential Office



J 7 June 2017. OECD Week 2017: Renewal of the OECD-Indonesia Framework of Cooperation Agreement – H.E. Sri Mulyani Indrawati, Minister of Finance, Indonesia and Angel Gurría, SecretaryGeneral of the OECD.

“The OECD has traditionally supported reform priorities and economic integration efforts in Southeast Asian countries. As partners, we can promote growth and development through advancing the OECD’s Southeast Asia Regional Programme. The Programme has delivered concrete outputs, including support for successive ASEAN Chairs, and is now entering an exciting new phase. It will continue to support the region as well as its elaborate co-operation with regional fora, such as APEC and ASEAN, leading up to the Programme’s Ministerial meeting planned for 2018. I encourage the region to continue to rely on the OECD’s expertise as a tool to advance their reform agenda. We will continue to support the OECD’s global relations efforts in Southeast Asia through concrete deliverables and a stronger involvement by SEA countries in OECD standards and bodies. I am grateful to witness the evolution and maturity of the OECD’s relation with Southeast Asia and look forward to continue working with the OECD across many fronts to ensure that global rules keep up with the pace of globalisation, and succeed in addressing many of its loopholes.”

“Over the past 10 years, relations between Thailand and the OECD have continued to expand in both breadth and depth. Our collaboration is very much in line with the Royal Thai Government’s reform agenda, Thailand’s 20 – year National Strategy (2017 – 2036) and the National Economic and Social Development Plan (2017-2021), which aims to move forward on key areas of structural reform such as good governance and transparency, business climate and competitiveness, Thailand 4.0 and inclusive growth. The launch of the OECD Southeast Asia Regional Programme in 2014 has reflected the priority the OECD attaches to the Region. Not only can the ASEAN Countries benefit from the excellence of the OECD as a platform for global policy dialogue and as an international standardsetter, the OECD, at the same time, could learn from ASEAN’s experience in their regional integration efforts.” H.E. Mr Don Pramudwinai, Minister of Foreign Affairs of Thailand

H.E. Mr Ulrich Lehner, Ambassador of Switzerland to the OECD and Chair of the External Relations Committee THE OECD AND SOUTHEAST ASIA . 5

“The launch of the OECD Southeast Asia Regional Programme in 2014 reflects the priority the OECD attaches to the Region.” H.E. Mr Don Pramudwinai, Minister of Foreign Affairs of Thailand


Located in the heart of the Asia-Pacific region, ASEAN has made remarkable progress in raising income levels, reducing poverty and integrating into the world economy. l Growth performance remains solid and steady. The ten

ASEAN economies are projected to see annual growth of 5.1% during 2017-21. l Domestic demand is the main driver of growth. In most

Figure 1. Sources of Foreign Direct Investment Inflows into ASEAN, USD million, 2015 Chinese Taipei Chinese 2,807, 2% Taipei

2,807, 2% Hong Kong, China Hong Kong, 4,543, 4% China 4,543, 4%

ASEAN countries the transition to middle and high income country status is foreseeable within the next decade. Malaysia is expected to become a high- income country in 2020.

Others 18,449, 15% Others 18,449, 15%

EU 20,128, EU17% 20,128, 17% Japan 17,559, 15% Japan 17,559, 15%

China* 8,256, 7% China* 8,256, 7%

USA 13,646, USA11% 13,646, 11%

Intra-ASEAN 22,232, 18% Intra-ASEAN 22,232, 18%

l The region has a favourable demography. Southeast Asia

serves a market bigger than Europe and North America with a population of more than 600 million. After China and India, ASEAN has the world’s third largest population. l The OECD and ASEAN economies are interdependent. More

than half of all FDI entering ASEAN comes from OECD countries, with an average of around 50% in 2013-2015 (2015, Figure 1). ASEAN attracted FDI flows amounting to 120 billion USD in 2015, or around 7% of global FDI in 2015. Around 40% of ASEAN’s key external trading partners are OECD countries (Figure 2).

New Zealand 2% New2,241, Zealand 2,241, 2%

Australia 5,247, 4% Australia 5,247, 4%

Korea 5,710, Korea 5% 5,710, 5%

Source: ASEAN Foreign Direct Investment Statistics Database

Figure 2. ASEAN Trade Partner Countries/Economies (Exports and Imports) USD million, 2015 India 58,554, India 3% Hong Kong, China Hong Kong, 91,416, 4% China

58,554, 3%

Others 280,463 Others 12% 280,463 12%

91,416, 4% Chinese Taipei Chinese 94,338, 4% Taipei 94,338, 4%

EU 283,152 EU 13% 283,152 13%

Japan 238,044 Japan 11% 238,044

11% USA 212,343, USA 9% 212,343, 9%

China* 345,764, China*5% 345,764, 5% Intra-ASEAN 543,751, 24% Intra-ASEAN 543,751, 24%

Korea 122,484, 5% Korea 122,484, *Excluding Hong Kong and Chinese Taipei 5% *Excluding Hong Kong and Chinese Taipei

Source: ASEAN Secretariat (2016) THE OECD AND SOUTHEAST ASIA . 7


Southeast Asia – A dynamic region with significant economic potential

Southeast Asia at a glance The OECD’s global relations strategy seeks to make the Organisation a more effective and relevant Global Policy Network. Our engagement with Southeast Asia, a region of strategic importance for the OECD, encompasses a growing range of policy areas and involves both regional-level initiatives and country-level support. Collaboration has deepened and the Southeast Asia Regional Programme (SEARP) has served to facilitate a stronger participation of SEA countries in a broad range of OECD bodies, instruments and activities. This partnership has also been underpinned by the OECD’s contribution to G20 and the SDGs, in particular in the areas of inclusive growth, trade and investment, and taxation. We are also enriching our co-operation with regional fora of key importance such as ASEAN and APEC. Working towards a Country Programme with Thailand and potentially other countries should also play a key role in supporting SEA countries’ reform efforts and disseminating best practices to the benefit of SEA economies and societies. We look forward to further deepening this mutually beneficial and strategic co-operation in the future. Andreas Schaal, Director of Global Relations, OECD 8 . ACTIVE WITH SOUTHEAST ASIA

410,000 79,500

Cambodia

Indonesia

Lao PDR

15,180,000

255,500,000

6,810,000

3,500 1.8%

♂: 76 – ♀: 79

7.3%

11,150

5.4%

5,350

7.5%

♂: 67 – ♀: 71

♂: 67 – ♀: 71

♂: 64 – ♀: 67

Malaysia

Myanmar

Philippines

31,000,000

50,280,000

100,980,000

26,200

4.7%

♂: 73 – ♀: 77

5,500

8.5%

7,300

6.1%

♂: 65 – ♀: 68

♂: 65 – ♀: 72

Singapore

Thailand

5,530,000

65,730,000

85,400

1.8%

♂: 80 – ♀: 86

16,130

3.6%

♂: 72 – ♀: 78

Viet Nam 91,710,000 6,000

6.2%

♂: 71 – ♀: 81

Population (2015) GDP per capita (PPP) USD Average life expectancy (2015) Real GDP growth-annual percentage change (2017-21 average forecast)

Source: OECD (Economic Outlook for Southeast Asia, China and India 2017), WHO THE OECD AND SOUTHEAST ASIA . 9


Brunei Darussalam

The OECD Southeast Asia Regional Programme The OECD Southeast Asia Regional Programme (SEARP) was inaugurated by OECD Secretary-General Angel Gurría and Japanese Prime Minister Shinzo Abe at the Ministeriallevel OECD Council Meeting in May 2014. It aims to support domestic reform priorities, regional integration efforts in Southeast Asia, and bring the countries closer to the OECD. It also seeks to foster mutual learning and the exchange of good practices between policy makers in Southeast Asia and OECD countries.

MEETINGS

2013

2014

2015

MCM: Mandate to establish a comprehensive Southeast Asia Regional Programme

March: First OECD Southeast Asia Regional Forum: Regional Competitiveness for Sustained Growth, in Bali, Indonesia

March: Second OECD Southeast Asia Regional Forum: Enhancing Regional Integration and Openness, in Jakarta, Indonesia

May: Official launch of the SEARP during the OECD Ministerial Council Meeting

l Investment Policy Review of


Malaysia

Myanmar

l Review of Innovation Policy

l Review of Innovation Policy

in Southeast Asia l Economic Outlook for

OUTPUTS

Southeast Asia, China and India 2013

of Viet Nam l Economic Outlook for Southeast

Asia, China and India 2015 l ASEAN SME Policy Index 2014 l Revenue Statistics in Asian Countries

2014: Trends in Indonesia and Malaysia

l Review of National Policies for

Education of Indonesia l Implementing Good Regulatory

Practice in Malaysia l Economic Outlook for Southeast

Asia, China and India 2016 l Report on Private Infrastructure

Investment: Availability of Risk Mitigation Instruments in ASEAN Member States l Revenue Statistics in Asian Countries

2015: Trends in Indonesia, Malaysia and the Philippines



GENDER INNOVATION Tax

SMEs

TRADE

Good Regulatory Practice

6 Regional Policy Networks (RPN) 3 Initiatives and Regional Economic Outlook

Education and Skills

Sustainable infrastructure

Investment REGIONAL ECONOMIC OUTLOOK

2016

2017

2018

June: Third OECD Southeast Asia Regional Forum: Boosting Productivity and Inclusiveness in Southeast Asia, in Hanoi, Viet Nam

August: Fourth OECD Southeast Asia Regional Forum in Opportunities and Policy Challenges of Digital Transformation in Southeast Asia, in Bangkok, Thailand

First OECD Southeast Asia Regional Programme’s Ministerial Meeting


l OECD Review on Local Job

l ASEAN SME Policy Index 2018

Philippines l Review of Innovation Policy of

Malaysia l Review of National Policies for

Education of Thailand l Economic Outlook for Southeast

Asia, China and India 2017 l Revenue Statistics in Asian Countries

2016: Trends in Indonesia, Japan, Korea, Malaysia, the Philippines and Singapore

Creation: Employment and Skills Strategies in the Philippines l Investment Policy Review of Viet

Nam

l ASEAN Investment Policy

Review l Economic Outlook for Southeast

Asia, China and India 2019

l Investment Policy Review of Lao

PDR l Investment Policy Review of

Cambodia l Economic Outlook for Southeast

Asia, China and India 2018 l Policy Handbook on Strengthening

Women’s Entrepreneurship in ASEAN

THE OECD AND SOUTHEAST ASIA . 11

SEARP supports ASEAN and APEC The OECD, through the Programme, has also worked closely with ASEAN in implementing the ASEAN Economic Community Blueprint 2025 “as an institution of strategic collaboration”. The engagement includes support for the ASEAN Secretariat and the Chairs in delivering: ASEAN Principles for Public-Private Partnership (PPP) Frameworks in 2014; the ASEAN Strategic Action Plan for Small and Medium-sized Enterprises Development 20162025 (SAPSMED 2025) in 2015; and deliverables in 2016 including the ASEAN Work Plan for Enhancing GVC Participation, the ASEAN Institutional Framework on Access to Finance for Micro, Small and Medium Enterprises (MSME); the Report and Work Programme on Starting a Business in ASEAN and conducting the Validation Workshop on Starting a Business in ASEAN, ASEAN Guidelines for Special Economic Zone (SEZ) Development and Collaboration, and the launch of the OECD Project for the Support of ASEAN SMEs. The OECD also works with Asia-Pacific Economic Cooperation (APEC) via the Finance Ministers and Senior Officials Processes. During Viet Nam’s host year 2017, the OECD will deliver work on long-term investment in infrastructure, disaster risk mitigation, financial literacy and BEPS for the Finance Ministers’ Meeting on 19-21 October 2017. 12 . ACTIVE WITH SOUTHEAST ASIA

Bui Thanh Son, Permanent Deputy Minister of Foreign Affairs of Viet Nam

“We have been working with OECD on several important initiatives to advance our regional economic integration agenda. These include the successful delivery of priority deliverables for Lao PDR’s ASEAN Chairmanship (2016), namely the report and work programme on starting a business, the institutional framework on access to finance for MSMEs, and guidelines for special economic zones development and collaboration. We have also leveraged on OECD’s expertise and experience to formulate work plans for new areas of co-operation including global value chains and good regulatory practice. We look forward to continue working with OECD to implement the AEC Blueprint 2025 as ASEAN pursues productivity-led growth strategy towards more inclusive and sustainable economic development in the midst of growing economic and political uncertainty.” Lim Hong Hin, Deputy Secretary-General of ASEAN for ASEAN Economic Community

THE OECD AND SOUTHEAST ASIA . 13


“OECD is an important partner of Viet Nam in knowledge sharing and capacity building in development issues. Viet Nam supports and actively participates in the implementation of the OECD Southeast Asia Regional Programme (SEARP), which brings ASEAN countries tangible benefits through policy dialogue in economic reform and integration towards sustainable and inclusive development. The OECD Forum on Southeast Asian Region hosted by Viet Nam in co-ordination with OECD in June 2016 contributed to enhancing dialogue and collaboration between ASEAN countries and OECD. In 2017, Viet Nam is the host of the Economic Leaders’ Meeting of the Asia Pacific Economic Co-operation (APEC), an important economic forum connecting two rims of the Pacific. Viet Nam appreciates OECD for its support to APEC 2017’s priorities and expects OECD’s practical contribution to sharing in-depth analysis and discussion on key development issues across Asia Pacific in the new global context.”

