ACTIVEWITH - OECD

64
SOUTHEAST ASIA ACTIVE WITH

Transcript of ACTIVEWITH - OECD

SOUTHEASTASIA

ACTIVE WITH

Southeast Asia and the OECD A mutually beneficial partnership

Southeast Asia is one of the fastest-growing regions in the world with vast endowments of natural resources a diversified economy an expanding middle class and a young and dynamic population The creation of an integrated ASEAN economic community beginning in 2015 will generate even more opportunities for growth and employment across the region However sustaining this growth and closing the development gaps that exist within and among Southeast Asian economies will require reforms in critical areas such as investment education infrastructure and tax Strong institutional capacity will be needed to make these reforms happen

The OECD has a long history of work with countries of the region and has defined Southeast Asia as a region of strategic priority We are pleased that this engagement has been further strengthened by the launching of the OECD Southeast Asia Regional Programme at the 2014 OECD Ministerial Council Meeting

This new Programme will help enhance OECD engagement with Southeast Asia and foster the exchange of good practices and mutual learning among policy makers in the region and OECD countries It will raise the political relationship to a more strategic whole-of-government level The Programme will help support domestic priorities and regional integration efforts by informing and supporting policy reforms

The OECD looks forward to a closer partnership with the countries of Southeast Asia We believe that this collaboration will not only help strengthen regional growth and development prospects but also help us address joint global challenges where we can all gain from sharing perspectives The partnership between Southeast Asia and the OECD will help us deliver to all our citizens better policies for better lives

ANGEL GURRIacuteA OECD Secretary-General

CONTENTS 1

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

Seeking best practices of social and health policies 36

Tackling gender inequality 38

Supporting SME development and entrepreneurship 40

Fostering skills through education and training 42

Promoting effective consumer policy 44

Managing international migration 45

INDUSTRY AND INNOVATION 46

Building a knowledge economy 47

Developing first-class shipbuilding and steel capacities 48

Enhancing chemical safety 49

Boosting tourism 51

ENVIRONMENT AND ENERGY 52

Towards a cleaner and healthier environment 53

Combating climate change 54

Improving water management 55

Ensuring reliable affordable and clean energy 56

ANNEXES

Adherence to OECD instruments 57

Participation in OECD bodies and OECD Asian networks 58

THE OECD AND SOUTHEAST ASIA 2

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 8

Maintaining economic resilience 9

Supporting green growth initiatives 11

Promoting regional development and urbanisation 12

Increasing agricultural productivity and food security 13

Promoting development and effective

co-operation worldwide 14

Better data for better policies 15

SMOOTH FUNCTIONING OF MARKETS 17

Enhancing co-operation on international investment 18

Promoting trade and upgrading in global value chains 19

Regulating export credits 20

Promoting sound competition 21

Developing a robust financial system 22

Strengthening connectivity capital investment

and public-private partnerships (PPPs) 23

Improving financial education 24

PUBLIC AND CORPORATE GOVERNANCE 25

Regulatory reform and administrative simplification 26

Budgeting and public expenditures 27

Public procurement 28

Increasing performance in the public sector 29

Disseminating open government 30

Enhancing public sector integrity 31

Fighting transnational corruption 32

Improving tax transparency and compliance 33

Raising the bar on corporate governance 34

CON

TENTS

Contents

THE OECD AND THE SOUTHEAST

ASIA REGIONAL PROGRAMME

2 ACTIVE WITH SOUTHEAST ASIA

The OECD and Southeast Asia have a longstanding and

mutually beneficial relationship that has steadily developed

since the late 1990s In 2007 OECD Ministers identified

Southeast Asia as a region of strategic priority for the

Organisation and Indonesia became a Key Partner along

with Brazil China India and South Africa

In recent years Indonesia and the other Southeast Asian

countries (Brunei Darussalam Cambodia Lao PDR

Malaysia Myanmar the Philippines Singapore Thailand

and Viet Nam) have intensified their participation in

OECD committees and working groups peer reviews and

studies and have increasingly contributed to statistical

data collection and international benchmarking exercises

such as the Programme for International Student Assessment

(PISA) Several Southeast Asian countries have adhered

to international standards and norms developed by the

OECD in such areas as tax chemicals and development

co-operation In order to further strengthen the OECDrsquos

engagement with the region in 2014 the OECD launched a

comprehensive Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 3

L High-level representatives from ASEAN

and OECD countries at the opening of the

OECD Southeast Asia Regional Forum

hosted by the Government of Indonesia in

Bali on 25-26 March 2014

THE O

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4 ACTIVE WITH SOUTHEAST ASIA

To enhance and broaden the OECDrsquos engagement with the region at the 2013 Ministerial Council Meeting (MCM) OECD Ministers called for the establishment of a comprehensive Southeast Asia Regional Programme The Programme which was officially launched at the 2014 MCM aims to strengthen engagement with the region in support of the regional integration process and national reform priorities The Programme is created as ASEAN economies strive to build the ASEAN Economic Community (AEC) by the end of 2015

The Southeast Asia Regional Programme will aim to foster the exchange of good practices and mutual learning between policy makers in Southeast Asia and OECD countries bringing perspectives from the region to enrich the policy debate at the OECD The Programme will help bring participating countries closer to OECD standards and practices and facilitate access to the expertise of OECD bodies and adherence to its instruments Building on the substantial existing work with the region an intensive consultation process was launched to shape the Programme including OECD Committees Southeast Asian governments and regional stakeholders

The Programmersquos structure is designed to encourage a systematic exchange of experience to develop common solutions to regional and global challenges It is comprised of thematic Regional Policy Networks which will build on the work programme of substantive OECD and Southeast Asian bodies and dialogue processes The initial areas of focus for the Networks are tax investment education and skills small and medium-sized enterprises regulatory reform and connectivity and public-private partnerships (PPPs) for infrastructure development Further work will be developed in trade innovation and gender Each Regional Policy Network will be composed of policy experts from Southeast Asia and OECD countries who will jointly decide on its work programme

l TAX POLICIES AND ADMINISTRATION The OECD has co-operated with Southeast Asian countries on tax issues since the launch of the OECD-Korea Tax Centre in 1997 In 2013 all Southeast Asian countries were involved as hosts or participants in some of the 22 technical events organised in the region by the Committee on Fiscal Affairs covering international tax issues tax administration and tax policy The Regional Policy Network on Tax policies channelled and expanded on this fruitful co-operation to build up a community of good practices

Connectivity and PPPs

Regulatory Reform

6 Regional Policy Networks

(RPN)Tax

Educationand Skills Investment

SMEs

3 Initiatives

GENDER

INNOVATION

TRADE

ldquoIn order to remain at the forefront of global governance the OECD needs to develop its relations with the rest of the world and especially with its most dynamic regions The Southeast Asian countries which are playing an increasingly key role in the global economy are thereby important partners for the OECD As such we are delighted at the launch of the Southeast Asia Regional Programme during the 2014 MCM which will allow our Organisation to establish the foundations of a powerful and sustainable partnership with this regionrdquo

Pascale Andreani Ambassador of France to the OECD Chair of the External Relations Committee (which oversees the Organisationrsquos overall global relations)

THE OECD AND SOUTHEAST ASIA 5

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l INVESTMENT POLICY AND PROMOTION The OECDrsquos work on investment policy in Southeast Asia is well-established The OECD has been co-operating with the ASEAN Secretariat on Investment Policy Reviews (Viet Nam 2009 Indonesia 2010 Malaysia 2013 and Myanmar Lao PDR the Philippines and a second review of Viet Nam in 2014) Through these country-level reviews officials from the region participate in OECD Committees such as the Investment Committee and the Advisory Group on Investment and Development to engage in peer review and exchange good practices with OECD Delegates The Regional Policy Network will work to strengthen co-operation on investment policies and promotion

l EDUCATION AND SKILLS DEVELOPMENT The Regional Policy Network on Education and Skills will co-ordinate and streamline a host of ongoing activities to help the region benefit from a better qualified workforce Since 2000 the OECD has been evaluating the knowledge and skills of the

worldrsquos 15-year-olds through its Programme for International Student Assessment (PISA) Results of the PISA 2012 survey were published on 3 December 2013 with five Southeast Asian countries participating Indonesia Malaysia Singapore Thailand and Viet Nam

l SMALL AND MEDIUM-SIZED ENTERPRISES (SME) POLICIES The OECD and the ASEAN Secretariat are working together on a comparative assessment of SME policies in the ten ASEAN member countries with the objective of supporting policies aimed at promoting enterprise development in the ASEAN region and enhancing dialogue and co-operation on SME policies In March 2014 the results of the first OECD-ASEAN SME Policy Index were presented and priorities for future work were discussed The Regional Policy Network on SME Policies will support the design and implementation of SME policies and enterprise development

l REGULATORY REFORM POLICIES The OECD has been engaged in issues of regulatory reform in Southeast Asia for over a decade In 2000 the OECD and APEC signed an agreement to co-operate in order to improve regulatory practices in the region resulting in the 2005 APEC-OECD Integrated Checklist on Regulatory Reform Bilateral Policy Reviews were conducted for Viet Nam (Review

ldquoSoutheast Asia has become a growth engine of the world economy and a strategic region in the global value chain The OECD has expertise which can further promote prosperity and stability in the region by for example strengthening connectivity and innovation The resulting dynamism of the region further contributes to the OECDrsquos work in enhancing its global relevance Japan as the 2014 MCM Chair is honoured to be engaged in launching the OECDrsquos Southeast Asia Regional Programme and continues to support the relationship with the region based on mutual Liking Listening and Learning at a time when ASEAN is reaching for integration in

2015rdquo Kazuo Kodami Ambassador of Japan to the OECD Chair of the 2014 Ministerial Council Meeting

ldquoASEAN will benefit from learning the best practices of economic integration as experienced by other regions In that regard co-operation with the OECD with its rich experience and expertise on the issue of economic integration would be highly beneficial for ASEANrsquos own effortrdquo

HE Mr Muhamad Chatib Basri Minister of Finance Republic of Indonesia

ldquoThe OECDrsquos Global Relations Strategy seeks to make the Organisation a more effective and inclusive global policy network in particular through close co-operation with five Key Partners (Brazil China India Indonesia and South Africa) and strengthened engagement with dynamic regions such as Southeast Asia The newly-created OECD Southeast Asia Regional Programme will build on two decades of co-operation and dialogue between OECD and SEA countriesrdquo