The OECD Southeast Asia Regional Forum The OECD Southeast Asia Regional Forum is a platform for sharing policy experiences and best practices with a different thematic focus each year.

Each year the Forum addresses a different thematic focus of relevance to both Southeast Asia and the OECD: 2014 – Regional Competitiveness for Sustained Growth;

The OECD Southeast Asia Regional Forum is the main OECD event to take place in the region each year. It is designed to provide a platform for policy dialogue and the exchange of views on global and regional challenges facing policy makers in Southeast Asia and OECD countries. The aim is to develop a common understanding of joint challenges and identify best policy solutions.

2015 – Enhancing Regional Integration and Openness; 2016 – B oosting Productivity and Inclusiveness in Southeast Asia; 2017 – Opportunities and Policy Challenges of Digital Transformation in Southeast Asia

The OECD benefits greatly from ASEAN country experiences and perspectives, which enrich the policy debate at the OECD. At the same time, Southeast Asian countries can tap into the wealth of OECD expertise to inform their policy reforms.

J Japanese Parliamentary ViceMinister for Foreign Affairs Masakazu Hamachi (standing) provides opening remarks alongside (left to right) Bui Thanh Son (Vice Minister of Foreign Affairs of Viet Nam), Deputy Secretary-General of ASEAN AKP Mocha, and OECD Deputy-SecretaryGeneral Douglas Frantz. 14 . ACTIVE WITH SOUTHEAST ASIA

L High-level representatives from SEA and OECD countries at the 2016 Southeast Asia Regional Forum in Hanoi, Viet Nam in June 2016.

J Speakers from SEA and OECD countries at the 2015 Southeast Asia Regional Forum in Jakarta, Indonesia in March 2015. THE OECD AND SOUTHEAST ASIA . 15

SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH


SUSTAINABLE GROWTH

Maintaining economic resilience OECD Economic Surveys are an important tool for exchanging views on best practice and for improving policy design for OECD Member and Key Partner countries. These Surveys have already been applied to several Southeast Asian countries that face challenges to achieve high-income country status. The first OECD Economic Survey of Malaysia was released in November 2016, with two in-depth thematic chapters focused on boosting productivity and fostering inclusive growth. The assessment shows the importance of boosting productivity and growth if the country is to raise its living standards. It calls for further reform efforts in a wide range of areas to make the economy more innovative, open, competitive, transparent and green. The report also emphasises the importance of socially inclusive growth. This requires reforms to boost access to quality education, social protection, labour force participation for women and older persons, as well inclusiveness in the tax and social transfer system.

SCAN TO READ THE REPORT

“Global conditions are becoming increasingly challenging, underpinned by complex global interlinkages and shifting trends. Inward-looking policies and a sharp tightening of global finances, particularly in advanced economies, could dampen the prospects of global growth and trade activity. More innovative strategies are imperative for emerging and developing economies to remain resilient, sustainable and inclusive in this challenging time. OECD’s multi-faceted expertise in policy research and advocacy complements policymakers in this region by providing an objective outside-in perspective and tools for the benchmarking of global practices. Mainstreaming and engendering these innovative policy tools will support government efforts to increase economic resilience and the enhanced wellbeing of their people. On that note, we look forward to further collaborations with the OECD for better socioeconomic outcomes.” Dr Ali Hamsa, Chief Secretary of the Government of Malaysia

The publication was well-received by Malaysian authorities, and its launch was hosted by Dr Ali Hamsa, Chief Secretary of the Government of Malaysia. The preparation of the report allowed for thorough interactions between OECD economists and the Malaysian authorities, together with exchanges of best practices between OECD Member countries and Malaysia in the Economic and Development Revue Committee meeting, thereby further strengthening the relationship between the OECD and Malaysia. The second assessment report of Malaysia is to be published in 2018. The possibility of conducting an economic assessment of another Southeast Asian country will be explored. www.oecd.org /eco

SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH . 17

Maintaining economic resilience

provides policy options for governments to assist them in creating and enabling an environment for renewable energy investments. The Outlook serves as an important medium for the Organisation in understanding economic developments in emerging Asia. It provides insights through policy dialogues and consultations with government representatives and delegates from other institutions, such as: UNESCAP, ERIA, AMRO, ADB/ ADBI, and the ASEAN Secretariat. The report likewise serves as a tool to structure the priorities for OECD support in the region.

L On 11 November, DSG Rintaro Tamaki presented the first Economic Assessment of Malaysia in Kuala Lumpur with Dr Ali Hamsa, Chief Secretary of the Government of Malaysia, in addition to a new Review of Innovation Policy.

The Economic Outlook for Southeast Asia, China and India produced by the OECD Development Centre, in collaboration with several regional organisations, monitors short-term macroeconomic challenges and medium-term economic trends in the Southeast Asia region. The report, released twice a year, is intended to inform policy dialogue with key regional stakeholders in Southeast Asia and beyond. The 2017 edition of the Outlook, launched in Paris on 15 December 2016, concluded that growth in emerging Asia will remain robust in the near-term. However, to address potential growth risks, the report encourages governments to retain their trade competitiveness, continuously monitor banking sector fragilities, and to foster knowledge and technology transfer in order to enhance productivity. In its special thematic chapter regarding energy challenges in emerging Asia, issues related to expanding access and improving regional connectivity are highlighted. To this end, the report 18 . ACTIVE WITH SOUTHEAST ASIA

The 2017 Outlook received good reviews from officials of various governments, OECD personnel, and the private sector. The launch of the report was well-attended and the forum successfully elicited intellectually stimulating discussions about pressing issues in emerging Asia. The 2018 edition will look at the development of the digital economy in emerging Asia with a special focus on e-commerce (and its relevance for MSMEs), cross-border transactions and the impact of digitalisation on the region’s manufacturing and service sectors. www.oecd.org/dev/asia-pacific


SUSTAINABLE GROWTH

“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

L Launch of the Economic Outlook for Southeast Asia, China and India 2017, OECD Headquarters in Paris, 15 December 2016. Left to right: Kensuke Tanaka, Head of Asia Unit, OECD Development Centre, Mario Pezzini, Director, OECD Development Centre, Rintaro Tamaki, OECD Deputy Secretary-General, Jong-won YOON, Korean Ambassador to the OECD, Ma. Theresa Lazaro, Philippines Ambassador to the OECD. SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH . 19

Supporting green growth initiatives The environmental risks faced by emerging and developing countries today require a fundamental shift in approach. 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 secure future. Five Southeast Asian cities participated in the OECD Urban Green Growth in Dynamic Asia project launched in 2013. This has resulted in studies of policies and governance practices to promote green growth in Bangkok (Thailand), Iskandar Malaysia (Malaysia), Haiphong (Viet Nam), Bandung (Indonesia) and Cebu (Philippines). These cities also hosted peer-learning workshops in 2014-2015, supported by the OECD Knowledge Sharing Alliance.

The OECD’s Green Growth Strategy, including its key publication Towards Green Growth, has set out a comprehensive guide for encouraging green growth and measuring progress towards it. The OECD will continue to apply the Urban Green Growth Policy Framework to more cities in Southeast Asia with the next Green Growth and Sustainable Development Forum on Greening the Ocean Economy on the 21-22 November 2017. The event’s focus on investment, innovation and employment aspects of the fast-growing ocean-based industries will be of particular relevance to Southeast Asia. www.oecd.org/greengrowth/asia.htm www.oecd.org/regional/greening-cities-regions/ citiesclimatechangeandgreengrowth.htm www.oecd.org/greengrowth/knowledge-sharing-for-urbangreen-growth-in-dynamic-asia.htm

Furthermore, building on the 2013 publication Putting Green Growth at the Heart of Development, the OECD DAC Network on Environment and Development has launched work to identify good practices in development co-operation to support green growth in developing countries, including several Southeast Asian economies. At the OECD Green Growth and Sustainable Development Forum in November 2016, the synthesis report of the Urban Green Growth in Dynamic Asia project was launched. In 2013 and 2015, the OECD organised knowledge sharing workshops to facilitate knowledge exchanges among cities, national governments and development partners, as well as through the dissemination of OECD examples. Interactions among institutions for development co-operation proved the most successful, by giving them an opportunity to discuss their respective projects. Furthermore, interaction among representatives from adjacent municipalities of the same metropolitan region proved useful as such interactions are rare, although the need for horizontal co-operation is strong. 20 . ACTIVE WITH SOUTHEAST ASIA


SUSTAINABLE GROWTH

Promoting regional development and urbanisation Countries need competitive and dynamic cities and regions to achieve their economic, social and environmental objectives. The OECD examines how best to promote urban and regional competitiveness, as well as effective and innovative territorial governance, providing policy advice to governments at national and sub-national levels. Co-operating with Southeast Asian countries has helped the organisation to understand diverse policy contexts and to develop effective policy strategies in Southeast Asian countries, which could be applied to other regions. Regions and cities are important hubs of productivity and innovation and play a key role in providing skills and creating environmental efficiency for sustainable and inclusive growth.

In October 2016, the OECD launched the National Urban Policy Programme (NUPP) at the Habitat III conference in Quito. The NUPP is a joint initiative by the OECD, UN Habitat and Cities Alliance to support the design and implementation of a National Urban Policy (NUP) for each participating country, which is a key implementation tool of the New Urban Agenda. In addition to the current collaboration in Viet Nam, the OECD stands ready for further NUP support in Southeast Asian countries such as Malaysia and Myanmar, under the framework of the NUPP. www.oecd.org/gov/regional-policy www.oecd.org/gov/regional- policy/urbandevelopment.htm www.oecd.org/gov/national-urban-policies.htm

The OECD Territorial Reviews at the national and metropolitan levels (urban and rural) aim to evaluate the economic, social and environmental performance of an area, and to assess and recommend policies to strengthen competitiveness, social inclusion and environmental sustainability. National Urban Policy Reviews also provide a comprehensive assessment of a country’s urban policies by focusing on those that explicitly or implicitly affect urban development. Currently, the OECD is undertaking the National Urban Policy Review of Viet Nam. For example, the National Urban Policy Review of Viet Nam analyses the country’s urban structure and development trends in an internationally-comparable framework, identifies the main challenges that urban and metropolitan areas face in Viet Nam, assesses how current urban policies assist in achieving national environmental and green growth goals, and provides practical policy recommendations. Such accumulated knowledge is not only useful for OECD countries but also for fast urbanising developing and emerging economies.

L High level seminar Towards a New Urban Agenda on 20 April 2017 in Hanoi. SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH . 21

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. Co-operation between the OECD and Southeast Asian countries has deepened and covers a range of collaborative analytical activities. Following the Review of Agricultural Policies of Indonesia, Viet Nam and the Philippines, these three countries have been included in the annual Agricultural Policy Monitoring and Evaluation report which measures government support to agriculture for 52 countries. The region will be the subject of a special thematic chapter in the 2017 OECD-FAO Agricultural Outlook. In May 2017, the study Building Food Security and Managing Risk in Southeast Asia was released. This study puts forward a number of policy recommendations to ensure that the ASEAN agriculture and fishing industries contribute effectively and efficiently to ensuring regional food security. In May 2017, the Global Forum on Agriculture focused on how to ensure food security for Southeast Asian populations, and how to mitigate the range of risks threatening it.

in order to improve food security and better manage food insecurity risk. As Southeast Asia has become more integrated in world agrofood markets, they have become a significant source of income for producers as well as food for consumers. Therefore, the most efficient and resourceful functioning of agricultural markets is extremely important for regional policymakers. Further work in 2017-18 will involve the exploration agriculture and food global value chains in Southeast Asia and the links between agro-food trade, trade policy and food security. www.oecd.org/tad/agricultural-policies/ www.oecd.org/tad/agriculture-policy-notes.htm www.oecd.org/tad/agricultural-policies/innovation-foodagriculture.htm www.oecd.org/tad/agricultural-policies/monitoring-andevaluation.htm www.agri-outlook.org

As an important region for global agricultural trade, the addition of three Southeast Asian countries to the Agricultural Policy Monitoring and Evaluation exercise is invaluable. This report provides policy recommendations based on the latest agricultural policy developments in these countries and on updated estimates of the level of support provided to their farming sectors. This regular assessment provides the necessary broad perspective on agricultural policy developments at a time when the global agriculture and food sector is facing both unprecedented challenges and exciting new opportunities. The Building Food Security and Managing Risk in Southeast Asia report, completed in close consultation with Southeast Asian countries, provided a number of recommendations to improve policy approaches to the agriculture and fishing industry 22 . ACTIVE WITH SOUTHEAST ASIA


SUSTAINABLE GROWTH

Promoting development and effective co-operation worldwide Multi-Dimensional Country Reviews (MDCRs) are a horizontal initiative led by the OECD Development Centre to support developing countries in designing high-impact development strategies. From Southeast Asia, Myanmar has recently completed an MDCR, and those of the Philippines and Thailand are currently being undertaken. The MDCRs adopt a multi-dimensional perspective to identify the key constraints to development, assessing whether barriers to growth also impede deeper determinants of economic development or citizen well-being. They combine rigorous benchmarking and measurement metrics with strategic foresight and incorporate the OECD Well-Being Framework with structural economic analysis. Furthermore, MDCRs have recently been expanded and now include a framework to measure and monitor progress in implementation of the SDGs. This additional element will assist countries in prioritising SDG targets and crafting implementable strategies to achieve them.