Marcos Bonturi OECD Director of Global Relations

ldquoSoutheast Asia is a dynamic region with a vibrant economy enormous potential and a population of about 600 million people It is therefore not surprising that the OECD has identified this region as a region of strategic priority At the 2013 Ministerial Council the Members of OECD further called for the establishment of a comprehensive OECD Southeast Asia Regional Programme

As I could witness myself as the Chair of the Informal Reflection Group on Southeast Asia at the OECD Southeast Asia Forum in Bali on 25 and 26 March 2014 the countries of the region showed great interest in an increased exchange on standards best practices and their implementation The further economic integration of the ASEAN region would be of benefit to the member countries but also to the world economy as a whole

By strengthening its engagement with this important region the OECD will promote policies designed to achieve the highest sustainable economic growth and employment and thus contribute to the development of the world economyrdquo

Dr Hans-Juumlrgen Heimsoeth Ambassador of Germany to the OECDChair of the Informal Reflection Group on Southeast Asia

6 ACTIVE WITH SOUTHEAST ASIA

on Administrative Simplification 2010) and Indonesia (Regulatory Reform 2012) A country-specific project with Malaysia on Good Regulatory Practices was launched in 2012 The OECD will also conduct a Product Market Regulation survey in 2013-2014 with Brunei Darussalam Malaysia Myanmar the Philippines and Thailand The Regional Policy Network on Regulatory Reform Policies will work with regional and OECD partners to improve government capacities for efficient and effective regulations

l CONNECTIVITY AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT Infrastructure investment needs in Southeast Asia can only be met if traditional forms of public investment are supplemented with private financing for example via the use of PPPs The Regional Policy Network for Connectivity will support the regional efforts to establish a well-connected ASEAN Economic Community by 2015 The networkrsquos activities will include diagnostic work tailored advice comparative data collection training and other capacity-building activities relating to PPPs capital investment and regional connectivity

The OECD Southeast Asia Regional Forum co-hosted in March 2014 in Bali by the Indonesian Ministry of Finance brought together over 300 high-level officials and representatives from OECD and Southeast Asia governments regional institutions universities and the private sector to discuss how the Regional Programme can most effectively foster regional competitiveness for sustained growth The event created strong momentum for the Programmersquos official launch at the OECD Ministerial and for its work moving forward to support the regionrsquos ambitious development goals

wwwoecdorgglobalrelationsseaprogrammehtm

OECD Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 7

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

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The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

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10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

wwwoecdorggovregional-policyurbandevelopmenthtmwwwoecdorggovregional-policyoecdworkonruraldevelopmenthtmwwwoecdorgdev

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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22 ACTIVE WITH SOUTHEAST ASIA

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

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PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

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30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

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36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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REPORT

There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

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L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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REPORT

Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Southeast Asia and the OECD A mutually beneficial partnership

Southeast Asia is one of the fastest-growing regions in the world with vast endowments of natural resources a diversified economy an expanding middle class and a young and dynamic population The creation of an integrated ASEAN economic community beginning in 2015 will generate even more opportunities for growth and employment across the region However sustaining this growth and closing the development gaps that exist within and among Southeast Asian economies will require reforms in critical areas such as investment education infrastructure and tax Strong institutional capacity will be needed to make these reforms happen

The OECD has a long history of work with countries of the region and has defined Southeast Asia as a region of strategic priority We are pleased that this engagement has been further strengthened by the launching of the OECD Southeast Asia Regional Programme at the 2014 OECD Ministerial Council Meeting

This new Programme will help enhance OECD engagement with Southeast Asia and foster the exchange of good practices and mutual learning among policy makers in the region and OECD countries It will raise the political relationship to a more strategic whole-of-government level The Programme will help support domestic priorities and regional integration efforts by informing and supporting policy reforms

The OECD looks forward to a closer partnership with the countries of Southeast Asia We believe that this collaboration will not only help strengthen regional growth and development prospects but also help us address joint global challenges where we can all gain from sharing perspectives The partnership between Southeast Asia and the OECD will help us deliver to all our citizens better policies for better lives

ANGEL GURRIacuteA OECD Secretary-General

CONTENTS 1

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

Seeking best practices of social and health policies 36

Tackling gender inequality 38

Supporting SME development and entrepreneurship 40

Fostering skills through education and training 42

Promoting effective consumer policy 44

Managing international migration 45

INDUSTRY AND INNOVATION 46

Building a knowledge economy 47

Developing first-class shipbuilding and steel capacities 48

Enhancing chemical safety 49

Boosting tourism 51

ENVIRONMENT AND ENERGY 52

Towards a cleaner and healthier environment 53

Combating climate change 54

Improving water management 55

Ensuring reliable affordable and clean energy 56

ANNEXES

Adherence to OECD instruments 57

Participation in OECD bodies and OECD Asian networks 58

THE OECD AND SOUTHEAST ASIA 2

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 8

Maintaining economic resilience 9

Supporting green growth initiatives 11

Promoting regional development and urbanisation 12

Increasing agricultural productivity and food security 13

Promoting development and effective

co-operation worldwide 14

Better data for better policies 15

SMOOTH FUNCTIONING OF MARKETS 17

Enhancing co-operation on international investment 18

Promoting trade and upgrading in global value chains 19

Regulating export credits 20

Promoting sound competition 21

Developing a robust financial system 22

Strengthening connectivity capital investment

and public-private partnerships (PPPs) 23

Improving financial education 24

PUBLIC AND CORPORATE GOVERNANCE 25

Regulatory reform and administrative simplification 26

Budgeting and public expenditures 27

Public procurement 28

Increasing performance in the public sector 29

Disseminating open government 30

Enhancing public sector integrity 31

Fighting transnational corruption 32

Improving tax transparency and compliance 33

Raising the bar on corporate governance 34

CON

TENTS

Contents

THE OECD AND THE SOUTHEAST

ASIA REGIONAL PROGRAMME

2 ACTIVE WITH SOUTHEAST ASIA

The OECD and Southeast Asia have a longstanding and

mutually beneficial relationship that has steadily developed

since the late 1990s In 2007 OECD Ministers identified

Southeast Asia as a region of strategic priority for the

Organisation and Indonesia became a Key Partner along

with Brazil China India and South Africa

In recent years Indonesia and the other Southeast Asian

countries (Brunei Darussalam Cambodia Lao PDR

Malaysia Myanmar the Philippines Singapore Thailand

and Viet Nam) have intensified their participation in

OECD committees and working groups peer reviews and

studies and have increasingly contributed to statistical

data collection and international benchmarking exercises

such as the Programme for International Student Assessment

(PISA) Several Southeast Asian countries have adhered

to international standards and norms developed by the

OECD in such areas as tax chemicals and development

co-operation In order to further strengthen the OECDrsquos

engagement with the region in 2014 the OECD launched a

comprehensive Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 3

L High-level representatives from ASEAN

and OECD countries at the opening of the

OECD Southeast Asia Regional Forum

hosted by the Government of Indonesia in

Bali on 25-26 March 2014

THE O

ECD

AN

D SO

UTH

EAST A

SIA

4 ACTIVE WITH SOUTHEAST ASIA

To enhance and broaden the OECDrsquos engagement with the region at the 2013 Ministerial Council Meeting (MCM) OECD Ministers called for the establishment of a comprehensive Southeast Asia Regional Programme The Programme which was officially launched at the 2014 MCM aims to strengthen engagement with the region in support of the regional integration process and national reform priorities The Programme is created as ASEAN economies strive to build the ASEAN Economic Community (AEC) by the end of 2015

The Southeast Asia Regional Programme will aim to foster the exchange of good practices and mutual learning between policy makers in Southeast Asia and OECD countries bringing perspectives from the region to enrich the policy debate at the OECD The Programme will help bring participating countries closer to OECD standards and practices and facilitate access to the expertise of OECD bodies and adherence to its instruments Building on the substantial existing work with the region an intensive consultation process was launched to shape the Programme including OECD Committees Southeast Asian governments and regional stakeholders

The Programmersquos structure is designed to encourage a systematic exchange of experience to develop common solutions to regional and global challenges It is comprised of thematic Regional Policy Networks which will build on the work programme of substantive OECD and Southeast Asian bodies and dialogue processes The initial areas of focus for the Networks are tax investment education and skills small and medium-sized enterprises regulatory reform and connectivity and public-private partnerships (PPPs) for infrastructure development Further work will be developed in trade innovation and gender Each Regional Policy Network will be composed of policy experts from Southeast Asia and OECD countries who will jointly decide on its work programme

l TAX POLICIES AND ADMINISTRATION The OECD has co-operated with Southeast Asian countries on tax issues since the launch of the OECD-Korea Tax Centre in 1997 In 2013 all Southeast Asian countries were involved as hosts or participants in some of the 22 technical events organised in the region by the Committee on Fiscal Affairs covering international tax issues tax administration and tax policy The Regional Policy Network on Tax policies channelled and expanded on this fruitful co-operation to build up a community of good practices

Connectivity and PPPs

Regulatory Reform

6 Regional Policy Networks

(RPN)Tax

Educationand Skills Investment

SMEs

3 Initiatives

GENDER

INNOVATION

TRADE

ldquoIn order to remain at the forefront of global governance the OECD needs to develop its relations with the rest of the world and especially with its most dynamic regions The Southeast Asian countries which are playing an increasingly key role in the global economy are thereby important partners for the OECD As such we are delighted at the launch of the Southeast Asia Regional Programme during the 2014 MCM which will allow our Organisation to establish the foundations of a powerful and sustainable partnership with this regionrdquo

Pascale Andreani Ambassador of France to the OECD Chair of the External Relations Committee (which oversees the Organisationrsquos overall global relations)

THE OECD AND SOUTHEAST ASIA 5

THE O

ECD

AN

D SO

UTH

EAST A

SIA

l INVESTMENT POLICY AND PROMOTION The OECDrsquos work on investment policy in Southeast Asia is well-established The OECD has been co-operating with the ASEAN Secretariat on Investment Policy Reviews (Viet Nam 2009 Indonesia 2010 Malaysia 2013 and Myanmar Lao PDR the Philippines and a second review of Viet Nam in 2014) Through these country-level reviews officials from the region participate in OECD Committees such as the Investment Committee and the Advisory Group on Investment and Development to engage in peer review and exchange good practices with OECD Delegates The Regional Policy Network will work to strengthen co-operation on investment policies and promotion

l EDUCATION AND SKILLS DEVELOPMENT The Regional Policy Network on Education and Skills will co-ordinate and streamline a host of ongoing activities to help the region benefit from a better qualified workforce Since 2000 the OECD has been evaluating the knowledge and skills of the

worldrsquos 15-year-olds through its Programme for International Student Assessment (PISA) Results of the PISA 2012 survey were published on 3 December 2013 with five Southeast Asian countries participating Indonesia Malaysia Singapore Thailand and Viet Nam

l SMALL AND MEDIUM-SIZED ENTERPRISES (SME) POLICIES The OECD and the ASEAN Secretariat are working together on a comparative assessment of SME policies in the ten ASEAN member countries with the objective of supporting policies aimed at promoting enterprise development in the ASEAN region and enhancing dialogue and co-operation on SME policies In March 2014 the results of the first OECD-ASEAN SME Policy Index were presented and priorities for future work were discussed The Regional Policy Network on SME Policies will support the design and implementation of SME policies and enterprise development

l REGULATORY REFORM POLICIES The OECD has been engaged in issues of regulatory reform in Southeast Asia for over a decade In 2000 the OECD and APEC signed an agreement to co-operate in order to improve regulatory practices in the region resulting in the 2005 APEC-OECD Integrated Checklist on Regulatory Reform Bilateral Policy Reviews were conducted for Viet Nam (Review

ldquoSoutheast Asia has become a growth engine of the world economy and a strategic region in the global value chain The OECD has expertise which can further promote prosperity and stability in the region by for example strengthening connectivity and innovation The resulting dynamism of the region further contributes to the OECDrsquos work in enhancing its global relevance Japan as the 2014 MCM Chair is honoured to be engaged in launching the OECDrsquos Southeast Asia Regional Programme and continues to support the relationship with the region based on mutual Liking Listening and Learning at a time when ASEAN is reaching for integration in

2015rdquo Kazuo Kodami Ambassador of Japan to the OECD Chair of the 2014 Ministerial Council Meeting

ldquoASEAN will benefit from learning the best practices of economic integration as experienced by other regions In that regard co-operation with the OECD with its rich experience and expertise on the issue of economic integration would be highly beneficial for ASEANrsquos own effortrdquo

HE Mr Muhamad Chatib Basri Minister of Finance Republic of Indonesia

ldquoThe OECDrsquos Global Relations Strategy seeks to make the Organisation a more effective and inclusive global policy network in particular through close co-operation with five Key Partners (Brazil China India Indonesia and South Africa) and strengthened engagement with dynamic regions such as Southeast Asia The newly-created OECD Southeast Asia Regional Programme will build on two decades of co-operation and dialogue between OECD and SEA countriesrdquo

Marcos Bonturi OECD Director of Global Relations

ldquoSoutheast Asia is a dynamic region with a vibrant economy enormous potential and a population of about 600 million people It is therefore not surprising that the OECD has identified this region as a region of strategic priority At the 2013 Ministerial Council the Members of OECD further called for the establishment of a comprehensive OECD Southeast Asia Regional Programme

As I could witness myself as the Chair of the Informal Reflection Group on Southeast Asia at the OECD Southeast Asia Forum in Bali on 25 and 26 March 2014 the countries of the region showed great interest in an increased exchange on standards best practices and their implementation The further economic integration of the ASEAN region would be of benefit to the member countries but also to the world economy as a whole

By strengthening its engagement with this important region the OECD will promote policies designed to achieve the highest sustainable economic growth and employment and thus contribute to the development of the world economyrdquo

Dr Hans-Juumlrgen Heimsoeth Ambassador of Germany to the OECDChair of the Informal Reflection Group on Southeast Asia

6 ACTIVE WITH SOUTHEAST ASIA

on Administrative Simplification 2010) and Indonesia (Regulatory Reform 2012) A country-specific project with Malaysia on Good Regulatory Practices was launched in 2012 The OECD will also conduct a Product Market Regulation survey in 2013-2014 with Brunei Darussalam Malaysia Myanmar the Philippines and Thailand The Regional Policy Network on Regulatory Reform Policies will work with regional and OECD partners to improve government capacities for efficient and effective regulations

l CONNECTIVITY AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT Infrastructure investment needs in Southeast Asia can only be met if traditional forms of public investment are supplemented with private financing for example via the use of PPPs The Regional Policy Network for Connectivity will support the regional efforts to establish a well-connected ASEAN Economic Community by 2015 The networkrsquos activities will include diagnostic work tailored advice comparative data collection training and other capacity-building activities relating to PPPs capital investment and regional connectivity

The OECD Southeast Asia Regional Forum co-hosted in March 2014 in Bali by the Indonesian Ministry of Finance brought together over 300 high-level officials and representatives from OECD and Southeast Asia governments regional institutions universities and the private sector to discuss how the Regional Programme can most effectively foster regional competitiveness for sustained growth The event created strong momentum for the Programmersquos official launch at the OECD Ministerial and for its work moving forward to support the regionrsquos ambitious development goals

wwwoecdorgglobalrelationsseaprogrammehtm

OECD Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 7

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

SUSTA

INA

BLE G

ROW

TH

The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

wwwoecdorgecowwwoecdorgdevasiapacific

SCAN TO READ THE REPORT

10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

wwwoecdorggreengrowthwwwoecdorggreengrowthasiahtm

SCAN TO READ THE

REPORT

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

wwwoecdorggovregional-policyurbandevelopmenthtmwwwoecdorggovregional-policyoecdworkonruraldevelopmenthtmwwwoecdorgdev

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

SUSTA

INA

BLE G

ROW

TH

SCAN TO READ THE REPORT

Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

SUSTA

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TH

The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

wwwoecdorgstdwwwoecdorgstatistics wwwoecdorgdevasiapacificabcis wwwparis21org

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

wwwoecdorginvestmentwwwoecdorginvestmentseasiahtmwwwoecdorginvestmentcountryreviewshtm

18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

FUN

CTIO

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

FUN

CTIO

NIN

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

22 ACTIVE WITH SOUTHEAST ASIA

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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CTIO

NIN

G M

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

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IAL D

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

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EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

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In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

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USTRTY amp

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

CONTENTS 1

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

Seeking best practices of social and health policies 36

Tackling gender inequality 38

Supporting SME development and entrepreneurship 40

Fostering skills through education and training 42

Promoting effective consumer policy 44

Managing international migration 45

INDUSTRY AND INNOVATION 46

Building a knowledge economy 47

Developing first-class shipbuilding and steel capacities 48

Enhancing chemical safety 49

Boosting tourism 51

ENVIRONMENT AND ENERGY 52

Towards a cleaner and healthier environment 53

Combating climate change 54

Improving water management 55

Ensuring reliable affordable and clean energy 56

ANNEXES

Adherence to OECD instruments 57

Participation in OECD bodies and OECD Asian networks 58

THE OECD AND SOUTHEAST ASIA 2

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 8

Maintaining economic resilience 9

Supporting green growth initiatives 11

Promoting regional development and urbanisation 12

Increasing agricultural productivity and food security 13

Promoting development and effective

co-operation worldwide 14

Better data for better policies 15

SMOOTH FUNCTIONING OF MARKETS 17

Enhancing co-operation on international investment 18

Promoting trade and upgrading in global value chains 19

Regulating export credits 20

Promoting sound competition 21

Developing a robust financial system 22

Strengthening connectivity capital investment

and public-private partnerships (PPPs) 23

Improving financial education 24

PUBLIC AND CORPORATE GOVERNANCE 25

Regulatory reform and administrative simplification 26

Budgeting and public expenditures 27

Public procurement 28

Increasing performance in the public sector 29

Disseminating open government 30

Enhancing public sector integrity 31

Fighting transnational corruption 32

Improving tax transparency and compliance 33

Raising the bar on corporate governance 34

CON

TENTS

Contents

THE OECD AND THE SOUTHEAST

ASIA REGIONAL PROGRAMME

2 ACTIVE WITH SOUTHEAST ASIA

The OECD and Southeast Asia have a longstanding and

mutually beneficial relationship that has steadily developed

since the late 1990s In 2007 OECD Ministers identified

Southeast Asia as a region of strategic priority for the

Organisation and Indonesia became a Key Partner along

with Brazil China India and South Africa

In recent years Indonesia and the other Southeast Asian

countries (Brunei Darussalam Cambodia Lao PDR

Malaysia Myanmar the Philippines Singapore Thailand

and Viet Nam) have intensified their participation in

OECD committees and working groups peer reviews and

studies and have increasingly contributed to statistical

data collection and international benchmarking exercises

such as the Programme for International Student Assessment

(PISA) Several Southeast Asian countries have adhered

to international standards and norms developed by the

OECD in such areas as tax chemicals and development

co-operation In order to further strengthen the OECDrsquos

engagement with the region in 2014 the OECD launched a

comprehensive Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 3

L High-level representatives from ASEAN

and OECD countries at the opening of the

OECD Southeast Asia Regional Forum

hosted by the Government of Indonesia in

Bali on 25-26 March 2014

THE O

ECD

AN

D SO

UTH

EAST A

SIA

4 ACTIVE WITH SOUTHEAST ASIA

To enhance and broaden the OECDrsquos engagement with the region at the 2013 Ministerial Council Meeting (MCM) OECD Ministers called for the establishment of a comprehensive Southeast Asia Regional Programme The Programme which was officially launched at the 2014 MCM aims to strengthen engagement with the region in support of the regional integration process and national reform priorities The Programme is created as ASEAN economies strive to build the ASEAN Economic Community (AEC) by the end of 2015

The Southeast Asia Regional Programme will aim to foster the exchange of good practices and mutual learning between policy makers in Southeast Asia and OECD countries bringing perspectives from the region to enrich the policy debate at the OECD The Programme will help bring participating countries closer to OECD standards and practices and facilitate access to the expertise of OECD bodies and adherence to its instruments Building on the substantial existing work with the region an intensive consultation process was launched to shape the Programme including OECD Committees Southeast Asian governments and regional stakeholders

The Programmersquos structure is designed to encourage a systematic exchange of experience to develop common solutions to regional and global challenges It is comprised of thematic Regional Policy Networks which will build on the work programme of substantive OECD and Southeast Asian bodies and dialogue processes The initial areas of focus for the Networks are tax investment education and skills small and medium-sized enterprises regulatory reform and connectivity and public-private partnerships (PPPs) for infrastructure development Further work will be developed in trade innovation and gender Each Regional Policy Network will be composed of policy experts from Southeast Asia and OECD countries who will jointly decide on its work programme

l TAX POLICIES AND ADMINISTRATION The OECD has co-operated with Southeast Asian countries on tax issues since the launch of the OECD-Korea Tax Centre in 1997 In 2013 all Southeast Asian countries were involved as hosts or participants in some of the 22 technical events organised in the region by the Committee on Fiscal Affairs covering international tax issues tax administration and tax policy The Regional Policy Network on Tax policies channelled and expanded on this fruitful co-operation to build up a community of good practices