The third and final phase of the MDCR of Myanmar was launched in Nay Pyi Taw and Yangon in June 2016. The MDCR of the Philippines is currently underway and a review of Thailand was started in Q2 2017. MDCRs are an OECD tool to engage with non-Member countries and are designed to be a two-way street. Namely, they extend the OECD and the Development Centre’s knowledge base and best practices in specific policy dimensions to non-Member countries. At the same time, MDCRs bring experiences from developing countries to the OECD, which are then used to broaden perspectives on development challenges as well as solutions. Going forward the OECD and the Development Centre will continue to work with the Philippines and Thailand, helping them to craft high-impact development strategies and support SDG prioritisation and implementation. www.oecd.org/development/mdcr

SCAN TO READ THE REPORTS


Promoting development and effective co-operation worldwide

The Global Partnership for Effective Development Co-operation is a multi-stakeholder platform used to maximise the effectiveness of all forms of co-operation for development. Jointly supported by the OECD and UNDP, it engages Development Co-operation Directorate and Development Assistance Committee (DAC) members and countries in the Southeast Asia region to strengthen the quality of their development co-operation. Countries and regional bodies in Southeast Asia actively collaborate with the Global Partnership for Effective Development Co-operation to maximise the effectiveness of all forms of co-operation for development, in order to reach the Sustainable Development Goals (SDGs) by 2030. Six countries (Cambodia, Lao PDR, Myanmar, the Philippines, Timor-Leste, Viet Nam) from Southeast Asia have contributed to the Partnership’s 2016 progress report, Making Development Co-operation More Effective, and eight countries participated in the High-level Meeting of the Global Partnership in Nairobi in 2016. The Republic of Korea hosts the annual Global Partnership Fora and Learning and Acceleration Workshops.

development co-operation in a predictable manner at 94%. However, it should be noted that partners need to make a greater effort to increase medium-term predictability of development cooperation, as well as transparency and data sharing. Development partners use Southeast Asian countries’ institutions and systems to channel development co-operation funds more often (61%) than for other regions (51%). Governments from the region in turn also record these funds on national budgets submitted to parliament (79%) than in other regions (66%). The OECD will continue to work closely with Southeast Asian countries, civil society and businesses to improve the effectiveness of development co-operation in the region and thereby support the achievement of the SDGs by 2030. The OECD’s Development Assistance Committee (DAC) will also collaborate with countries and regional bodies in the region to advance mutual learning and facilitate joint action on effective development co-operation. www.effectivecooperation.org

The Global Partnership brings together key development stakeholders and spurs progress on the four principles of the Global Partnership. These are: ensuring country ownership of development efforts, adopting a results-based focus, establishing inclusive partnerships for development, and enhancing transparency and accountability. It also provides an interface for dialogue on effective development co-operation between the OECD Development Assistance Committee and the region. The monitoring round on development effectiveness commitments to prepare the 2016 Progress Report engaged the governments in the region. The results indicated that Southeast Asian countries have taken the lead in planning for development results. Of these, most development partners are aligning their programmes and projects to national priorities and delivering 24 . ACTIVE WITH SOUTHEAST ASIA


SUSTAINABLE GROWTH

Making co-operation more effective and coherent between foundations and governments in developing countries lies at the heart of the Guidelines for Effective Philanthropic Engagement. They were designed by the OECD’s Network of Foundations Working for Development (netFWD), and Myanmar, India, Kenya and Mexico pioneered the implementation of these Guidelines. In 2016, the OECD Development Centre’s netFWD published the synthesis report Bringing Foundations and Governments Closer: A Cross-Country analysis, which compared governmentfoundation co-operation in India, Kenya, Mexico and Myanmar. In Myanmar, the netFWD has been collaborating with the Ayeyarwaddy Foundation and the British Council, who helped to co-ordinate the project at the local level. The Myanmar study was launched together with the Daw Khin Kyi Foundation in Nay Pyi Taw in June 2015.

government; however, with the election of a new government in early 2016 new opportunities for engagement are being opened. For instance, the Ministry of Social Welfare, Relief and Resettlements, the body in charge of relations with foundations and civil society, has begun to reach out to foundations. Yet, as the report shows, data sharing remains inconsistent and more could be done. The pilot project has also raised awareness on opportunities for increased dialogue and better partnerships between state officials and foundations in support of youth and entrepreneurship. In addition, it has contributed comparative insights into Myanmar’s philanthropic model and its nascent engagement with government. www.oecd.org/site/netfwd/ebook_Cross_Country_Analysis.pdf

The synthesis report showed that engagement between governments and foundations is still low in Myanmar, and new compared to other reviewed countries. Historically, there has been little interaction between foundations and the


L Myanmar’s President Htin Kyaw in his former capacity as Head of the Daw Khin Kyi Foundation with members of the Board and the OECD Development Centre’s netFWD coordinator Emilie Romon at the launch of the Guidelines for Effective Philanthropic Engagement country study of Myanmar, Nay Pyi Taw, June 2015. SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH . 25

Better data for better policies

The OECD’s Development Assistance Committee (DAC) has modernised its international statistical framework for measuring development finance. The OECD has developed a new measurement framework Total Official Support for Sustainable Development (TOSSD), for development finance. The TOSSD concept was recognised in the Addis Ababa Action agenda and shows potential to support the monitoring of SDG financing, particularly the SDG 17 to “strengthen the means of implementation and revitalise the global partnership for sustainable development”. The OECD carried out a number of country pilot projects in order to test, directly with developing country governments, the utility and the technical design of the measure as it was being developed. The Philippines was chosen as a case study because of the government’s strong commitment to the SDGs, including SDG-relevant tools and processes.

The main objective of the ongoing Philippines pilot study is to scope the parameters of TOSSD by: l Identifying the potential of TOSSD to meet the needs of the

Philippines, particularly in increasing the transparency of external financing and strategic planning; l Identifying adjustments to the statistical features of TOSSD,

both in terms of the nature of activities and the instruments to be included in the framework This pilot project will place officially-supported resources within the broader context of available external development finance. In this regard, the project will also consider other external funding sources such as remittances, private donations (including from private foundations), and other private funds at market terms – all of which represent significant inflows at country level supporting sustainable development. www.oecd.org/dac/financing-sustainable-development/ www.oecd.org/dac/financing-sustainable-development/tossdpublic-consultation.htm



SUSTAINABLE GROWTH

The Revenue Statistics in Asian Countries 2016: Trends in Indonesia, Malaysia, the Philippines and Singapore report provides detailed, internationally comparable data on tax revenues for five Asian economies: Indonesia, Malaysia, the Philippines, and Singapore as well as for Japan and Korea. Its approach is based on a well- established methodology developed by the OECD Revenue Statistics database and enables the comparison of tax systems across Africa, Asia, Latin America, the Caribbean and OECD Member countries. The third edition of the Revenue Statistics in Asian Countries was launched in November 2016 at the Asian Development Bank headquarters in Manila and includes data on Singapore for the first time–increasing the country coverage in the report to six. It provides an overview of the main taxation trends as well as attribution by sub-level of government from 1990-2014. This edition of the report also contains a special feature on the development of segmented taxpayer offices in Southeast Asian tax administrations.

L Launch of the Revenue Statistics in Asian Countries, Manila, the Philippines, 29 November 2016.

The Revenue Statistics in Asian Countries report seeks to harmonise data definitions and present selected Southeast Asian economies benchmarked against OECD best practices. It is a valuable resource for policymakers, academia and the broader development community, as well as for OECD staff responsible for analysing fiscal issues in the region and globally. The fourth edition of the Revenue Statistics in Asian Countries was released on 20 July 2017, in Manila. www.oecd.org /tax/revenue-statistics -in-asian-countries-20169789264266483-en.htm



SMOOTH FUNCTIONING OF MARKETS


FUNCTIONING MARKETS

Enhancing co-operation on international investment Investment has been a key priority for ASEAN for many years and features prominently in the ASEAN Economic Community Blueprint 2025. At the same time, Southeast Asia has been an important region for OECD work on investment, notably through its Investment Policy Reviews. The OECD has further deepened its co-operation with Southeast Asia on investment through its Investment Policy Reviews, which are conducted in collaboration with the ASEAN Secretariat. It has also boosted its co-operation via regional investment policy dialogues, including regular meetings of the Regional Policy Network on Investment, where investment policy reforms are discussed by officials and experts from ASEAN and OECD Member countries with experiences shared. The IPR has been undertaken for Viet Nam (2009), Indonesia(2010), Malaysia(2013), Myanmar (2014), Philippines (2016), as well as Lao PDR, Cambodia and a second review of Viet Nam, with the latter three due to be published in 2017. Almost all Southeast Asian countries feature in the OECD FDI Regulatory Restrictiveness Index and some of them also regularly participate in the OECD Freedom of Investment Roundtable, through which governments exchange information and experience on investment policies, including new approaches to bilateral investment treaties. 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. Through its co-operation with Southeast Asia on investment, the OECD is increasingly well-anchored in the region, not only as a global reference and standard-setter, but also as an institutional and economic partner. The Organisation’s collaboration with one of the most dynamic regions in the world has also contributed to galvanising policy discussions at the OECD and the integration of innovative policy practices in the latest investment thinking.

Going forward, the third meeting of the Regional Policy Network on Investment will take place in July 2017 in Bangkok and will be co-chaired by Thailand and Australia. The Investment Policy Reviews of Lao PDR and Viet Nam will be launched in the third quarter of 2017. In addition, a regional Investment Policy Review is currently being prepared and will be released in early 2018. In the framework of an OECD-wide project supported by the Government of Canada, an in-depth study will be prepared on the role of investment and investment-related policies for Southeast Asian SME participation in global value chains. This project will include enterprise surveys and case studies in partnership with other international organisations. “The recommendations from the Reviews are candid, impartial and highly practical.” Aung Naing Oo, Director General, Ministry of National Planning and Economic Development of Myanmar (Phnom Penh, 12 April 2017)

SMOOTH FUNCTIONING OF MARKETS . 29

Enhancing co-operation on international investment

OECD Southeast Asia Regional Programme

The Regional Policy Network for Investment works to strengthen regional co-operation on investment policies and promotion.

L Adrian Cristobal, Secretary of Trade and Industry, Philippines, with Deputy Secretary-General Douglas Frantz, at the launch of the Investment Policy Review of the Philippines in Paris, France on 26 April 2016.



FUNCTIONING MARKETS

Promoting trade and upgrading in global value chains Trade liberalisation has played a key role in the economic transformation of Southeast Asian countries, whose trade, investment and production are increasingly organised around global value chains (GVCs). ASEAN countries have seized upon new opportunities offered by GVCs and participation has grown across the board, in turn increasing employment and economic prosperity. The importance of GVCs in moving towards “a highly integrated and cohesive economy” is underscored in the ASEAN Economic Community Blueprint 2025. Continuing the liberalisation of trade for goods, services and investment, as well as undertaking regulatory reform and investing in skills, will be key in achieving the ambitious goals being set out.

The OECD and Southeast Asian countries collaborate on a range of trade-related issues. The Trade Facilitation Indicators (TFIs) cover the full spectrum of border procedures for more than 160 countries, including all 10 ASEAN member states. The Services Trade Restrictiveness Index (STRI) database covers 44 countries in 22 services sectors, including Indonesia. The OECDWTO Trade in Value Added (TiVA) database currently covers 62 countries including 8 ASEAN member states. Furthermore, countries like Malaysia already use the OECD Initiative for Policy Dialogue on GVCs, Production Transformation and Development to share its experiences on upgrading strategies.

L Making GVCs Work for ASEAN: OECD-ERIA symposium June 2016, Ha Noi, Viet Nam. SMOOTH FUNCTIONING OF MARKETS . 31

Promoting trade and upgrading in global value chains

The OECD is actively involved in helping ASEAN countries make the most out of GVCs. A recent study on Using Foreign Factors to Enhance Domestic Export Performance analyses how ASEAN countries can leverage reforms and foreign value added to enhance their domestic export performance. Another recently completed study aims to map how SMEs in the region are engaging in GVCs, noting that SMEs may be facing constraints to accessing imports which limit their ability to draw benefits from more efficient sourcing. It also highlights that many SMEs engage in GVCs indirectly, underscoring the need to foster domestic linkages with larger domestic or multinational firms. The OECD and Southeast Asian countries will continue to deepen co-operation in coming years. Going forward the OECD will: l Continue to assist the ASEAN secretariat in maximising the

benefits of GVC participation. l Deepen the analysis of how SMEs integrate in GVCs, providing

policy guidance on how to make the benefits of participation more inclusive.