Connectivity and PPPs

Regulatory Reform

6 Regional Policy Networks

(RPN)Tax

Educationand Skills Investment

SMEs

3 Initiatives

GENDER

INNOVATION

TRADE

ldquoIn order to remain at the forefront of global governance the OECD needs to develop its relations with the rest of the world and especially with its most dynamic regions The Southeast Asian countries which are playing an increasingly key role in the global economy are thereby important partners for the OECD As such we are delighted at the launch of the Southeast Asia Regional Programme during the 2014 MCM which will allow our Organisation to establish the foundations of a powerful and sustainable partnership with this regionrdquo

Pascale Andreani Ambassador of France to the OECD Chair of the External Relations Committee (which oversees the Organisationrsquos overall global relations)

THE OECD AND SOUTHEAST ASIA 5

THE O

ECD

AN

D SO

UTH

EAST A

SIA

l INVESTMENT POLICY AND PROMOTION The OECDrsquos work on investment policy in Southeast Asia is well-established The OECD has been co-operating with the ASEAN Secretariat on Investment Policy Reviews (Viet Nam 2009 Indonesia 2010 Malaysia 2013 and Myanmar Lao PDR the Philippines and a second review of Viet Nam in 2014) Through these country-level reviews officials from the region participate in OECD Committees such as the Investment Committee and the Advisory Group on Investment and Development to engage in peer review and exchange good practices with OECD Delegates The Regional Policy Network will work to strengthen co-operation on investment policies and promotion

l EDUCATION AND SKILLS DEVELOPMENT The Regional Policy Network on Education and Skills will co-ordinate and streamline a host of ongoing activities to help the region benefit from a better qualified workforce Since 2000 the OECD has been evaluating the knowledge and skills of the

worldrsquos 15-year-olds through its Programme for International Student Assessment (PISA) Results of the PISA 2012 survey were published on 3 December 2013 with five Southeast Asian countries participating Indonesia Malaysia Singapore Thailand and Viet Nam

l SMALL AND MEDIUM-SIZED ENTERPRISES (SME) POLICIES The OECD and the ASEAN Secretariat are working together on a comparative assessment of SME policies in the ten ASEAN member countries with the objective of supporting policies aimed at promoting enterprise development in the ASEAN region and enhancing dialogue and co-operation on SME policies In March 2014 the results of the first OECD-ASEAN SME Policy Index were presented and priorities for future work were discussed The Regional Policy Network on SME Policies will support the design and implementation of SME policies and enterprise development

l REGULATORY REFORM POLICIES The OECD has been engaged in issues of regulatory reform in Southeast Asia for over a decade In 2000 the OECD and APEC signed an agreement to co-operate in order to improve regulatory practices in the region resulting in the 2005 APEC-OECD Integrated Checklist on Regulatory Reform Bilateral Policy Reviews were conducted for Viet Nam (Review

ldquoSoutheast Asia has become a growth engine of the world economy and a strategic region in the global value chain The OECD has expertise which can further promote prosperity and stability in the region by for example strengthening connectivity and innovation The resulting dynamism of the region further contributes to the OECDrsquos work in enhancing its global relevance Japan as the 2014 MCM Chair is honoured to be engaged in launching the OECDrsquos Southeast Asia Regional Programme and continues to support the relationship with the region based on mutual Liking Listening and Learning at a time when ASEAN is reaching for integration in

2015rdquo Kazuo Kodami Ambassador of Japan to the OECD Chair of the 2014 Ministerial Council Meeting

ldquoASEAN will benefit from learning the best practices of economic integration as experienced by other regions In that regard co-operation with the OECD with its rich experience and expertise on the issue of economic integration would be highly beneficial for ASEANrsquos own effortrdquo

HE Mr Muhamad Chatib Basri Minister of Finance Republic of Indonesia

ldquoThe OECDrsquos Global Relations Strategy seeks to make the Organisation a more effective and inclusive global policy network in particular through close co-operation with five Key Partners (Brazil China India Indonesia and South Africa) and strengthened engagement with dynamic regions such as Southeast Asia The newly-created OECD Southeast Asia Regional Programme will build on two decades of co-operation and dialogue between OECD and SEA countriesrdquo

Marcos Bonturi OECD Director of Global Relations

ldquoSoutheast Asia is a dynamic region with a vibrant economy enormous potential and a population of about 600 million people It is therefore not surprising that the OECD has identified this region as a region of strategic priority At the 2013 Ministerial Council the Members of OECD further called for the establishment of a comprehensive OECD Southeast Asia Regional Programme

As I could witness myself as the Chair of the Informal Reflection Group on Southeast Asia at the OECD Southeast Asia Forum in Bali on 25 and 26 March 2014 the countries of the region showed great interest in an increased exchange on standards best practices and their implementation The further economic integration of the ASEAN region would be of benefit to the member countries but also to the world economy as a whole

By strengthening its engagement with this important region the OECD will promote policies designed to achieve the highest sustainable economic growth and employment and thus contribute to the development of the world economyrdquo

Dr Hans-Juumlrgen Heimsoeth Ambassador of Germany to the OECDChair of the Informal Reflection Group on Southeast Asia

6 ACTIVE WITH SOUTHEAST ASIA

on Administrative Simplification 2010) and Indonesia (Regulatory Reform 2012) A country-specific project with Malaysia on Good Regulatory Practices was launched in 2012 The OECD will also conduct a Product Market Regulation survey in 2013-2014 with Brunei Darussalam Malaysia Myanmar the Philippines and Thailand The Regional Policy Network on Regulatory Reform Policies will work with regional and OECD partners to improve government capacities for efficient and effective regulations

l CONNECTIVITY AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT Infrastructure investment needs in Southeast Asia can only be met if traditional forms of public investment are supplemented with private financing for example via the use of PPPs The Regional Policy Network for Connectivity will support the regional efforts to establish a well-connected ASEAN Economic Community by 2015 The networkrsquos activities will include diagnostic work tailored advice comparative data collection training and other capacity-building activities relating to PPPs capital investment and regional connectivity

The OECD Southeast Asia Regional Forum co-hosted in March 2014 in Bali by the Indonesian Ministry of Finance brought together over 300 high-level officials and representatives from OECD and Southeast Asia governments regional institutions universities and the private sector to discuss how the Regional Programme can most effectively foster regional competitiveness for sustained growth The event created strong momentum for the Programmersquos official launch at the OECD Ministerial and for its work moving forward to support the regionrsquos ambitious development goals

wwwoecdorgglobalrelationsseaprogrammehtm

OECD Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 7

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

SUSTA

INA

BLE G

ROW

TH

The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

wwwoecdorgecowwwoecdorgdevasiapacific

SCAN TO READ THE REPORT

10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

wwwoecdorggreengrowthwwwoecdorggreengrowthasiahtm

SCAN TO READ THE

REPORT

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

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USTRTY amp

INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

REPORT

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

THE OECD AND THE SOUTHEAST

ASIA REGIONAL PROGRAMME

2 ACTIVE WITH SOUTHEAST ASIA

The OECD and Southeast Asia have a longstanding and

mutually beneficial relationship that has steadily developed

since the late 1990s In 2007 OECD Ministers identified

Southeast Asia as a region of strategic priority for the

Organisation and Indonesia became a Key Partner along

with Brazil China India and South Africa

In recent years Indonesia and the other Southeast Asian

countries (Brunei Darussalam Cambodia Lao PDR

Malaysia Myanmar the Philippines Singapore Thailand

and Viet Nam) have intensified their participation in

OECD committees and working groups peer reviews and

studies and have increasingly contributed to statistical

data collection and international benchmarking exercises

such as the Programme for International Student Assessment

(PISA) Several Southeast Asian countries have adhered

to international standards and norms developed by the

OECD in such areas as tax chemicals and development

co-operation In order to further strengthen the OECDrsquos

engagement with the region in 2014 the OECD launched a

comprehensive Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 3

L High-level representatives from ASEAN

and OECD countries at the opening of the

OECD Southeast Asia Regional Forum

hosted by the Government of Indonesia in

Bali on 25-26 March 2014

THE O

ECD

AN

D SO

UTH

EAST A

SIA

4 ACTIVE WITH SOUTHEAST ASIA

To enhance and broaden the OECDrsquos engagement with the region at the 2013 Ministerial Council Meeting (MCM) OECD Ministers called for the establishment of a comprehensive Southeast Asia Regional Programme The Programme which was officially launched at the 2014 MCM aims to strengthen engagement with the region in support of the regional integration process and national reform priorities The Programme is created as ASEAN economies strive to build the ASEAN Economic Community (AEC) by the end of 2015

The Southeast Asia Regional Programme will aim to foster the exchange of good practices and mutual learning between policy makers in Southeast Asia and OECD countries bringing perspectives from the region to enrich the policy debate at the OECD The Programme will help bring participating countries closer to OECD standards and practices and facilitate access to the expertise of OECD bodies and adherence to its instruments Building on the substantial existing work with the region an intensive consultation process was launched to shape the Programme including OECD Committees Southeast Asian governments and regional stakeholders

The Programmersquos structure is designed to encourage a systematic exchange of experience to develop common solutions to regional and global challenges It is comprised of thematic Regional Policy Networks which will build on the work programme of substantive OECD and Southeast Asian bodies and dialogue processes The initial areas of focus for the Networks are tax investment education and skills small and medium-sized enterprises regulatory reform and connectivity and public-private partnerships (PPPs) for infrastructure development Further work will be developed in trade innovation and gender Each Regional Policy Network will be composed of policy experts from Southeast Asia and OECD countries who will jointly decide on its work programme

l TAX POLICIES AND ADMINISTRATION The OECD has co-operated with Southeast Asian countries on tax issues since the launch of the OECD-Korea Tax Centre in 1997 In 2013 all Southeast Asian countries were involved as hosts or participants in some of the 22 technical events organised in the region by the Committee on Fiscal Affairs covering international tax issues tax administration and tax policy The Regional Policy Network on Tax policies channelled and expanded on this fruitful co-operation to build up a community of good practices

Connectivity and PPPs

Regulatory Reform

6 Regional Policy Networks

(RPN)Tax

Educationand Skills Investment

SMEs

3 Initiatives

GENDER

INNOVATION

TRADE

ldquoIn order to remain at the forefront of global governance the OECD needs to develop its relations with the rest of the world and especially with its most dynamic regions The Southeast Asian countries which are playing an increasingly key role in the global economy are thereby important partners for the OECD As such we are delighted at the launch of the Southeast Asia Regional Programme during the 2014 MCM which will allow our Organisation to establish the foundations of a powerful and sustainable partnership with this regionrdquo