The Trade Initiative works to identify areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia.

l The STRIs for 6 of 22 sectors have been completed as one

element in the broader Economic Assessment of Malaysia. The OECD will now work on adding Malaysia to the STRI indicators for transport and logistics (8 additional sectors). l Engage in negotiations to include additional countries from

Southeast Asia in the STRI database. www.oecd.org/trade www.oecd.org/tad/trade-policy-notes.htm www.oecd.org/tad/policynotes/oecd-trade-brochure.pdf www.oecd.org/trade/facilitation http://oe.cd/stri http://oe.cd/gvc http://oe.cd/tiva

FUNCTIONING MARKETS


Encouraging a fair, sound and rules-based culture of competition contributes to increased productivity growth, innovation and overall economic growth, in addition to playing a role in reducing inequality and poverty. The OECD provides guidance on competition laws and policy, partnering with ASEAN and ASEAN member countries to assist governments in the region in building effective competition frameworks. In the context of the 2007 ASEAN Economic Blueprint, competition law legislation has been introduced over the last decade in many ASEAN nations. The objective has been to create a culture of rules-based competition for enhanced regional economic performance. To achieve these objectives, competition laws in ASEAN need to be effectively implemented and enforced by well-functioning institutions with adequate resources and skills. In order to fully benefit from wellfunctioning markets, Southeast Asian countries need to

ensure that laws and regulations are not unnecessarily and inadvertently creating barriers to competition. The OECD enjoys a unique position on policy regarding economic competition, owing to its internationally recognised standards and guidelines, long-standing technical expertise, and competition roundtables which help to advance dialogue on key and emerging issues. The Organisation provides many avenues to encourage advancement of sound competition through the Competition Committee, the Global Forum on Competition, and the OECD Korea Policy Centre workshops. These opportunities promote peer-to-peer learning, international co-operation between competition authorities, and facilitate the dissemination of OECD standards and best practices. By working with the OECD, countries of Southeast Asia can also contribute to the OECD’s competition knowledge, as well as the development and revision of standards and guidelines.



In addition, the OECD has significantly increased its cooperation on competition with the ASEAN Secretariat since 2015, with a particular focus on capacity building and policy analysis. The OECD-Korea Policy Centre (KPC) has undertaken 18 capacity-building workshops, benefiting Southeast Asian competition agencies and judges. The OECD has also shared its experience by introducing pro-competitive reforms and the Competition Assessment Toolkit in a number of workshops with Indonesian officials, to include at APEC meetings held in Viet Nam in 2017, amongst others. In a broader sense, through OECD economic and investment surveys, the Organisation has also provided in the last two years policy analysis and recommendations on the competition laws and policies of Cambodia, Vietnam, and the Philippines. These country analyses have been performed in the context of OECD Investment Policy Reviews. In Malaysia, a country Economic Assessment was conducted, while Viet Nam is undertaking a Peer Review of the Competition Laws. Currently, the OECD/KPC is finalising a Guidebook on the region’s competition laws that will serve as a tool to understand the different legal regimes as well as foster mutual understanding of each national competition regime, in addition to regional co-operation initiatives. The OECD is supporting the ASEAN Secretariat in developing a Capacity Building Roadmap for 2017-2020. Together these will help to identify and better target future OECD capacity-building plans. The Organisation will continue to provide assistance to ASEAN members in order to build domestic competition capacity, and thereby laying the foundations to improve regional enforcement co-operation and policy convergence. www.oecd.org/competition



FUNCTIONING MARKETS

Developing a robust financial system

The OECD promotes efficient, open, stable and sound marketoriented 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 Organisation also suggests reform measures related to banking, securities and institutional investors, with a special emphasis on insurance companies and private pension schemes, as well as facilitates policy dialogue and knowledge exchange on capital market reform, insurance, private pensions, financial education and financial consumer protection. For example, the OECD-ADBI Roundtable on Capital Market and Financial Reform in Asia, established in 1999, meets annually in Tokyo to bring together 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 in addition to policy frameworks for effective and efficient financial regulation in Southeast Asia. In-depth and ongoing work includes the OECD Project on Institutional Investors and Long-term Investment, which aims to facilitate long-term investment (LTI) for institutional investors in pension funds, insurance companies, and sovereign wealth funds by addressing both potential regulatory obstacles and market failures. The project has held events targeting the SEA region and relies on close co-operation between OECD economies and non-OECD economies, major investors and other key stakeholders.

In addition, 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 published the Recommendation on Disaster Risk Financing Strategies. This Recommendation supports the development of effective strategies in managing the financial impacts of disasters. In addition, it actively works with the Asia-Pacific Economic Co-operation (APEC) Finance Minister Initiative on disaster risk financing that seeks to promote information exchange and good practices amongst APEC economies, some of which are from Southeast Asia. www.oecd.org/finance Initial public offerings (IPOs) by companies from Southeast Asia 70 60 50 USD, billions

Having the tools necessary to build and maintain a strong financial system is a fundamental requirement for Southeast Asian countries to compete and prosper at all levels in the global market.

40 30

Philippines Viet Nam

20

Thailand Singapore

10 0

Indonesia Malaysia

1993-2000

2001-2008

2009-2016

Amount of capital raised, 2016 USD, billions Note: Based on the domicile country of the issuer. Over-the-counter (OTC) transactions are excluded. Data are presented in 2016 USD adjusted by US CPI. SMOOTH FUNCTIONING OF MARKETS . 35

Strengthening connectivity, capital investment and public-private partnerships


The Regional Policy Network on Sustainable Infrastructure works to support the implementation of the Master Plan for ASEAN Connectivity 2025.

Infrastructure gaps in Southeast Asia hamper sustainable economic and social development and present a major challenge for deepening economic integration and connectivity within the ASEAN Economic Community. Closing these gaps through the implementation of infrastructure initiatives is essential for Southeast Asia to be competitive in regional and global markets.

the Network of Senior PPP and Infrastructure Officials, which was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly. The RPN’s current work in the region on how to use transaction advisors effectively in private infrastructure projects will add to this body of knowledge and support OECD and partner countries that face similar challenges.

The OECD Regional Policy Network (RPN) on Sustainable Infrastructure collaborates closely with the ASEAN Secretariat and ASEAN Member States, supporting the implementation of the Master Plan for ASEAN Connectivity (MPAC) 2025. Highlights of this co-operation include the ASEAN Principles for PublicPrivate Partnership Frameworks. Based on these principles, the OECD conducted a pilot review of the PPP framework in the Philippines. In addition, supported by the UK’s Prosperity Fund, the OECD developed a handbook on “Value for Money in PPPs within Southeast Asia”, which was presented at the RPN meeting in Bangkok in 2016.

Going forward, the OECD is strongly committed to continue this collaboration to improve the sustainable investment environment of ASEAN Member States. Future co-operation on sustainable infrastructure and PPPs may include the assessment of the adequacy of infrastructure management in ASEAN countries, assisted by the framework presented in the OECD publication, Getting Infrastructure Right. The guide lays out key “success factors” that lead to effective planning, financing and delivery across the infrastructure spectrum, including public-private partnerships. www.oecd.org/governance

The annual RPN meetings on Infrastructure and PPPs have provided a unique opportunity to exchange experiences and knowledge between OECD and ASEAN policy makers and experts. The region’s achievements and challenges feed into the work of



FUNCTIONING MARKETS

Improving financial literacy and inclusion In order to increase financial well-being, support inclusive growth and support financial stability, improvements in financial literacy and financial inclusion of individuals and small businesses are crucial for Southeast Asia. Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth, financial stability and as a starting point for more inclusive societies. Cambodia, Indonesia, Malaysia, Thailand and Viet Nam have used OECD methodology to assess financial literacy and financial inclusion in order to provide clear indications of the challenges faced by consumers and the groups in most need of support within a national strategy for financial education. Indonesia will also participate in the Financial Literacy Option within the OECD Programme for International Students Assessment (PISA) in 2018, and has promoted the importance of financial literacy at G20 level and within ASEAN and APEC, where financial education policies have become a policy priority.

2 June 2016. The next regional meeting and Asian Roundtable will be held in Viet Nam in 2017. The OECD formulates financial education recommendations through the International Network on Financial Education (OECD/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 over 115 economies in order to undertake analytical work and develop good practices. Brunei, Cambodia, Indonesia, Malaysia, the Philippines, Singapore and Thailand are members of the Network. Indonesia, Malaysia, the Philippines and Thailand have hosted meetings of the OECD/INFE and OECD Asian Roundtables on the Role of Central Banks in Financial Literacy and Inclusion. www.oecd.org/finance/oecd-financial-literacy-study-finds-manyadults-struggle-with-money-matters.htm www.oecd.org/daf/fin/financial-education/G20-OECD-INFEreport-adult-financial-literacy-in-G20-countries.pdf

The OECD co-hosts regular seminars in Southeast Asia, providing stakeholders in the region with the opportunity to learn more about OECD policy tools and hear from high-level policy makers, academics and practitioners about new and innovative approaches designed to tackle low levels of financial literacy and inclusion. Most recently, the OECD co- hosted a high-level regional seminar on Empowering MSMEs through Financial Literacy and Inclusion with the Indonesia Financial Services Authority (OJK), in June 2016. A regional research paper was subsequently published by the OECD entitled, Financial Education for Micro, Small and Medium-Sized Enterprises in Asia, to highlight the wide variety of financial education activities for MSMEs in Asia, with a particular focus on Indonesia. The MSMEs seminar in June 2016 was held back-to-back with the first meeting of the ASEAN Working Committee on Financial Inclusion on 30-31 May 2016, in addition to the 7th OECD Asian Roundtable on Financial Literacy and Financial Inclusion on



PUBLIC AND CORPORATE GOVERNANCE


GOVERNANCE

Good regulatory practice and regulatory reform Good regulatory practice (GRP) is a cross-cutting theme for ASEAN economic integration and regulatory coherence, as well as for individual ASEAN member countries’ structural and rule-of-law reforms. ASEAN countries recognise that the economic agenda must be premised on productivity-driven growth, aided by good regulatory processes. “Efficient, Effective, Coherent and Responsive Regulations, and Good Regulatory Practice” has in turn been recognised in the ASEAN Economic Community (AEC) Blueprint 2025 as a key pillar for achieving “a Competitive, Innovative, and Dynamic ASEAN”. This builds upon previous declarations that underline the importance of GRP such as the Putrajaya Joint Declaration on ASEAN Post-2015 Priorities towards an ASEAN-Centric Civil Service by the ASEAN Heads of

Civil Service in December 2015 and the Nay Pyi Taw Declaration on the ASEAN Community’s Post-2015 Vision issued by the Heads of State or Government in November 2014. Furthermore, the OECD was included in the ASEAN 2025: Forging Ahead Together vision which was approved at the Leaders’ Summit in November 2015. The OECD has a longstanding engagement with Southeast Asia on regulatory reform, both regionally through APEC and ASEAN and bilaterally with individual ASEAN member countries. Highlights of this engagement include the APEC-OECD Cooperative Initiative on Regulatory Reform that gave rise to the 2005 APEC-OECD Integrated Checklist on Regulatory Reform, as well as the 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia.

J Left to right: Faisal Naru, OECD Secretariat, Jayasena Jayasiri, Secretary-General of the Ministry for International Trade and Industry, Mark Steel, Director of Ministry of Business Innovation and Employment of New Zealand and Dr Ernesto Pernia, Secretary of Socioeconomic Planning of the Philippines. PUBLIC AND CORPORATE GOVERNANCE . 39

OECD Southeast Asia

Good regulatory practice and regulatory reform

J Tan Sri Dr Ali Bin Hamsa speaking at the ASEAN-OECD Good Regulatory Practice Conference 2015 on Regulatory Coherence for Regional Connectivity and Global Competitiveness, held on 9-12 March 2015 in Kuala Lumpur, Malaysia

The Organisation has also been working bilaterally with various ASEAN governments to strengthen their implementation of good regulatory practice, including in the fields of Regulatory Impact Analysis (RIA), administrative simplification and burden reduction, as well as institutional arrangements for assuring high quality regulation. For example, a comprehensive regulatory reform review has also been carried out for Malaysia producing an important tool, Implementing Good Regulatory Practice in Malaysia (2015).

I 12th OECD-Asian Senior Budget Officials Annual Meeting, Bangkok, Thailand, 15-16 December 2016. 40 . ACTIVE WITH SOUTHEAST ASIA

Regional Programme

The Regional Policy Network for Good Regulatory Practice (GRPN) works with regional and OECD partners to improve government capacities for efficient and effective regulations.

The OECD is engaged with ASEAN on increasing the capacity of SMEs to cope with regulations. This work supports the goal to “Enhance Policy and Regulatory Environment”, one of the five Strategic Goals of the ASEAN Strategic Action Plan for SME Development 2016-2025. www.oecd.org/gov/regulatory-policy www.oecd.org/gov/regulatory-policy/grpn.htm


GOVERNANCE

Budgeting and public expenditures Maintaining fiscal discipline, allocating resources where they are needed most, and achieving greater efficiency in government operations all have vital impacts on overall national economic performance. The OECD works on the full range of budgeting and public financial management issues through reviews of country budgeting systems and comparative analysis of specific aspects of the budgeting system across countries. To this end, it also maintains a comprehensive database of budgeting practices across countries. The result of this work is published in the OECD Journal on Budgeting. The Organisation also convenes an annual meeting of Senior Budget Officials from Asia– the Asian SBO. This meeting brings together the budget directors and other senior officials from the region to share policy experiences and discuss common budgetary issues. The meeting is a unique opportunity for dialogue and interaction among colleagues and is generously hosted by the Thai Bureau of the Budget in Bangkok. In addition, the OECD completed the Budgeting Practices in Asia Survey which includes comprehensive information on the budget institutions of Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Timor-Leste, and Viet Nam. Furthermore, in Timor-Leste, the Organisation has developed a Roadmap of Budgetary Governance Reform in 2017 on the basis of a comprehensive review of its budgeting system, and the OECD continues to be engaged in extensive follow-up work there. www.oecd.org/gov/budgeting www.oecd.org/gov/budgeting/oecd-asianseniorbudgetofficials network.htm www.oecd.org/gov/budgeting/oecd-asianseniorbudget officialsnetwork.htm www.oecd.org/gov/budgeting/oecdjournalonbudgeting.htm


PUBLIC AND CORPORATE GOVERNANCE . 41

Public procurement Employing public procurement best practices and strategies are central to achieving public sector efficiency and advancing public policy objectives. In 2015, the OECD Council adopted a Recommendation on Public Procurement which advocates the strategic and holistic practice in public procurement. It provides a 21st-century reference for modernising the public procurement system and can be applied across all levels of government and stateowned enterprises. The Recommendation addresses the entire procurement cycle whilst integrating public procurement with other elements of strategic governance such as budgeting, financial management and additional forms of service delivery. The publication, Public Procurement for Innovation, which is part of the OECD Public Governance Reviews series, is a useful complement to the Recommendation instrument.

The OECD also partners with several Southeast Asian countries to support reforms in their public procurement systems and to ensure long-term sustainable and inclusive growth, and trust in government. Several Southeast Asian countries regularly participate in meetings of the Working Party of Leading Practitioners on Public Procurement, which brings together senior procurement experts from OECD and G20 countries, in addition to international organisation and the private sector participants. www.oecd.org/gov/ethics/public-procurement.htm www.oecd.org/governance/procurement/toolbox

On this basis and depending on countries’ demands, the OECD undertakes peer reviews of national and sector procurement systems, and provides proposals for improvement. The Organisation collects useful and reliable evidence across OECD and non-OECD countries on the performance of public procurement operations as well as the impact of procurement on broader public policy objectives, such as sustainable green growth, SME development, and innovation.



GOVERNANCE

Increasing performance in the public sector OECD analyses can help the public sector improve its performance, thus ensuring better value for money and contributing to national well-being. The Observatory of Public Sector Innovation supports countries in implementing innovative approaches to improving 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. It connects innovators through an online platform for knowledge-sharing and collaboration in the development of innovations, and develops practical guidance on how to source, develop, support, scale and diffuse innovations. Since 2016, Indonesia participates in the Observatory’s National Contact Points meetings. The Observatory is also exploring potential engagement with non-Members in the Southeast Asian region through its involvement in the OECD Network on Open and Innovative Government. The OECD partnered with the Government of Korea and the Korea Policy Centre to organise the Global Forum: Government 3.0, the Asian Public Governance Forum on Public Innovation and the OECD Network on Open and Innovative Government in Southeast Asia, in order to bring together reformers from the OECD and SEA to exchange best practices and policy experiences on digital government and public sector innovation. The OECD Public Governance Directorate is partnering with the Asian Development Bank (ADB) on a new Southeast Asian Government at a Glance initiative to better inform public sector reform in the region and provide a platform for peer-to-peer learning on public management practices and procedures between participating countries.

The Government at a Glance report, through a diverse set of surveys, will provide actionable and comparative evidence for decision-makers to have an overall view on the current state of affairs across a spectrum of policy areas. As part of this effort, the data collected will allow for the assessment of public finance, strategic human resources management, digital government performance and the impact of open government data policies using the OECD OURdata Index. The flagship report, Government at a Glance, last published in 2015, presents the results of various data collected in the region. The latest edition is expected to be released in 2018. www.oecd.org/gov



Promoting open government Reforms that promote open and transparent governments, and foster partnerships and networks with citizens and businesses, benefit countries and regions alike. The OECD’s open government activities in SEA are focused on identifying and supporting countries’ efforts to promote transparency, accountability, as well as public consultation and engagement throughout the policy lifecycle (policy design, implementation, evaluation and feedback). Given the wide range of expertise in pursuing open government reforms across the region, the OECD supports regional leaders in consolidating the benefits of their reforms, as well as bringing countries together to identify a shared understanding of the opportunities presented by pursuing such initiatives. In March 2015, the OECD launched the Network on Open and Innovative Government in Southeast Asia; a second meeting was held in September 2015, and a third in November 2016. The Network, co-chaired by Korea and Indonesia, provides a platform to discuss efforts in Southeast Asian countries to implement open and innovative policies and to present relevant experiences from OECD Member countries. Notably, the OECD produced an Open Government Review of Myanmar in 2014 and launched an Open Government Review of Indonesia in 2016. This review included a capacity-building component, as well as a chapter linking Indonesia’s open government reforms to its implementation of the Sustainable Development Goals (SDGs). In supporting open government and public sector reforms, the OECD seeks to respond to the demands of citizens and businesses for more transparency, accountability and participation; modernise public administrations for better services; foster sustainable and inclusive socio-economic development; and provide access to good practices and comparative data. To this end, the OECD conducts Open Government Reviews, which provide countries with analysis and actionable recommendations on how to design and 44 . ACTIVE WITH SOUTHEAST ASIA

implement open government policies and engage with stakeholders. Through the Network, the OECD will continue to map open and innovative policies and practices. The Organisation will also continue to support countries’ implementation of the recommendations outlined in the Open Government Reviews, and build on the analysis contained in the Open Government: Global Context and Way Forward. This report, published in 2016, collected data from over 50 countries, including in Southeast Asia, to provide an overview of how countries are implementing open government practices and the challenges and opportunities they face. www.oecd.org/gov


GOVERNANCE

Enhancing public sector integrity Integrity, transparency and accountability are essential to developing trust in government for individuals, investors and institutions. A new OECD Recommendation on Public Integrity provides a vision and guidance for developing a public integrity strategy. Southeast Asian countries are paying increased attention to enhancing their public integrity systems. The ADB/OECD AntiCorruption Initiative for Asia and the Pacific provides a forum for peers from the region to meet regularly to discuss shared integrity challenges as well as innovative and effective ways to address them. The OECD has also initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region. Together with the Asia-Pacific Economic Co-operation (APEC), the OECD developed the Principles to Prevent and Combat Trafficking in Persons-related Corruption. The increasing importance of public integrity in this region was also reflected in the high level participants at the 2017 OECD Global Anti-Corruption & Integrity Forum, including representatives from Indonesia, Malaysia, Thailand, Cambodia and the Philippines.

using cross-country benchmarks. These reviews bring together Thai and Indonesian officials with integrity experts from OECD countries. Both countries are also invited to participate in the meetings of the OECD Working Party of Senior Public Integrity Officials (SPIO), which promotes the design and implementation of integrity and anti-corruption policies that support good governance. The insights and experiences of both countries strengthen the evidence base For, and support the development of, policy tools to implement the new OECD Recommendation on Public Integrity, adopted in January 2017. www.oecd.org/gov/ethics/recommendation-public-integrity.htm www.oecd.org/gov/ethics/latestdocuments www.oecd.org/corruption/ethics/integrity-forum-2017.htm

Integrity Reviews of Thailand and Indonesia will be launched in the second half of 2017. The OECD is already discussing options to further strengthen co-operation with both countries on integrity and anti-corruption, especially in the implementation of the policy recommendations of the Integrity Reviews and in assessing high-risk areas, including infrastructure and public procurement. Preparations are underway for the next meeting of the ADB/OECD Anti-Corruption Initiative for Asia and Pacific in November 2017 in Seoul, hosted by the Anti-Corruption & Civil Rights Commission of Korea. The OECD is currently conducting integrity reviews in Thailand and Indonesia. Integrity reviews assess the functioning of a country’s integrity system and provide tailored, actionable proposals to support evidence-based and well-targeted reforms,



Fighting transnational corruption Corruption is a major obstacle to economic development as it undermines good governance, sustainable and inclusive development and fair business practices. As the South Asian region’s economies grow, so does the risk of transnational bribery. This is particularly the case regarding major public infrastructure projects that are required to keep up with rapid urbanisation, in addition to significant investments in resource-based sectors, and the emergence of manufacturing hubs. The OECD participates in a number of initiatives with Southeast Asian countries to promote the OECD Anti-Bribery Convention and support governments in implementing international standards for combating foreign bribery. These include bilateral and regional discussions on best practices for establishing effective foreign bribery offences.

The ADB/OECD Anti-Corruption Initiative for Asia and the Pacific supports members’ national and multilateral efforts to reduce corruption. 31 economies in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the Initiative. In 2017, the ADB/OECD Initiative published Mutual Legal Assistance in Asia and the Pacific: Experiences in 31 Jurisdictions, which outlines common barriers to mutual legal assistance among the 31 member jurisdictions of the Initiative, and describes best practices used to overcome these barriers. www.oecd.org/site/adboecdanti-corruptioninitiative

The Convention on Bribery of Foreign Public Officials in International Business Transactions (the “Anti-Bribery Convention”) is an international legally-binding instrument that focuses on the supply of bribes by individual entrepreneurs and companies to foreign public officials. The OECD Working Group on Bribery, composed of the 43 parties to the Convention, monitors its implementation through rigorous peer reviews. The major emerging Southeast Asian economies, namely: Indonesia, Malaysia, Singapore, Thailand and Viet Nam, are not yet parties to this Convention. Indonesia, Malaysia and Thailand have attended meetings of the OECD Working Group on Bribery as invitees. Malaysia and Thailand have foreign bribery offences, and Thailand has established corporate liability for offenders. The OECD looks forward to increasing its collaboration with economies in the region. The Organisation encourages countries to take their engagement to the next level and actively work towards membership in the OECD Working Group on Bribery and acceding to the OECD Anti- Bribery Convention. This, in addition to their continuing participation in the ADB/OECD Anti-Corruption Initiative for Asia-Pacific. 46 . 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 strengthening co-operation between Southeast Asia and the OECD on international tax issues. In recent years there has been growing recognition of the role that the tax system plays in state-building and as a sustainable source of domestic resources for development. From increasing global tax transparency to addressing gaps in the international tax rules that facilitate Base Erosion and Profit Shifting (BEPS) by multinational enterprises, the OECD has been working hand-in-hand with economies across Southeast Asia to develop and monitor implementation of global solutions to these common tax issues. The OECD-hosted Global Forum on Transparency and Exchange of Information for Tax Purposes is responsible for monitoring the implementation of international standards on tax transparency and now has over 140 members including more than 20 from the Asia-Pacific region. In addition to providing bilateral assistance, the Global Forum Secretariat is working closely with the Asian Development Bank (ADB) to deliver a series of training events to ensure that all jurisdictions can benefit to tackle tax evasion effectively.

Regional Programme

The Regional Policy Network for Tax works to strengthen co-operation on tax policy and administration in the region and between OECD and Southeast Asian countries.

standardised, comparable revenue data that allows comparison of key tax revenue indicators over time and between countries. Practical capacity building assistance is also available. As well as dedicated assistance through bilateral country programmes, the OECD Global Relations and Development Programme on Tax Matters holds more than 20 tax seminars and events each year for Southeast Asian economies. Meanwhile, the OECDUNDP Tax Inspectors without Borders initiative works to deploy experts on-demand to support tax audit teams to work on real cases involving international tax issues. A regionally-targeted approach to ensure effective engagement in the global tax dialogue by jurisdictions from Southeast Asia will continue in 2017 and 2018, supported by a deepening of co-operation with regional organisations such as the ADB, APEC, SGATAR (Study Group for Asian Tax Administration and Research), and UNESCAP (United Nations Economic and Social Commission for Asia and the Pacific). www.oecd.org/tax

Recent efforts to promote participation in the development and implementation of international tax rules to curtail BEPS practices has already seen 15 jurisdictions from Asia-Pacific join the Inclusive Framework on BEPS. With over 100 members, all participating on an equal footing, the Inclusive Framework is working to support countries to implement the measures agreed to tackle BEPS, as well as continuing its technical work to ensure BEPS challenges are addressed. Ensuring policy-makers have the right tools is critical to building stronger tax systems. In 2015, the OECD’s Global Revenue Statistics Programme was extended to Asia, and the 3rd edition (2017) covers seven Asian economies, providing

L Asia-Pacific Regional meeting of the Inclusive Framework on BEPS, Manila, The Philippines, 29 Nov 1– Dec 2016 PUBLIC AND CORPORATE GOVERNANCE . 47

GOVERNANCE

OECD Southeast Asia

Raising the bar on corporate governance Good corporate governance is central to developing robust and healthy capital markets and essential to fostering sustained growth in Southeast Asia. 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 G20/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 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

The OECD Guidelines on Corporate Governance of StateOwned Enterprises, 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 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, and the Philippines have directly cited the OECD instrument as a source of inspiration. Both the Principles and the Guidelines were updated in 2015, taking into account developments in the corporate sector and capital markets. Indonesia and Singapore, along with other FSB members, participated in the review as Associates, and thereby on an equal footing with OECD Members, so as to ensure that the updated standards truly reflect an international perspective; Malaysia participated in the Committee as an Invitee. www.oecd.org/corporate

I OECD – Southeast Asia Corporate Governance Initiatives in Phnom Penh in April 2017. Left to right: Masato Kanda, Deputy Commissioner for International Affairs, Financial Services Agency, Japan and Chairman, OECD Corporate Governance Committee; Karin Zarifi, Advisor, Securities and Exchange Commission, Thailand; Fianna Jurdant Senior Policy Analyst, Corporate Affairs Division- OECD; Nadia Zainuddin, Assistant General Manager, Chief Regulatory Office, Securities Commission, Malaysia. 48 . ACTIVE WITH SOUTHEAST ASIA