Pascale Andreani Ambassador of France to the OECD Chair of the External Relations Committee (which oversees the Organisationrsquos overall global relations)

THE OECD AND SOUTHEAST ASIA 5

THE O

ECD

AN

D SO

UTH

EAST A

SIA

l INVESTMENT POLICY AND PROMOTION The OECDrsquos work on investment policy in Southeast Asia is well-established The OECD has been co-operating with the ASEAN Secretariat on Investment Policy Reviews (Viet Nam 2009 Indonesia 2010 Malaysia 2013 and Myanmar Lao PDR the Philippines and a second review of Viet Nam in 2014) Through these country-level reviews officials from the region participate in OECD Committees such as the Investment Committee and the Advisory Group on Investment and Development to engage in peer review and exchange good practices with OECD Delegates The Regional Policy Network will work to strengthen co-operation on investment policies and promotion

l EDUCATION AND SKILLS DEVELOPMENT The Regional Policy Network on Education and Skills will co-ordinate and streamline a host of ongoing activities to help the region benefit from a better qualified workforce Since 2000 the OECD has been evaluating the knowledge and skills of the

worldrsquos 15-year-olds through its Programme for International Student Assessment (PISA) Results of the PISA 2012 survey were published on 3 December 2013 with five Southeast Asian countries participating Indonesia Malaysia Singapore Thailand and Viet Nam

l SMALL AND MEDIUM-SIZED ENTERPRISES (SME) POLICIES The OECD and the ASEAN Secretariat are working together on a comparative assessment of SME policies in the ten ASEAN member countries with the objective of supporting policies aimed at promoting enterprise development in the ASEAN region and enhancing dialogue and co-operation on SME policies In March 2014 the results of the first OECD-ASEAN SME Policy Index were presented and priorities for future work were discussed The Regional Policy Network on SME Policies will support the design and implementation of SME policies and enterprise development

l REGULATORY REFORM POLICIES The OECD has been engaged in issues of regulatory reform in Southeast Asia for over a decade In 2000 the OECD and APEC signed an agreement to co-operate in order to improve regulatory practices in the region resulting in the 2005 APEC-OECD Integrated Checklist on Regulatory Reform Bilateral Policy Reviews were conducted for Viet Nam (Review

ldquoSoutheast Asia has become a growth engine of the world economy and a strategic region in the global value chain The OECD has expertise which can further promote prosperity and stability in the region by for example strengthening connectivity and innovation The resulting dynamism of the region further contributes to the OECDrsquos work in enhancing its global relevance Japan as the 2014 MCM Chair is honoured to be engaged in launching the OECDrsquos Southeast Asia Regional Programme and continues to support the relationship with the region based on mutual Liking Listening and Learning at a time when ASEAN is reaching for integration in

2015rdquo Kazuo Kodami Ambassador of Japan to the OECD Chair of the 2014 Ministerial Council Meeting

ldquoASEAN will benefit from learning the best practices of economic integration as experienced by other regions In that regard co-operation with the OECD with its rich experience and expertise on the issue of economic integration would be highly beneficial for ASEANrsquos own effortrdquo

HE Mr Muhamad Chatib Basri Minister of Finance Republic of Indonesia

ldquoThe OECDrsquos Global Relations Strategy seeks to make the Organisation a more effective and inclusive global policy network in particular through close co-operation with five Key Partners (Brazil China India Indonesia and South Africa) and strengthened engagement with dynamic regions such as Southeast Asia The newly-created OECD Southeast Asia Regional Programme will build on two decades of co-operation and dialogue between OECD and SEA countriesrdquo

Marcos Bonturi OECD Director of Global Relations

ldquoSoutheast Asia is a dynamic region with a vibrant economy enormous potential and a population of about 600 million people It is therefore not surprising that the OECD has identified this region as a region of strategic priority At the 2013 Ministerial Council the Members of OECD further called for the establishment of a comprehensive OECD Southeast Asia Regional Programme

As I could witness myself as the Chair of the Informal Reflection Group on Southeast Asia at the OECD Southeast Asia Forum in Bali on 25 and 26 March 2014 the countries of the region showed great interest in an increased exchange on standards best practices and their implementation The further economic integration of the ASEAN region would be of benefit to the member countries but also to the world economy as a whole

By strengthening its engagement with this important region the OECD will promote policies designed to achieve the highest sustainable economic growth and employment and thus contribute to the development of the world economyrdquo

Dr Hans-Juumlrgen Heimsoeth Ambassador of Germany to the OECDChair of the Informal Reflection Group on Southeast Asia

6 ACTIVE WITH SOUTHEAST ASIA

on Administrative Simplification 2010) and Indonesia (Regulatory Reform 2012) A country-specific project with Malaysia on Good Regulatory Practices was launched in 2012 The OECD will also conduct a Product Market Regulation survey in 2013-2014 with Brunei Darussalam Malaysia Myanmar the Philippines and Thailand The Regional Policy Network on Regulatory Reform Policies will work with regional and OECD partners to improve government capacities for efficient and effective regulations

l CONNECTIVITY AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT Infrastructure investment needs in Southeast Asia can only be met if traditional forms of public investment are supplemented with private financing for example via the use of PPPs The Regional Policy Network for Connectivity will support the regional efforts to establish a well-connected ASEAN Economic Community by 2015 The networkrsquos activities will include diagnostic work tailored advice comparative data collection training and other capacity-building activities relating to PPPs capital investment and regional connectivity

The OECD Southeast Asia Regional Forum co-hosted in March 2014 in Bali by the Indonesian Ministry of Finance brought together over 300 high-level officials and representatives from OECD and Southeast Asia governments regional institutions universities and the private sector to discuss how the Regional Programme can most effectively foster regional competitiveness for sustained growth The event created strong momentum for the Programmersquos official launch at the OECD Ministerial and for its work moving forward to support the regionrsquos ambitious development goals

wwwoecdorgglobalrelationsseaprogrammehtm

OECD Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 7

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

SUSTA

INA

BLE G

ROW

TH

The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

wwwoecdorgecowwwoecdorgdevasiapacific

SCAN TO READ THE REPORT

10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

SCAN TO READ THE

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The OECD and Southeast Asia have a longstanding and

mutually beneficial relationship that has steadily developed

since the late 1990s In 2007 OECD Ministers identified

Southeast Asia as a region of strategic priority for the

Organisation and Indonesia became a Key Partner along

with Brazil China India and South Africa

In recent years Indonesia and the other Southeast Asian

countries (Brunei Darussalam Cambodia Lao PDR

Malaysia Myanmar the Philippines Singapore Thailand

and Viet Nam) have intensified their participation in

OECD committees and working groups peer reviews and

studies and have increasingly contributed to statistical

data collection and international benchmarking exercises

such as the Programme for International Student Assessment

(PISA) Several Southeast Asian countries have adhered

to international standards and norms developed by the

OECD in such areas as tax chemicals and development

co-operation In order to further strengthen the OECDrsquos

engagement with the region in 2014 the OECD launched a

comprehensive Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 3

L High-level representatives from ASEAN

and OECD countries at the opening of the

OECD Southeast Asia Regional Forum

hosted by the Government of Indonesia in

Bali on 25-26 March 2014

THE O

ECD

AN

D SO

UTH

EAST A

SIA

4 ACTIVE WITH SOUTHEAST ASIA

To enhance and broaden the OECDrsquos engagement with the region at the 2013 Ministerial Council Meeting (MCM) OECD Ministers called for the establishment of a comprehensive Southeast Asia Regional Programme The Programme which was officially launched at the 2014 MCM aims to strengthen engagement with the region in support of the regional integration process and national reform priorities The Programme is created as ASEAN economies strive to build the ASEAN Economic Community (AEC) by the end of 2015

The Southeast Asia Regional Programme will aim to foster the exchange of good practices and mutual learning between policy makers in Southeast Asia and OECD countries bringing perspectives from the region to enrich the policy debate at the OECD The Programme will help bring participating countries closer to OECD standards and practices and facilitate access to the expertise of OECD bodies and adherence to its instruments Building on the substantial existing work with the region an intensive consultation process was launched to shape the Programme including OECD Committees Southeast Asian governments and regional stakeholders

The Programmersquos structure is designed to encourage a systematic exchange of experience to develop common solutions to regional and global challenges It is comprised of thematic Regional Policy Networks which will build on the work programme of substantive OECD and Southeast Asian bodies and dialogue processes The initial areas of focus for the Networks are tax investment education and skills small and medium-sized enterprises regulatory reform and connectivity and public-private partnerships (PPPs) for infrastructure development Further work will be developed in trade innovation and gender Each Regional Policy Network will be composed of policy experts from Southeast Asia and OECD countries who will jointly decide on its work programme

l TAX POLICIES AND ADMINISTRATION The OECD has co-operated with Southeast Asian countries on tax issues since the launch of the OECD-Korea Tax Centre in 1997 In 2013 all Southeast Asian countries were involved as hosts or participants in some of the 22 technical events organised in the region by the Committee on Fiscal Affairs covering international tax issues tax administration and tax policy The Regional Policy Network on Tax policies channelled and expanded on this fruitful co-operation to build up a community of good practices

Connectivity and PPPs

Regulatory Reform

6 Regional Policy Networks

(RPN)Tax

Educationand Skills Investment

SMEs

3 Initiatives

GENDER

INNOVATION

TRADE

ldquoIn order to remain at the forefront of global governance the OECD needs to develop its relations with the rest of the world and especially with its most dynamic regions The Southeast Asian countries which are playing an increasingly key role in the global economy are thereby important partners for the OECD As such we are delighted at the launch of the Southeast Asia Regional Programme during the 2014 MCM which will allow our Organisation to establish the foundations of a powerful and sustainable partnership with this regionrdquo

Pascale Andreani Ambassador of France to the OECD Chair of the External Relations Committee (which oversees the Organisationrsquos overall global relations)

THE OECD AND SOUTHEAST ASIA 5

THE O

ECD

AN

D SO

UTH

EAST A

SIA

l INVESTMENT POLICY AND PROMOTION The OECDrsquos work on investment policy in Southeast Asia is well-established The OECD has been co-operating with the ASEAN Secretariat on Investment Policy Reviews (Viet Nam 2009 Indonesia 2010 Malaysia 2013 and Myanmar Lao PDR the Philippines and a second review of Viet Nam in 2014) Through these country-level reviews officials from the region participate in OECD Committees such as the Investment Committee and the Advisory Group on Investment and Development to engage in peer review and exchange good practices with OECD Delegates The Regional Policy Network will work to strengthen co-operation on investment policies and promotion

l EDUCATION AND SKILLS DEVELOPMENT The Regional Policy Network on Education and Skills will co-ordinate and streamline a host of ongoing activities to help the region benefit from a better qualified workforce Since 2000 the OECD has been evaluating the knowledge and skills of the

worldrsquos 15-year-olds through its Programme for International Student Assessment (PISA) Results of the PISA 2012 survey were published on 3 December 2013 with five Southeast Asian countries participating Indonesia Malaysia Singapore Thailand and Viet Nam

l SMALL AND MEDIUM-SIZED ENTERPRISES (SME) POLICIES The OECD and the ASEAN Secretariat are working together on a comparative assessment of SME policies in the ten ASEAN member countries with the objective of supporting policies aimed at promoting enterprise development in the ASEAN region and enhancing dialogue and co-operation on SME policies In March 2014 the results of the first OECD-ASEAN SME Policy Index were presented and priorities for future work were discussed The Regional Policy Network on SME Policies will support the design and implementation of SME policies and enterprise development

l REGULATORY REFORM POLICIES The OECD has been engaged in issues of regulatory reform in Southeast Asia for over a decade In 2000 the OECD and APEC signed an agreement to co-operate in order to improve regulatory practices in the region resulting in the 2005 APEC-OECD Integrated Checklist on Regulatory Reform Bilateral Policy Reviews were conducted for Viet Nam (Review

ldquoSoutheast Asia has become a growth engine of the world economy and a strategic region in the global value chain The OECD has expertise which can further promote prosperity and stability in the region by for example strengthening connectivity and innovation The resulting dynamism of the region further contributes to the OECDrsquos work in enhancing its global relevance Japan as the 2014 MCM Chair is honoured to be engaged in launching the OECDrsquos Southeast Asia Regional Programme and continues to support the relationship with the region based on mutual Liking Listening and Learning at a time when ASEAN is reaching for integration in

2015rdquo Kazuo Kodami Ambassador of Japan to the OECD Chair of the 2014 Ministerial Council Meeting

ldquoASEAN will benefit from learning the best practices of economic integration as experienced by other regions In that regard co-operation with the OECD with its rich experience and expertise on the issue of economic integration would be highly beneficial for ASEANrsquos own effortrdquo

HE Mr Muhamad Chatib Basri Minister of Finance Republic of Indonesia

ldquoThe OECDrsquos Global Relations Strategy seeks to make the Organisation a more effective and inclusive global policy network in particular through close co-operation with five Key Partners (Brazil China India Indonesia and South Africa) and strengthened engagement with dynamic regions such as Southeast Asia The newly-created OECD Southeast Asia Regional Programme will build on two decades of co-operation and dialogue between OECD and SEA countriesrdquo

Marcos Bonturi OECD Director of Global Relations

ldquoSoutheast Asia is a dynamic region with a vibrant economy enormous potential and a population of about 600 million people It is therefore not surprising that the OECD has identified this region as a region of strategic priority At the 2013 Ministerial Council the Members of OECD further called for the establishment of a comprehensive OECD Southeast Asia Regional Programme

As I could witness myself as the Chair of the Informal Reflection Group on Southeast Asia at the OECD Southeast Asia Forum in Bali on 25 and 26 March 2014 the countries of the region showed great interest in an increased exchange on standards best practices and their implementation The further economic integration of the ASEAN region would be of benefit to the member countries but also to the world economy as a whole

By strengthening its engagement with this important region the OECD will promote policies designed to achieve the highest sustainable economic growth and employment and thus contribute to the development of the world economyrdquo

Dr Hans-Juumlrgen Heimsoeth Ambassador of Germany to the OECDChair of the Informal Reflection Group on Southeast Asia

6 ACTIVE WITH SOUTHEAST ASIA

on Administrative Simplification 2010) and Indonesia (Regulatory Reform 2012) A country-specific project with Malaysia on Good Regulatory Practices was launched in 2012 The OECD will also conduct a Product Market Regulation survey in 2013-2014 with Brunei Darussalam Malaysia Myanmar the Philippines and Thailand The Regional Policy Network on Regulatory Reform Policies will work with regional and OECD partners to improve government capacities for efficient and effective regulations

l CONNECTIVITY AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT Infrastructure investment needs in Southeast Asia can only be met if traditional forms of public investment are supplemented with private financing for example via the use of PPPs The Regional Policy Network for Connectivity will support the regional efforts to establish a well-connected ASEAN Economic Community by 2015 The networkrsquos activities will include diagnostic work tailored advice comparative data collection training and other capacity-building activities relating to PPPs capital investment and regional connectivity

The OECD Southeast Asia Regional Forum co-hosted in March 2014 in Bali by the Indonesian Ministry of Finance brought together over 300 high-level officials and representatives from OECD and Southeast Asia governments regional institutions universities and the private sector to discuss how the Regional Programme can most effectively foster regional competitiveness for sustained growth The event created strong momentum for the Programmersquos official launch at the OECD Ministerial and for its work moving forward to support the regionrsquos ambitious development goals

wwwoecdorgglobalrelationsseaprogrammehtm

OECD Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 7

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

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The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

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10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

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Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

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Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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REPORT

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

4 ACTIVE WITH SOUTHEAST ASIA

To enhance and broaden the OECDrsquos engagement with the region at the 2013 Ministerial Council Meeting (MCM) OECD Ministers called for the establishment of a comprehensive Southeast Asia Regional Programme The Programme which was officially launched at the 2014 MCM aims to strengthen engagement with the region in support of the regional integration process and national reform priorities The Programme is created as ASEAN economies strive to build the ASEAN Economic Community (AEC) by the end of 2015

The Southeast Asia Regional Programme will aim to foster the exchange of good practices and mutual learning between policy makers in Southeast Asia and OECD countries bringing perspectives from the region to enrich the policy debate at the OECD The Programme will help bring participating countries closer to OECD standards and practices and facilitate access to the expertise of OECD bodies and adherence to its instruments Building on the substantial existing work with the region an intensive consultation process was launched to shape the Programme including OECD Committees Southeast Asian governments and regional stakeholders

The Programmersquos structure is designed to encourage a systematic exchange of experience to develop common solutions to regional and global challenges It is comprised of thematic Regional Policy Networks which will build on the work programme of substantive OECD and Southeast Asian bodies and dialogue processes The initial areas of focus for the Networks are tax investment education and skills small and medium-sized enterprises regulatory reform and connectivity and public-private partnerships (PPPs) for infrastructure development Further work will be developed in trade innovation and gender Each Regional Policy Network will be composed of policy experts from Southeast Asia and OECD countries who will jointly decide on its work programme

l TAX POLICIES AND ADMINISTRATION The OECD has co-operated with Southeast Asian countries on tax issues since the launch of the OECD-Korea Tax Centre in 1997 In 2013 all Southeast Asian countries were involved as hosts or participants in some of the 22 technical events organised in the region by the Committee on Fiscal Affairs covering international tax issues tax administration and tax policy The Regional Policy Network on Tax policies channelled and expanded on this fruitful co-operation to build up a community of good practices

Connectivity and PPPs

Regulatory Reform

6 Regional Policy Networks

(RPN)Tax

Educationand Skills Investment

SMEs

3 Initiatives

GENDER

INNOVATION

TRADE

ldquoIn order to remain at the forefront of global governance the OECD needs to develop its relations with the rest of the world and especially with its most dynamic regions The Southeast Asian countries which are playing an increasingly key role in the global economy are thereby important partners for the OECD As such we are delighted at the launch of the Southeast Asia Regional Programme during the 2014 MCM which will allow our Organisation to establish the foundations of a powerful and sustainable partnership with this regionrdquo

Pascale Andreani Ambassador of France to the OECD Chair of the External Relations Committee (which oversees the Organisationrsquos overall global relations)

THE OECD AND SOUTHEAST ASIA 5

THE O

ECD

AN

D SO

UTH

EAST A

SIA

l INVESTMENT POLICY AND PROMOTION The OECDrsquos work on investment policy in Southeast Asia is well-established The OECD has been co-operating with the ASEAN Secretariat on Investment Policy Reviews (Viet Nam 2009 Indonesia 2010 Malaysia 2013 and Myanmar Lao PDR the Philippines and a second review of Viet Nam in 2014) Through these country-level reviews officials from the region participate in OECD Committees such as the Investment Committee and the Advisory Group on Investment and Development to engage in peer review and exchange good practices with OECD Delegates The Regional Policy Network will work to strengthen co-operation on investment policies and promotion

l EDUCATION AND SKILLS DEVELOPMENT The Regional Policy Network on Education and Skills will co-ordinate and streamline a host of ongoing activities to help the region benefit from a better qualified workforce Since 2000 the OECD has been evaluating the knowledge and skills of the

worldrsquos 15-year-olds through its Programme for International Student Assessment (PISA) Results of the PISA 2012 survey were published on 3 December 2013 with five Southeast Asian countries participating Indonesia Malaysia Singapore Thailand and Viet Nam

l SMALL AND MEDIUM-SIZED ENTERPRISES (SME) POLICIES The OECD and the ASEAN Secretariat are working together on a comparative assessment of SME policies in the ten ASEAN member countries with the objective of supporting policies aimed at promoting enterprise development in the ASEAN region and enhancing dialogue and co-operation on SME policies In March 2014 the results of the first OECD-ASEAN SME Policy Index were presented and priorities for future work were discussed The Regional Policy Network on SME Policies will support the design and implementation of SME policies and enterprise development

l REGULATORY REFORM POLICIES The OECD has been engaged in issues of regulatory reform in Southeast Asia for over a decade In 2000 the OECD and APEC signed an agreement to co-operate in order to improve regulatory practices in the region resulting in the 2005 APEC-OECD Integrated Checklist on Regulatory Reform Bilateral Policy Reviews were conducted for Viet Nam (Review

ldquoSoutheast Asia has become a growth engine of the world economy and a strategic region in the global value chain The OECD has expertise which can further promote prosperity and stability in the region by for example strengthening connectivity and innovation The resulting dynamism of the region further contributes to the OECDrsquos work in enhancing its global relevance Japan as the 2014 MCM Chair is honoured to be engaged in launching the OECDrsquos Southeast Asia Regional Programme and continues to support the relationship with the region based on mutual Liking Listening and Learning at a time when ASEAN is reaching for integration in

2015rdquo Kazuo Kodami Ambassador of Japan to the OECD Chair of the 2014 Ministerial Council Meeting

ldquoASEAN will benefit from learning the best practices of economic integration as experienced by other regions In that regard co-operation with the OECD with its rich experience and expertise on the issue of economic integration would be highly beneficial for ASEANrsquos own effortrdquo