EMPLOYMENT AND SOCIAL DEVELOPMENT EMPLOYMENT AND SOCIAL DEVELOPMENT . 49

Seeking best practices of social and health policies SOCIETY Over the past ten years economic growth in Asia has contributed to a reduction in poverty and fertility rates; greater prosperity has also contributed to gains in life expectancy. Many workers in Southeast Asia are still engaged in informal employment, frequently for long hours, without reliable income and social protections. Meeting citizens’ growing demand for social support, extending the coverage of social protection benefits, and improving job quality while closing gender pay gaps, will be among the challenges facing the region in the future. The 2017 OECD report A Decade of Social Protection Development in Selected Asian Countries considers these challenges, providing policy examples from countries to illustrate good practice, including in Bangladesh, Indonesia, Japan, Korea, Malaysia, Pakistan, Singapore and Viet Nam. A new issue of the OECD Society at a Glance Asia/Pacific will be released in 2018. The upcoming OECD Policy Insight on Strengthening Women’s Entrepreneurship in ASEAN includes an account of recent trends in labour market gaps between men and women in ASEAN countries. It discusses the progress achieved so far towards gender parity in education and provides an analysis of the remaining challenges to reduce outstanding gaps in a wide range of labour market outcomes, with a particular focus on women entrepreneurship. http://oe.cd/decade-social-protection-asia


PENSIONS Many Southeast Asian pensions systems are ill-prepared for the rapid ageing of their populations that will occur over the next two decades. Pensions are a major policy issue in Southeast Asian and OECD economies alike, with low coverage being a particular issue for the former. This low coverage combined with rapidly ageing populations brings with it higher poverty risks for future generations. 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 report Pensions at a Glance 2015 contains a comprehensive list of pension policy indicators that look at the design of pension systems, future pension entitlements for men and women at different earning levels, the financing of retirement-income systems as a whole, the demographic and economic context in which retirementincome systems operate, private pensions and public-pension reserve funds. The next edition of the report is due to be published in late 2017, and the next Asia-specific report in 2018. www.oecd.org/els/public-pensions

SOCIAL DEVELOPMENT

HEALTH As the global financial and economic crisis has forced countries to seek ways to rein in public spending, health systems need to increase their efficiency and deliver better value for money. The OECD helps Southeast Asian 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, healthcare resources and quality of care.

financing, and quality of care in the region. As countries strive to achieve universal health coverage, these indicators help measure their progress. Through the OECD Korea Policy Centre, experts and policymakers in the region share policy experiences, including on policies to improve health care quality. The 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 care aimed at effectively tackling the main risk factors, such as obesity and harmful alcohol consumption, is a high cost-effective strategy. www.oecd.org/health

The report Health at a Glance: Asia/Pacific 2016 presents the latest comparable data and trends on key aspects of health and health systems in selected Asia/Pacific countries. The indicators provide an overview of health status, determinants of health, healthcare resources and utilisation, health expenditure and


EMPLOYMENT AND SOCIAL DEVELOPMENT . 51

OECD Southeast Asia

Tackling gender inequality

Regional Programme

The OECD is working with regional partners to improve women’s economic development through the OECD Southeast Asia Gender Initiative.

Gender inequality negatively affects development outcomes, including in Southeast Asia. The OECD is assisting countries in the region by providing them with comprehensive data to inform and support their gender equality policy initiatives.

Myanmar, the Philippines, Singapore, Thailand and Viet Nam. The publication captures key results on women’s discrimination across five areas: decision-making within the family, son preference, secure access to land and assets, civil liberties, and violence against women.

The Social Institutions and Gender Index (SIGI) measures gender equality by looking at social institutions that hamper women’s participation in society and thus complements and improves existing measures that very often only measure outcomes of gender inequality.

Going forward the OECD Development Centre will continue to measure discriminatory social norms in Southeast Asia and beyond, and will increasingly using these results for informed policy dialogues with national and regional stakeholders.

The SIGI database provides in-depth country profiles on over 160 countries spanning all global regions. More recently, regional editions have been issued, including one on East Asia and the Pacific which was launched in 2016. The regional report on East Asia and Pacific covers several Southeast Asian countries including: Cambodia, Indonesia, Lao PDR, Malaysia,

The next edition of the SIGI will be launched in 2018 and will continue to draw on collaboration with countries and regional stakeholders from Southeast Asia. www.oecd.org/dev/development-gender/ theoecdsocialinstitutionsandgenderindex.htm



SOCIAL DEVELOPMENT

Social cohesion

Over the last two decades the world’s economic centre of gravity has shifted from West to East, with the emerging and developing economies of the East now driving rapid global growth. Whilst this may have brought down absolute poverty levels, in many countries social cohesion is threatened by public perception that the fruits of growth have not been equally shared. The OECD Development Centre has produced a Social Cohesion Policy Review for Viet Nam, to contribute to the on-going policy dialogue on social cohesion in Viet Nam and to support the formulation of well-informed public interventions. The review was produced through close consultation with Invalids and Social Affairs (MOLISA), the research teams at Institute of Labour Science and Social Affairs (ILSSA) and the General Statistics Office of Viet Nam. At the request of the Government, the Centre is also engaged in the development of a Social Protection System Review for Cambodia and Indonesia, and a Youth Well-Being and Policy Review for Viet Nam and Cambodia. The SIGI Regional Report for East Asia and the Pacific, on gender-based discrimination in social institutions was produced and disseminated in the region. The Social Cohesion Policy Review takes a multi-dimensional approach to the analysis of fiscal, labour, education, health and social protection policies to establish their impact on social cohesion. It applies an analytical framework based on the OECD report Perspectives on Global Development 2012: Social Cohesion in a Shifting World, which examines the impacts, challenges and opportunities that the last decade’s rapid economic has had on social cohesion. The findings constitute technical inputs to ongoing discussions led by the Ministry of Labour, MOLISA to set new social targets for their Socio-Economic Development Strategy 2011-20. The Social Protection System Review in Cambodia and Indonesia will in turn help those countries identify policy options that could improve the coherence of their social protection systems.

Finally, the policy reviews to be conducted on youth wellbeing in Cambodia and Viet Nam will help these countries adjust their national youth strategies with a greater focus on equity issues. Through research and policy development work, often undertaken in collaboration with national research institutions, the OECD Development Centre with deepen its policy dialogue with governments from the region on key social issues. www.oecd.org/dev/inclusivesocietiesanddevelopment/socialcohesion.htm



OECD Southeast Asia

Supporting SME development and entrepreneurship Governments in Southeast Asia recognise that implementing policy to support SME development and entrepreneurship fuels economic growth and creates jobs. The OECD has a long tradition of working on enhancing the business and policy environment for small- and medium-sized enterprises in ASEAN countries. Over the last several years, the OECD has focused on the promotion of SME productivity, SME financing and maximising the benefits of the digital economy. Twice a year the OECD organises a Regional Policy Network (RPN) SME meeting which is part of a week of formal meetings of the ASEAN Coordination Committee of Micro, Small and Medium Enterprises (ACCMSME). They provide an important bridge to the policy discussions taking place in the OECD Working Party on SMEs and Entrepreneurship (WPSMEE). Several ASEAN countries participate in the annual report on Financing SMEs and Entrepreneurs, an OECD Scoreboard. Other countries are expected to join the exercise in the near future. The Scoreboard monitors data on SME and entrepreneurship financing in order to (i) improve the understanding of SME

Regional Programme

The Regional Policy Network for SME will strengthen co-operation in the region to support the implementation of ASEAN strategic action plan for SME development

financing needs and provide the basis for a more informed policy discussion, (ii) give finance suppliers a better understanding of their clients’ needs, enabling them to design more appropriate products and services, and (iii) allow policy makers to better assess the impact of their policy measures on SMEs’ and entrepreneurs’ access to finance. Participation also helps build national capacity to collect and analyse SME financing data. Thailand and Malaysia currently participate and the OECD encourages other ASEAN countries to join the Scoreboard. The OECD has also been working with ASEAN governments to develop the ASEAN SME Policy Index. Following the pilot edition in 2014, the OECD currently collaborates with National Coordinators in ten countries in order to develop a new updated publication in 2018, which will be used as a benchmarking tool to assess progress on the application of the ASEAN Strategic Action Plan for SME Development (SAPSMED 2016-2025). It will provide a set of country specific recommendations in 25 areas related to SME policy and identify the obstacles that SMEs face when trying to participate in global value chains and enter new markets. It will also propose policies that could be developed to help SMEs overcome these barriers. www.oecd.org/cfe/smes www.oecd.org/cfe

J OECD RPN Meeting in Brunei Darussalam in November 2016. Left to right: Hoa Cuong NGUYEN, Deputy Director General, Ministry of Planning and Investment, Viet Nam; Co-chair of the Regional Policy Network on SME, Lois A. Stevenson, Co-chair of the Regional Policy Network on SME, Alejandro Gonzalez Hernandez, Chair of OECD Working Party on SMEs and Entrepreneurship (WPSMEE), Alexander Böhmer, Head of OECD Southeast Asia Division, OECD. 54 . ACTIVE WITH SOUTHEAST ASIA

SOCIAL DEVELOPMENT

Promoting effective consumer policy More than ever, active and empowered consumers are playing a role in driving innovation, productivity and competition. With an expected doubling of the number of ASEAN households that are part of the “consuming class” over the next 15 years, positioning consumers to better deal with global markets and technological change is a key challenge for Southeast Asian economies. The OECD helps governments design effective consumer policies to support the development of efficient, transparent and fair global markets for consumers. A 2010 Consumer Policy Toolkit has been taken up by both Member and Partner governments to address specific consumer issues, and the lessons learned have been codified in the 2014 OECD Council Recommendation on Consumer Policy Decision Making. In the field of e-commerce, the 2016 update of the OECD Guidelines for Consumer Protection in the Context of Electronic Commerce paid particular attention to issues concerning mobile and online payments, digital content products, online product safety, and participative e-commerce. This is of strong relevance to Southeast Asian economies, particularly given forecasts suggesting the Asia and Oceania region will experience the fastest growth in business-to-consumer (B2C) e-commerce through 2018.

Complementing this work, the OECD’s Global Recalls online platform launched in 2012, continues to assist stakeholders in improving their awareness about product recalls worldwide, and thereby, enhances co-operation on product safety enforcement. Enhancing engagement with non-Members is of keen interest to the OECD Committee on Consumer Policy. Closer contact with Southeast Asian countries has been established through participation in the Asia Consumer Policy Forum organised by Korea, as well as in the ASEAN’s first and second international consumer protection conferences, held respectively in 2014 in Hanoi, and in 2015 in Bangkok. Both the OECD’s revised e-commerce Recommendation and Global Recalls web portal were discussed at a joint OECD/ ASEAN workshop on e-commerce held in Cambodia in May 2016. At the meeting, ASEAN members expressed interest in contributing to the portal and to further exchanges with the OECD on key consumer protection issues in e-commerce that may be taken into account in the development and implementation of the ASEAN’s e-commerce work plan. www.oecd.org/sti/consumer/ www.oecd.org/sti/consumer/consumer-product-safety.htm



Fostering skills through education and training Investment in education and training helps drive economic growth, alleviate poverty and enhance social cohesion. As Southeast Asia moves towards greater regional integration, a strong skills base is needed for countries to remain competitive and achieve sustainable growth.

The Teaching and Learning International Survey (TALIS) examines working conditions and attitudes of teachers and school leaders in participating countries in order to inform policies for better teaching. Singapore and Viet Nam will participate in the 2018 TALIS.

The Southeast Asian (SEA) region has increased participation in the OECD’s triennial Programme for International Student Assessment (PISA). In 2018, seven SEA countries will participate: Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam. Cambodia and Myanmar will participate in the 2021 edition of PISA, bringing the total of ASEAN representation in PISA to nine out of ten countries.

Singapore and Indonesia (Jakarta) participated in the second round (2012-2016) of the OECD’s Survey of Adult Skills (PIAAC), which measures foundational skills (literacy, numeracy, and problem solving) in the adult population.

Building on the PISA experience, Cambodia is participating in PISA for Development, which adapts the PISA survey to the middle- and low-income country context, thereby increasing its relevance and providing opportunities for peer-to-peer learning.


Viet Nam and Singapore have been involved in the Future of Education & Skills: The Education 2030 Framework –a new initiative that helps countries to design and develop curricula that meet the needs of the 21st century. Senior officials from the education and labour ministries of ASEAN countries are active in the OECD Education and Skills

Regional Programme

The Regional Policy Network for Education and Skills helps strengthen knowledge sharing networks and improve educational quality and skills.

Network, which aims to foster knowledge-exchange in support of national growth and regional integration. All ten ASEAN countries were represented at the last meeting of the SEARPN on Education and Skills, which was hosted by the Republic of the Philippines’ Department of Labour and Employment (DOLE) and took place in October 2016. The Philippines has participated in the OECD Reviews on Local Job Creation, which will be published in 2017. The report looks at the implementation of employment and skills programmes across three cities and provides comparative analysis on how the regional and local level government can contribute to more and better quality jobs. In 2017, a working paper will be published on Engaging Employers in Skills Development and Utilisation at the Local Level, which looks at best practices in aligning training activities with the demands of the labour market.