HE Mr Muhamad Chatib Basri Minister of Finance Republic of Indonesia

ldquoThe OECDrsquos Global Relations Strategy seeks to make the Organisation a more effective and inclusive global policy network in particular through close co-operation with five Key Partners (Brazil China India Indonesia and South Africa) and strengthened engagement with dynamic regions such as Southeast Asia The newly-created OECD Southeast Asia Regional Programme will build on two decades of co-operation and dialogue between OECD and SEA countriesrdquo

Marcos Bonturi OECD Director of Global Relations

ldquoSoutheast Asia is a dynamic region with a vibrant economy enormous potential and a population of about 600 million people It is therefore not surprising that the OECD has identified this region as a region of strategic priority At the 2013 Ministerial Council the Members of OECD further called for the establishment of a comprehensive OECD Southeast Asia Regional Programme

As I could witness myself as the Chair of the Informal Reflection Group on Southeast Asia at the OECD Southeast Asia Forum in Bali on 25 and 26 March 2014 the countries of the region showed great interest in an increased exchange on standards best practices and their implementation The further economic integration of the ASEAN region would be of benefit to the member countries but also to the world economy as a whole

By strengthening its engagement with this important region the OECD will promote policies designed to achieve the highest sustainable economic growth and employment and thus contribute to the development of the world economyrdquo

Dr Hans-Juumlrgen Heimsoeth Ambassador of Germany to the OECDChair of the Informal Reflection Group on Southeast Asia

6 ACTIVE WITH SOUTHEAST ASIA

on Administrative Simplification 2010) and Indonesia (Regulatory Reform 2012) A country-specific project with Malaysia on Good Regulatory Practices was launched in 2012 The OECD will also conduct a Product Market Regulation survey in 2013-2014 with Brunei Darussalam Malaysia Myanmar the Philippines and Thailand The Regional Policy Network on Regulatory Reform Policies will work with regional and OECD partners to improve government capacities for efficient and effective regulations

l CONNECTIVITY AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT Infrastructure investment needs in Southeast Asia can only be met if traditional forms of public investment are supplemented with private financing for example via the use of PPPs The Regional Policy Network for Connectivity will support the regional efforts to establish a well-connected ASEAN Economic Community by 2015 The networkrsquos activities will include diagnostic work tailored advice comparative data collection training and other capacity-building activities relating to PPPs capital investment and regional connectivity

The OECD Southeast Asia Regional Forum co-hosted in March 2014 in Bali by the Indonesian Ministry of Finance brought together over 300 high-level officials and representatives from OECD and Southeast Asia governments regional institutions universities and the private sector to discuss how the Regional Programme can most effectively foster regional competitiveness for sustained growth The event created strong momentum for the Programmersquos official launch at the OECD Ministerial and for its work moving forward to support the regionrsquos ambitious development goals

wwwoecdorgglobalrelationsseaprogrammehtm

OECD Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 7

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

SUSTA

INA

BLE G

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The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

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10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

THE OECD AND SOUTHEAST ASIA 5

THE O

ECD

AN

D SO

UTH

EAST A

SIA

l INVESTMENT POLICY AND PROMOTION The OECDrsquos work on investment policy in Southeast Asia is well-established The OECD has been co-operating with the ASEAN Secretariat on Investment Policy Reviews (Viet Nam 2009 Indonesia 2010 Malaysia 2013 and Myanmar Lao PDR the Philippines and a second review of Viet Nam in 2014) Through these country-level reviews officials from the region participate in OECD Committees such as the Investment Committee and the Advisory Group on Investment and Development to engage in peer review and exchange good practices with OECD Delegates The Regional Policy Network will work to strengthen co-operation on investment policies and promotion

l EDUCATION AND SKILLS DEVELOPMENT The Regional Policy Network on Education and Skills will co-ordinate and streamline a host of ongoing activities to help the region benefit from a better qualified workforce Since 2000 the OECD has been evaluating the knowledge and skills of the

worldrsquos 15-year-olds through its Programme for International Student Assessment (PISA) Results of the PISA 2012 survey were published on 3 December 2013 with five Southeast Asian countries participating Indonesia Malaysia Singapore Thailand and Viet Nam

l SMALL AND MEDIUM-SIZED ENTERPRISES (SME) POLICIES The OECD and the ASEAN Secretariat are working together on a comparative assessment of SME policies in the ten ASEAN member countries with the objective of supporting policies aimed at promoting enterprise development in the ASEAN region and enhancing dialogue and co-operation on SME policies In March 2014 the results of the first OECD-ASEAN SME Policy Index were presented and priorities for future work were discussed The Regional Policy Network on SME Policies will support the design and implementation of SME policies and enterprise development

l REGULATORY REFORM POLICIES The OECD has been engaged in issues of regulatory reform in Southeast Asia for over a decade In 2000 the OECD and APEC signed an agreement to co-operate in order to improve regulatory practices in the region resulting in the 2005 APEC-OECD Integrated Checklist on Regulatory Reform Bilateral Policy Reviews were conducted for Viet Nam (Review

ldquoSoutheast Asia has become a growth engine of the world economy and a strategic region in the global value chain The OECD has expertise which can further promote prosperity and stability in the region by for example strengthening connectivity and innovation The resulting dynamism of the region further contributes to the OECDrsquos work in enhancing its global relevance Japan as the 2014 MCM Chair is honoured to be engaged in launching the OECDrsquos Southeast Asia Regional Programme and continues to support the relationship with the region based on mutual Liking Listening and Learning at a time when ASEAN is reaching for integration in

2015rdquo Kazuo Kodami Ambassador of Japan to the OECD Chair of the 2014 Ministerial Council Meeting

ldquoASEAN will benefit from learning the best practices of economic integration as experienced by other regions In that regard co-operation with the OECD with its rich experience and expertise on the issue of economic integration would be highly beneficial for ASEANrsquos own effortrdquo

HE Mr Muhamad Chatib Basri Minister of Finance Republic of Indonesia

ldquoThe OECDrsquos Global Relations Strategy seeks to make the Organisation a more effective and inclusive global policy network in particular through close co-operation with five Key Partners (Brazil China India Indonesia and South Africa) and strengthened engagement with dynamic regions such as Southeast Asia The newly-created OECD Southeast Asia Regional Programme will build on two decades of co-operation and dialogue between OECD and SEA countriesrdquo

Marcos Bonturi OECD Director of Global Relations

ldquoSoutheast Asia is a dynamic region with a vibrant economy enormous potential and a population of about 600 million people It is therefore not surprising that the OECD has identified this region as a region of strategic priority At the 2013 Ministerial Council the Members of OECD further called for the establishment of a comprehensive OECD Southeast Asia Regional Programme

As I could witness myself as the Chair of the Informal Reflection Group on Southeast Asia at the OECD Southeast Asia Forum in Bali on 25 and 26 March 2014 the countries of the region showed great interest in an increased exchange on standards best practices and their implementation The further economic integration of the ASEAN region would be of benefit to the member countries but also to the world economy as a whole

By strengthening its engagement with this important region the OECD will promote policies designed to achieve the highest sustainable economic growth and employment and thus contribute to the development of the world economyrdquo

Dr Hans-Juumlrgen Heimsoeth Ambassador of Germany to the OECDChair of the Informal Reflection Group on Southeast Asia

6 ACTIVE WITH SOUTHEAST ASIA

on Administrative Simplification 2010) and Indonesia (Regulatory Reform 2012) A country-specific project with Malaysia on Good Regulatory Practices was launched in 2012 The OECD will also conduct a Product Market Regulation survey in 2013-2014 with Brunei Darussalam Malaysia Myanmar the Philippines and Thailand The Regional Policy Network on Regulatory Reform Policies will work with regional and OECD partners to improve government capacities for efficient and effective regulations

l CONNECTIVITY AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT Infrastructure investment needs in Southeast Asia can only be met if traditional forms of public investment are supplemented with private financing for example via the use of PPPs The Regional Policy Network for Connectivity will support the regional efforts to establish a well-connected ASEAN Economic Community by 2015 The networkrsquos activities will include diagnostic work tailored advice comparative data collection training and other capacity-building activities relating to PPPs capital investment and regional connectivity

The OECD Southeast Asia Regional Forum co-hosted in March 2014 in Bali by the Indonesian Ministry of Finance brought together over 300 high-level officials and representatives from OECD and Southeast Asia governments regional institutions universities and the private sector to discuss how the Regional Programme can most effectively foster regional competitiveness for sustained growth The event created strong momentum for the Programmersquos official launch at the OECD Ministerial and for its work moving forward to support the regionrsquos ambitious development goals

wwwoecdorgglobalrelationsseaprogrammehtm

OECD Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 7

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

SUSTA

INA

BLE G

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The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

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10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

ldquoThe OECDrsquos Global Relations Strategy seeks to make the Organisation a more effective and inclusive global policy network in particular through close co-operation with five Key Partners (Brazil China India Indonesia and South Africa) and strengthened engagement with dynamic regions such as Southeast Asia The newly-created OECD Southeast Asia Regional Programme will build on two decades of co-operation and dialogue between OECD and SEA countriesrdquo

Marcos Bonturi OECD Director of Global Relations

ldquoSoutheast Asia is a dynamic region with a vibrant economy enormous potential and a population of about 600 million people It is therefore not surprising that the OECD has identified this region as a region of strategic priority At the 2013 Ministerial Council the Members of OECD further called for the establishment of a comprehensive OECD Southeast Asia Regional Programme

As I could witness myself as the Chair of the Informal Reflection Group on Southeast Asia at the OECD Southeast Asia Forum in Bali on 25 and 26 March 2014 the countries of the region showed great interest in an increased exchange on standards best practices and their implementation The further economic integration of the ASEAN region would be of benefit to the member countries but also to the world economy as a whole

By strengthening its engagement with this important region the OECD will promote policies designed to achieve the highest sustainable economic growth and employment and thus contribute to the development of the world economyrdquo

Dr Hans-Juumlrgen Heimsoeth Ambassador of Germany to the OECDChair of the Informal Reflection Group on Southeast Asia