In 2015, a system-wide review was completed for Indonesia and a joint OECD-UNESCO review on education quality in Thailand was released in 2016. A commentary skills report for Viet Nam was also completed as part of the series OECD Reviews of Vocational Education and Training (VET). The next meeting of the SEA Regional Policy Network on Education and Skills will be hosted by the Vietnamese Ministry of Labour, Invalids, and Social Affairs (MOLISA) and will take place in September 2017. The OECD encourages countries to continue their participation in OECD international education surveys to build a stronger evidence base for effective teaching, learning and skills. This will also allow governments to benchmark their progress against other countries in the region and around the world. To maximise the benefit of participating in these surveys, countries may wish to undertake tailored reviews of national education policies or organise policy dialogues to discuss the results of PISA and other surveys at the national or regional level. Southeast Asian countries may also wish to explore the regional and local dimension of employment and skills policies through the OECD Reviews on Local Job Creation. In order to develop and design new curricula adapted to 21st century needs, SEA countries are invited to collaborate with the Future of Education & Skills: The Education 2030 Framework.


www.oecd.org/cfe/leed/employmentesssa.htm www.oecd.org/publications/education-in-indonesia9789264230750-en.htm www.oecd.org/fr/publications/education-in-thailand9789264259119-en.htm


SOCIAL DEVELOPMENT

OECD Southeast Asia

Managing international migration The OECD supports the efforts of Southeast Asia countries in the better management of labour migration by providing up-to-date information on 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 508,000 citizens of Southeast Asian countries migrated to an OECD country in 2015, accounting for 7.4% of total migration flows to the OECD area. Furthermore, in 2015, 6% of international students in OECD countries originated from Southeast Asia. Since 2011, the OECD, the Asian Development Bank Institute (ADBI) and ILO have jointly organised an Annual Roundtable on Labour Migration which brings together policymakers from 17 Asian countries and delegates from OECD countries. This constitutes a platform for exchanging experiences and ideas regarding the management of labour migration in Asia and fosters a better understanding of the dynamics and challenges of international migration between OECD and Southeast Asian

countries, as well as within the region. In 2016, the Roundtable was held in Tokyo and focused on Safeguarding Labour Migrants from Home to Workplace. In 2017, the meeting was organised in Manila at the ADBI headquarters and concentrated on Finance and Technology to Increase the Positive Impact of Migration on Home Countries. The latest joint OECD, Asian Development Bank Institute and ILO report, Safeguarding the Rights of Asian Migrant Workers from Home to the Workplace, was published in 2017. In 2015, the OECD also partnered with the Agence Française de Développement (AFD) to produce the second edition of Connecting with Emigrants: A Global Profile of Diasporas, which featured detailed information on emigrant populations originating from Southeast Asia that are currently living in other countries in the region or the rest of the world. www.oecd.org/migration



INDUSTRY AND INNOVATION INDUSTRY AND INNOVATION . 59

Building a knowledge economy Innovation provides the foundation for new businesses, new jobs and productivity growth, making it an important driver of economic growth and development. The OECD has been engaged with SEA economies on these issues, offering evidence-based policy advice on the contribution of science, technology and innovation to the well-being and economic growth in the region. Innovation plays a pivotal role in economic development. The OECD has been engaged with SEA economies to offer advice on innovation policy, through in-depth reviews of innovation policy (IP) as well as work on national intellectual property systems. Most recently, the OECD Review of Innovation Policy for Malaysia provided a comprehensive assessment of Malaysia’s national innovation system, offering concrete recommendations on policies to boost businesses’ innovation capabilities, enhance higher education institutions’ contributions to research and innovation, as well as modernise public research institutions. Earlier reviews included an in-depth analysis of innovation policy in Viet Nam, as well as a regional review of six Southeast Asian economies. The OECD has also developed a framework that discusses how IP systems can best serve development as

well as country reviews of Indonesia and Malaysia to provide specific policy recommendations for the IP systems of these countries. In addition to this work, the 2016 edition of the OECD’s flagship publication OECD Science, Technology and Innovation Outlook, has dedicated country profiles for Indonesia, Malaysia and Thailand. This report sets out the latest policy trends in participating countries and benchmarks them against peers in the areas of science, technology and innovation. The OECD project on Innovation for Inclusive Growth, which aims to get a better understanding of how to make innovation policy more inclusive, and to explore policy solutions to support the reconciliation of innovation with inclusive development agendas, also draws in several emerging economies, including Indonesia. Southeast Asian economies are ever more engaged in global innovation systems and their engagement in OECD work brings many mutually-beneficial insights into good practice policies for seizing opportunities from science, technology and innovation. The adherence of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Thailand and Viet Nam to the OECD Daejeon Declaration on STI Policies for the



Regional Programme

The OECD has developed an Innovation initiative which serves as a platform to discuss and exchange experiences among Southeast Asian and OECD countries on policies for innovation.

Global and Digital Age in 2015 was a clear sign of the shared interest in this critical policy area The OECD’s co-operation with SEA countries on these themes will intensify in the near future, including through the OECD Project for ASEAN SMEs (COPAS), which will look, inter alia, at the importance of building a knowledge economy to foster a favourable ecosystem for enhancing SMEs competitiveness. https://www.oecd.org/sti/outlook/e-outlook www.oecd.org/sti/inno/knowledge-and-innovation-for-inclusivedevelopment.htm http://oe.cd/ip-studies


INDUSTRY AND INNOVATION . 61

INDUSTRTY & INNOVATION

OECD Southeast Asia

Developing first-class shipbuilding and steelmaking capacity Economies in Southeast Asia are experiencing rapid growth in their shipbuilding and steel industries, while globally these sectors are suffering from significant overcapacity and structural adjustment challenges. The OECD is working with countries in the region to address these challenges. Production and investment are booming in the shipbuilding industries of Indonesia, Malaysia, the Philippines and Viet Nam, while local steel producers in the Southeast Asian region are investing heavily in new steelmaking capacity in anticipation of continued demand growth over the long term. The OECD Council Working Party on Shipbuilding (WP6) and the OECD Steel Committee work to build transparency in the market and policy developments affecting the two sectors, to promote improved policy responses to emerging challenges.

Participation by Southeast Asian countries is increasing, with Malaysia, the Philippines and Viet Nam taking part in WP6 meetings and sharing information on market and policy developments in their domestic shipbuilding industries. The OECD Steel Committee benefits from Malaysia’s role as Participant in the Committee, and, in light of the growth of steel activity in the region, has extended invitations to Southeast Asian economies, such as: Indonesia, the Philippines and Thailand to participate in some of the meetings. For decades, the OECD has provided a unique platform for governments to discuss global challenges in the shipbuilding and steel industries and to consider political solutions to those issues. In view of the growing importance of Southeast Asian economies in global ship and steel production, the WP6 and the Steel Committee are working to involve these economies into their policy discussions. Southeast Asian economies bring important perspectives about their sectors, and can benefit from the experiences and best practices of OECD Members. The OECD will keep enhancing its engagement with Southeast Asian economies on shipbuilding and steel issues, including via the OECD Steel Market Developments paper series and the OECD Steelmaking Capacity Portal, which provide access to a range of analyses and data on the global steel market and capacity developments, including steel industry trends in Indonesia, Malaysia, Thailand, Viet Nam and other Southeast Asian economies. www.oecd.org/sti/ind/shipbuilding.htm www.oecd.org/sti/ind/steel.htm


INDUSTRTY & INNOVATION

Enhancing chemical safety The OECD supports countries’ efforts to protect their citizens’ health and the environment by improving chemical safety, making chemical control policies more transparent and efficient, and preventing unnecessary distortions in the trade of chemicals and chemical products. Several Southeast Asian countries are involved in the OECD system of Mutual Acceptance of Data (MAD) in the Assessment of Chemicals: Malaysia and Singapore, as full adherents, and Thailand as a provisional adherent. In addition, Thailand contributes actively to the OECD’s programme on nanomaterials, while Indonesia, the Philippines, and Viet Nam take an active role in the OECD’s work on the harmonisation of regulatory oversight in biotechnology and food safety. MAD is a multilateral agreement that allows the results of nonclinical safety tests on chemicals and chemical products to be shared across adhering countries. Full adherents to this system are ensured that safety data developed in their laboratories

following OECD standards is acceptable for registration or notification of chemicals and chemical products in other MAD adhering countries. This reduces potential barriers to trade in chemical products between countries. In addition, this may have created new expansion and employment opportunities for facilities which test chemical substances. Through their participation in the OECD’s work on biotechnology and nanotechnology, countries are able to reduce health- and environment-related risks to these emerging technologies. The OECD will continue to support Thailand in the process of becoming a full adherent to the OECD MAD system. The OECD also seeks to deepen its co-operation with other Southeast Asian countries on nanomaterials and biotechnology safety assessments through their active enrolment in developing risk/ safety assessment methods, such as for genetically modified crops grown in tropical climates. www.oecd.org/ehs/mad

INDUSTRY INDUSTRYAND ANDINNOVATION INNOVATION . 63

Boosting tourism

Tourism is an important economic driver in Southeast Asia. Information on trends and active tourism policies are essential for the region to grow their tourism industry; the OECD is working with ASEAN countries to support this need. For many countries in Southeast Asia, tourism plays an important role in promoting economic growth. The pace of tourism growth in many emerging economies is outstripping growth in advanced economies, led primarily by the Asia Pacific region. In the Philippines, for example, tourism contributed 8.2% to GDP in 2015, a rise of 14.8% compared to the previous year, and accounted for approximately 12.7% of total employment and 8.2% of total exports.

strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action. The OECD’s flagship tourism publication OECD Tourism Trends and Policies 2016 (with a forthcoming 2018 edition) analyses tourism data from 50 countries, including all OECD Members and emerging tourism economies such as the Philippines. www.oecd.org/industry/tourism

The Philippines has been actively engaged in the OECD Tourism Committee activities since 2012. The OECD is also strengthening its ties with the region through its engagement with the APEC Tourism Working Group. Active tourism policies are required in Southeast Asia to leverage the industry’s growth and development potential in an inclusive and sustainable manner. The OECD Tourism Committee is a unique forum for multilateral co-operation, which aims to



ENVIRONMENT AND ENERGY ENVIRONMENT AND ENERGY . 65

Towards a cleaner and healthier environment As one of the most dynamic areas in the global economy, Southeast Asia has seen remarkable development over the past few decades. The depletion of natural resources resulting from this rapid economic development, as well as pollution and climate change in a general sense, are posing serious environmental challenges for the region. The OECD has recently strengthened its co-operation with Indonesia on environment-related projects. In 2015, the OECD released a case study on the environmental, economic and distributional impacts of energy subsidy reforms in Indonesia entitled Modelling the Distributional Impacts of Energy Subsidy Reforms: an illustration with Indonesia. Discussions are underway with the Indonesian government to carry out a Green Growth Policy Review of Indonesia over the next two years. In addition, the OECD helps countries to design environmental policies that are both economically efficient and environmentally effective. The OECD Environment Policy Committee (EPOC) oversees work on resource management, climate change, policy tools and evaluation, environment and development, as well as country reviews. Indonesia has


been invited to EPOC’s meetings since 2008, and Indonesian policymakers and OECD experts have had the opportunity to benefit mutually from each other’s policy expertise. Cooperation with the SEA region in a broader sense has been achieved through the OECD Global Forum on Environment (GFENV), where several Southeast Asian countries have shared their experiences and learned from similar environmental challenges faced by developed and developing countries alike. A GFENV event focusing on the transition towards the circular economy is planned for 2018 and will involve several SEA countries. The Organisation continues to strengthen its ties with Indonesia and other countries of the SEA region. Under the new OECD country programme, Thailand is invited to participate in the work of EPOC and to adhere to OECD instruments. Furthermore, the OECD is continuing its efforts to extend the coverage of the OECD Database on Policy Instruments for the Environment (PINE), to countries in the SEA region. www.oecd.org/environment www.oecd.org/env/policies/database

ENVIRONMENT & ENERGY

Conservation and sustainable use of biodiversity and ecosystems Biodiversity is fundamental to sustaining life, providing critical ecosystems, such as nutrient cycling and climate regulation. These services are essential to support human well-being and economic growth. Yet, despite its significance, biodiversity is being lost at an accelerating rate in parts of the Southeast Asian region as the countries have developed. The OECD is working with governments in Southeast Asia to slow this phenomenon. Ongoing work on Biodiversity and Development: Mainstreaming and Managing for Results examines lessons learned and good practice insights on mainstreaming biodiversity across a range of predominantly megadiverse countries, including Southeast Asian countries: Myanmar, the Philippines and Viet Nam. Other work, such as OECD (2016) on Biodiversity Offsets: Effective Design and Implementation, draws on experience from more than 40 offset programmes worldwide to derive lessons on how they can be more effectively designed. As biodiversity loss is a global environmental challenge, the inclusion of Southeast Asian countries in OECD biodiversityrelated analysis increases the relevance of the work beyond OECD countries. Southeast Asian countries, many of which are classified as megadiverse, benefit from OECD

policy analysis, which 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. In early 2018, the OECD will hold a meeting of the Global Forum on Environment, focused on Mainstreaming Biodiversity into Development, in one of the countries of the Southeast Asian region. The Forum aims to take stock and share good practice insights on how to more effectively mainstream biodiversity and natural capital into development objectives and key sectors, including: agriculture, forestry and fisheries. The OECD and the Ministry of Finance of Indonesia (Fiscal Policy Agency) held an expert seminar on 4-5 November 2015 in Bogor, Indonesia. The event brought together representatives from the ASEAN line ministries, research organisations and other key international organisations to share their knowledge and expertise on the topic. This event was supported by the OECD Knowledge Sharing Alliance. www.oecd.org/env/biodiversity

L Southeast Asia Expert Seminar: Aligning Policies for the Transition to a Low-Carbon Economy – Reconciling Environmental, Social and Economic Objectives. ENVIRONMENT AND ENERGY . 67

Combating climate change Certain Southeast Asian countries face the combined challenge of securing stable economic growth whilst reducing greenhouse gas emissions and lowering their vulnerability to the impacts of climate change. For the UNFCCC COP21, the OECD released a report on Climate Change Mitigation: Policies and Progress, which reviews trends and progress on climate change mitigation policies in OECD countries and partner economies, including Indonesia. The OECD has produced policy guidance on a wide variety of climate change-related subjects of direct relevance to Southeast Asian countries, including Policy Guidance for Investment in Clean Energy Infrastructure, Mobilising Private Investment in Sustainable Transport: The Case of Land-based Passenger Transport Infrastructure and, more recently, the 2017 publication on Financial Protection and Climate Change Adaptation. Many Southeast Asian countries, including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam have participated in the Global Forum on Environment events and climate change related seminars.

The OECD climate change work continues to focus on how to move countries to a low-carbon and climate resilient pathway, and how to improve the effectiveness of the global climate regime. The countries of the SEA region have also benefitted from this work, through analytical inputs provided by the OECD-IEA Climate Change Exchange Group (CCXG), a body which supports international climate change negotiations. To help tackle the challenge of financing the transition to a green, low-emission and climate-resilient economy, the OECD established the OECD Centre on Green Finance and Investment in 2016. Its launch was announced at the 3rd OECD Green Investment and Financing Forum (GIFF), which was held in Tokyo with a focus on Asia and was attended by many senior stakeholders from the SEA region. The Centre focuses on the development of effective policies, institutions and instruments for green finance and investment. The Organisation, along with the IEA, encourages Southeast Asian countries’ participation in the meetings of the Global Forum on Environment, organised as part of the Climate Change Expert Group (CCXG) of the United Nations’ Framework Convention. Countries of the SEA region can also engage with and benefit from the work carried out by the OECD Centre on Green Finance and Investment. The 4th GIFF will be organised in Paris on 10-11 October 2017. www.oecd.org/env/cc www.oecd.org/env/cc/adaptation.htm 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-energyinfrastructure.htm



Improving water management Better water management is necessary in Southeast Asia to ensure that there is enough good quality water to meet the needs of all users. The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to green growth and better health. The OECD is continuing to provide guidance to Southeast Asian governments 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 work on water is currently focused on managing water for growth. Topics include: protecting against water-related risks, allocating water where it is scarce, the benefit of investment in water infrastructures, as well as financing water-related investments and water governance. In the coming years, OECD work will address current and emerging policy priorities around these issues, covering urban water management (investment and finance; stakeholder engagement), water for agriculture (managing droughts, floods, and groundwater for agriculture), and the development of indicators of good water governance through the OECD Water Governance Initiative. In a related field, the OECD investigates Human Impacts on the Nitrogen and Phosphorous Cycle.

The OECD encourages countries in Southeast Asia to adhere to the OECD Recommendation on Water, which was adopted by the OECD Council in December 2016, and is an instrument that can be used to inspire water policy reforms. Adherent countries will have access to an implementation toolkit that can facilitate the implementation of the Recommendation. The OECD is keen to engage further with adhering countries, to facilitate implementation of ambitious water policy agendas. www.oecd.org/water


ENVIRONMENT AND ENERGY . 69

Strengthening global partnerships on clean energy and energy efficiency With 600 million people and dynamic economic growth, Southeast Asia is and will continue to be crucial to the global achievement of objectives relating to clean energy development, sustainable energy use and energy security. Through the Associate Membership of Indonesia, Thailand and Singapore in the IEA, and unique engagement with regional multilateral fora, the IEA actively works with Southeast Asian partners to assist in these processes. In clean energy deployment, the International Energy Agency (IEA) provides analytical support and policy advice to governments on renewables integration, investment financing and pricing, and clean technology options. Recent pieces of analysis include those on reducing emissions from generation and energy pricing reform, while high-level engagement takes place through fora such as the Bali Clean Energy Forum and the IEA-ASEAN Ministers of Energy Meeting. The IEA’s energy efficiency collaboration is led by the energy efficiency in emerging economies (E4) programme, which assists with data collection, indicators and modelling on energy efficiency and energy efficiency policy design, implementation and evaluation in countries such as Indonesia and Thailand. The IEA is also rolling out integrated approaches to renewables and energy efficiency promotion, including through pilot programmes in Sulawesi, Indonesia. In addition to work at the national level, the IEA leads the analytical inputs into the ASEAN process to enhance power sector integration and regional harmonisation in energy efficiency policy while assisting energy policy planning through the 2017 Southeast Asia Energy Outlook. The IEA’s engagement with Southeast Asia places it at the centre of national and regional debates on energy sector development, sustainable growth and energy security, each of which have systemic implications for global dynamics in these areas. The Association framework allows the IEA unparalleled access to policy development processes and decision-makers in partner countries, and will enhance co-operation on energy 70 . ACTIVE WITH SOUTHEAST ASIA

security, data and statistics, energy policy studies and beyond. Association status is expected to serve as a bridge and platform for wider-ranging and deeper co-operation and collaboration between IEA- member and Association countries to strengthen institutional ties. The IEA’s co-operation with partners in Southeast Asia in the future will build on a strong foundation of collaboration, with bilateral work programmes with Indonesia, Thailand and Singapore to be finalised in late 2017. With its world-leading technical capacity, the IEA is well-placed to assist countries with the important parallel processes of energy sector development and the greening of energy systems. Capacity building, for example in the field of developing energy data and statistics, will continue to play an important role in the Agency’s interaction with SEA governments. At the same time, the IEA will continue to promote innovative solutions to energy policy challenges in areas such as digitalisation and renewables integration. www.iea.org/topics/ cleanenergytechnologies www.iea.org/topics/ energyefficiency www.iea.org/topics/ energyefficiency/e4



The OECD Development Centre’s Emerging Markets Network (EMnet), is an initiative dedicated to the private sector. The Network brings together government officials, multinational corporation executives and OECD experts to discuss and analyse economic trends, the business environment and green investment strategies in Asia and other emerging markets. EMnet held its annual business meeting on Asia on Energy Challenges and Business Opportunities in Paris on 14 March 2017. The event provided investors with the opportunity to discuss regional energy trends and their impact on business operations in Asia in an informal setting. Discussions highlighted the views of the private sector on current energy policies in Southeast Asia and identified strategies to encourage more private energy investment to the region. EMnet member DSB Bank (Singapore) took part in these discussions. EMnet also hosts a yearly Thematic Working Group focusing on green investment in emerging markets. In 2017, the business implications of the Paris Agreement on Climate Change and policies to unlock energy investment were discussed. Discussions included specific challenges and opportunities of the energy sector for Southeast Asia. EMnet publishes a yearly report Business Insights on Emerging Markets, with a dedicated Policy Note on Asia and a Policy Note on Green Investment. www.oecd.org/dev/oecdemnet.htm www.oecd.org/dev/development-philanthropy/Green_Economy_ note_final_WEB.pdf SCAN TO READ THE REPORT

ENVIRONMENT AND ENERGY . 71


ANNEXES

INSTRUMENTS: FACILITATING INTERNATIONAL CO-ORDINATION 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 the 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. Alternatively, they can be standards and models, for example the Standards of Transparency and Exchange of Information for Tax Purposes, or Recommendations, for 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 legal instruments is an important priority for the Organisation. Currently, a concerted effort is being made to further integrate the perspectives of Southeast Asian countries into the OECD’s standard-setting activities. In particular, the participation of Southeast Asian countries and other strategically important partners in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance.

ANNEXXES

Annexes ADHERENCE TO OECD INSTRUMENTS Paris Declaration on Aid Effectiveness – Cambodia, Indonesia, Lao PDR, Malaysia, Philippines, Thailand, Viet Nam Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals – Malaysia, Singapore, Thailand (provisional) Convention on Mutual Administrative Assistance In Tax Matters – Indonesia, Malaysia (signatory), Philippines (signatory), Singapore Declaration on Automatic Exchange of Information on Tax Matters – Indonesia, Malaysia, Singapore Declaration on Base Erosion Profit Shifting (BEPS) – Indonesia Decision – Recommendation of the Council on Compliance with Principles of Good Laboratory Practice – Malaysia, Singapore, Thailand (provisional) Cancun Declaration on the Digital Economy: Innovation, Growth and Social Prosperity – Indonesia Declaration on the Fight Against Foreign Bribery Towards a New Era of Enforcement – Thailand International Understanding on Maritime Transport Principles – Malaysia, Singapore, Thailand Declaration for the Future of the Internet Economy (Seoul Declaration) – Indonesia Declaration: The Bologna Charter on SME Policies – Indonesia, Philippines, Viet Nam Istanbul Ministerial Declaration on Fostering the Growth of Innovative and Internationally Competitive SMEs – Indonesia, Malaysia, Thailand, Viet Nam Daejeon Declaration on Science, Technology, and Innovation Policies for the Global and Digital Age – Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Thailand, Viet Nam Declaration on Better Policies to Achieve a Productive, Sustainable and Resilient Global Food System – Indonesia, Viet Nam

ANNEXES . 73

Annexes

PARTNERSHIPS IN OECD BODIES AND PROGRAMMES 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, The Philippines, Singapore, Thailand Global Forum Peer Review Group – Indonesia, Malaysia, Singapore

Committee for Scientific and Technological Policy – Indonesia*, Thailand Committee on Statistics and Statistical Policy – Indonesia* Working Party on Financial Statistics – Indonesia* Corporate Governance Committee (main committee only) – Singapore* Working Party on State Ownership and Privatisation Practices – Indonesia*, Philippines*

Associate in:

Public Governance Committee Senior Budget Officials Network – Malaysia*

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) – Indonesia*, Singapore*

Centre for Educational Research and Innovation (CERI) Governing Board – Singapore*

Coal Industry Advisory Board – International Energy Agency (IEA) – Thailand*

Working Party on Innovation and Technology Policy – Malaysia

International Energy Agency (IEA) – Indonesia*, Thailand* Joint Meeting of the Chemicals Committee and the Working Party on Chemicals, Pesticides and Biotechnology (MAD-related bodies) – Malaysia, Singapore Freedom of Investment Project – Malaysia*, Indonesia Committee on Fiscal Affairs – Inclusive Framework on Base Erosion and Profit Shifting (BEPS) – Brunei Darussalam*, Cambodia*, Indonesia, Lao PDR*, Malaysia*, Myanmar*, Philippines*, Singapore, Thailand, Viet Nam* Corporate Governance Committee Discussions Concerning the Recommendation of the Council on Principles of Corporate Governance – Indonesia*, Singapore* Programme for International Student Assessment (PISA) Governing Board – Indonesia*

Steel Committee – Malaysia Business and Industry Advisory Committee (BIAC) – Indonesia* Working Group on Good Laboratory Practice – Thailand Working Group of National Co-ordinators of the Test Guideline Programme – Thailand Working Party on SMEs and Entrepreneurship – Indonesia*, Thailand Committee on Digital Economic Policy – Indonesia*, Singapore IEA Technology Collaboration Programmes – Malaysia*, Singapore* Joint Meeting of the Chemicals Committee and the Working Party on Chemicals, Pesticides and Biotechnology (non-MAD related bodies)– Malaysia*, Singapore* Tourism Committee – Philippines*

Participant in: Fisheries Committee – Thailand Competition Committee – Indonesia Committee on Fiscal Affairs – Indonesia, Malaysia, Singapore Healthcare Quality Indicators Expert Group – Singapore 74 . ACTIVE WITH SOUTHEAST ASIA

*Acceptance pending

ANNEXXES

Annexes

PARTICIPATION IN OECD ASIAN NETWORKS

DIALOGUE AND DATA

OECD-Asian Roundtable on Corporate Governance – Indonesia, Malaysia, Philippines, Singapore, Thailand, Viet Nam

The OECD discusses its data and analyses with stakeholders from Southeast Asia through a range of channels.

ADB/OECD Anti-Corruption Initiative for the Asia-Pacific – Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand, Viet Nam

The Trade Union Advisory Committee to the OECD (TUAC) and the Business and Industry Advisory Committee to the OECD (BIAC) bring their perspectives to this policy dialogue. In particular, BIAC cooperates with Southeast Asian business organisations to contribute knowledge and guidance to the OECD Southeast Asia Regional Programme. The TUAC works in co-operation with the International Trade Union Confederation (ITUC) to provide international support for Asian unions and provides comment on the evolving industrial relations situation in the region. In particular, it has been involved in the development of a series of training workshops that were held on implementation of the OECD Guidelines for Multinational Enterprises in SEA.

Network of Senior Budget Officials for Asia – Cambodia, Indonesia, Philippines, 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) – Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, 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

www.tuac.org www.biac.org www.oecd.org /forum

OECD-ADBI Roundtable on Capital Market and Financial Reform in Asia Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam

News and information about OECD work with Southeast Asia is available at www.oecd.org/southeast-asia

Discover reports, data and analysis about Southeast Asia and the Caribbean alongside the world’s leading economies on OECD iLibrary, the global knowledge base – www.oecd-ilibrary.org ANNEXES . 75


The OECD: A Global Policy Network

EURASIA ACTIVE WITH

November 2016

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, Latvia, 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.

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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.

Global Relations Secretariat OECD, 2 rue André Pascal 75775 Paris Cedex 16 France www.oecd.org/globalrelations [email protected]

August 2017