6 ACTIVE WITH SOUTHEAST ASIA

on Administrative Simplification 2010) and Indonesia (Regulatory Reform 2012) A country-specific project with Malaysia on Good Regulatory Practices was launched in 2012 The OECD will also conduct a Product Market Regulation survey in 2013-2014 with Brunei Darussalam Malaysia Myanmar the Philippines and Thailand The Regional Policy Network on Regulatory Reform Policies will work with regional and OECD partners to improve government capacities for efficient and effective regulations

l CONNECTIVITY AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS FOR INFRASTRUCTURE DEVELOPMENT Infrastructure investment needs in Southeast Asia can only be met if traditional forms of public investment are supplemented with private financing for example via the use of PPPs The Regional Policy Network for Connectivity will support the regional efforts to establish a well-connected ASEAN Economic Community by 2015 The networkrsquos activities will include diagnostic work tailored advice comparative data collection training and other capacity-building activities relating to PPPs capital investment and regional connectivity

The OECD Southeast Asia Regional Forum co-hosted in March 2014 in Bali by the Indonesian Ministry of Finance brought together over 300 high-level officials and representatives from OECD and Southeast Asia governments regional institutions universities and the private sector to discuss how the Regional Programme can most effectively foster regional competitiveness for sustained growth The event created strong momentum for the Programmersquos official launch at the OECD Ministerial and for its work moving forward to support the regionrsquos ambitious development goals

wwwoecdorgglobalrelationsseaprogrammehtm

OECD Southeast Asia Regional Programme

THE OECD AND SOUTHEAST ASIA 7

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

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INA

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The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

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10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

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Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

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Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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REPORT

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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REPORT

The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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REPORT

44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

THE OECD AND SOUTHEAST ASIA 7

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

SUSTA

INA

BLE G

ROW

TH

The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

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SCAN TO READ THE REPORT

10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

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USTRTY amp

INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Southeast Asian countries are confronted with the challenges of transforming economic growth into sustainable development that benefits all citizens Creating resilient economic

structures that can withstand external shocks building liveable cities and lowering urban-rural divides improving agricultural efficiency and promoting global stability

and prosperity through effective development co-operation are all important issues for Southeast Asian countries in moving towards a more balanced and inclusive growth

SUSTAINABLE BALANCED AND

INCLUSIVE GROWTH

8 ACTIVE WITH SOUTHEAST ASIA

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

SUSTA

INA

BLE G

ROW

TH

The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

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SCAN TO READ THE REPORT

10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

wwwoecdorggreengrowthwwwoecdorggreengrowthasiahtm

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

wwwoecdorggovregional-policyurbandevelopmenthtmwwwoecdorggovregional-policyoecdworkonruraldevelopmenthtmwwwoecdorgdev

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

SUSTA

INA

BLE G

ROW

TH

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

SUSTA

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TH

The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

wwwoecdorgstdwwwoecdorgstatistics wwwoecdorgdevasiapacificabcis wwwparis21org

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

wwwoecdorginvestmentwwwoecdorginvestmentseasiahtmwwwoecdorginvestmentcountryreviewshtm

18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

FUN

CTIO

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

FUN

CTIO

NIN

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

22 ACTIVE WITH SOUTHEAST ASIA

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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CTIO

NIN

G M

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

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IAL D

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

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EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

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In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

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USTRTY amp

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

How can economies increase resilience to soften economic shocks or recover quickly from them Does structural reform positively impact a countryrsquos economic resilience

Through four series of publications the OECD examines macroeconomic and structural policies and developments The Economic Outlook released twice a year analyses recent developments in the global economy and provides economic projections for 41 economies including Indonesia The Going for Growth publication provides a comparative overview of structural policy developments in Member and key non-OECD countries The 2013 edition highlights the potential gains Indonesia can reap from improving the quality of education promoting infrastructure reforming stringent labour market regulations and capping the minimum wage Indonesia would also benefit from reducing energy subsidies easing barriers to entrepreneurship and investment and strengthening institutions to fight corruption

The annual Economic Outlook for Southeast Asia China and India jointly produced by the ASEAN Secretariat and the OECD Development Centre monitors short-term macroeconomic

Maintaining economic resilience

challenges and medium-term economic trends in the Southeast Asian region The 2014 edition contains an assessment of national structural policy reforms a medium-term plan and an in-depth look at how Emerging Asia can grow beyond the ldquomiddle income traprdquo by unleashing productivity through investment in human capital and innovation and shifting towards a technology-intensive economy The 2015 edition of the Outlook will include a special focus on building strong and effective institutions ndash from rule of law to government regulation administration and implementation together with appropriate medium-term development plans ndash which are needed to realise the regionrsquos long-term potential

ldquoThe collaboration with the OECD based on the lsquoEconomic Outlook for Southeast Asia China and Indiarsquo 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 regionrdquo

Rony Soerakoesoemah Assistant Director of the Economic Community Department ASEAN Secretariat

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 9

SUSTA

INA

BLE G

ROW

TH

The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

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SCAN TO READ THE REPORT

10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

wwwoecdorggovregional-policyurbandevelopmenthtmwwwoecdorggovregional-policyoecdworkonruraldevelopmenthtmwwwoecdorgdev

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

SUSTA

INA

BLE G

ROW

TH

The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

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36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

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wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

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L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The Economic Surveys published biennially for each OECD member and Key Partner country analyse major economic challenges in those countries and propose reform options drawing on international best practices The forthcoming Economic Survey of Indonesia to be released September 2014 will include in-depth chapters on ldquoGetting the Most Out of Natural Resourcesrdquo and ldquoMaking Growth More Inclusive and Sustainablerdquo

OECD Multi-Dimensional Country Reviews evaluate how countries are performing with regards to meeting the multiple objectives of growth sustainability and equity looking not just at the absolute levels which a country has achieved but also at how the underlying dynamics of a countryrsquos development process affects these objectives The Multi-dimensional Review of Myanmar released in July 2013 identified key existing constraints to economic development in Myanmar and provided recommendations to ignite growth and embark on a higher more sustainable and equitable development trajectory

ldquoMyanmar is a country under challenging conditions of triple transitionsmdashguided to multiparty democracy planned to market economy and war to peacemdashrequiring the Government of Myanmar to design multi-dimensional and comprehensive reforms to transform the country OECDrsquos Multi-dimensional Review of Myanmar is one of essential guidebooks for our reformsrdquo

HE U Soe Thane Minister of the Presidentrsquos Office of Myanmar

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10 ACTIVE WITH SOUTHEAST ASIA

Maintaining economic resilience

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

wwwoecdorggovregional-policyurbandevelopmenthtmwwwoecdorggovregional-policyoecdworkonruraldevelopmenthtmwwwoecdorgdev

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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INA

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

SUSTA

INA

BLE G

ROW

TH

The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

wwwoecdorgtradewwwoecdorgtradestri

SMOOTH FUNCTIONING OF MARKETS 19

FUN

CTIO

NIN

G M

ARK

ETS

SCAN TO READ THE

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

wwwoecdorgtradehttpoecdgvchttpoecdtiva

20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

FUN

CTIO

NIN

G M

ARK

ETS

Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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22 ACTIVE WITH SOUTHEAST ASIA

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REPORT

Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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G M

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The environmental risks faced by emerging and developing countries today call for a fundamental shift in approaches to growth and development By integrating environmental considerations and the value of natural capital into economic decision making and development planning green growth can help Southeast Asian economies secure a stronger and more sustainable future

The OECDrsquos Green Growth Strategy is built upon three reports ndash Towards Green Growth Towards Green Growth Monitoring Progress ndash OECD Indicators and Tools for Delivering on Green Growth ndash through which the OECD provides concrete and targeted advice to member and partner countries on integrating green growth policy into the design and implementation of economic environmental investment and innovation policies Its 2013 report Putting Green Growth at the Heart of Development proposes an agenda to guide policy action in support of green growth in developing countries It examines 74 policies and measures from 37 developing countries and five regional initiatives The DAC Network on Environment and Development has recently launched work to identify good practices in development co-operation that supports developing countriesrsquo efforts to make growth more green and inclusive

A two-year multi-disciplinary project is now underway on green growth in Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Thailand and Viet Nam A synthesis paper ldquoWhat have we learned from attempts to introduce green growth policiesrdquo was published in 2013 as the first part of this project The publication discusses green growth instruments policy frameworks and indicators and seeks to draw lessons applicable to green growth policies relying on both country-specific and cross-country analyses undertaken at the OECD The second part of the project will be a 2014 report on Toward Green Growth in Emerging and Developing Asia focusing on 1) key economic social and environmental trends 2) how green growth strategies can be best incorporated into national development plans

Supporting green growth initiatives

3) how to achieve sustainable management of natural resources in the context of growing energy and food demands and 4) how to manage the challenges arising from rapid urbanisation In addition the OECD collaborated with the Cambodian Ministry of Environment and its National Council on Green Growth to produce a country case study on ldquoMaking Growth Green and Inclusive The Case of Cambodiardquo released in 2013 The paper identifies several areas of potential improvement for Cambodia and through international co-operation in order to achieve the countryrsquos national green growth objectives

The OECD is currently carrying out the Urban Green Growth in Dynamic Asia project which aims to provide Asian countries and cities with short-term and long-term policy options towards green growth at the city scale building on the previous OECD urban green growth studies The projectrsquos emphasis is on integrating policies across different domains since much of the discussion that has taken place to date is sector-specific Several city-based case studies are under preparation in cities in ASEAN countries China and India for 2014-2015

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 11

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

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SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

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Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

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Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

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USTRTY amp

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

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INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

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INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

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ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Countries need competitive dynamic regions to achieve their economic social and environmental objectives The OECD examines how territorial development policies can best promote regional competitiveness and effective and innovative territorial governance and provides policy advice to government at the national and sub-national levels

The rapid transformation of some Asian countries into innovation and knowledge-led economies has not necessarily been characterised by a balanced and inclusive territorial development Important differences in terms of income and overall opportunities remain between cities and less-densely populated areas Central and local governments are increasingly interested in sharing experiences and knowledge on the design and implementation of policies and governance arrangements that promote sustainable development

Territorial Reviews at the city and metropolitan levels aim to evaluate the economic social and environmental performance of an urban area and assess the policies put in place to strengthen competitiveness social inclusion and environmental sustainability National Urban Policy Reviews provide a comprehensive assessment of a countryrsquos urban policies by focusing on policies that explicitly or implicitly affect urban development The OECD also offers a unique forum to address issues in urban areas with its organisation of the Roundtable of Mayors and Ministers ndash the only global platform convening representatives from both high-level national and local governments

Rural regions are important economically and demographically OECD research seeks to understand growth factors in rural regions over the long term (innovation natural resources etc) how rural regions contribute to national growth and ways of maintaining the vitality of rural areas through the provision of goods and services that support growth and well-being The series of National Rural Policy Reviews seek to explain the shift

Promoting regional development and urbanisation

12 ACTIVE WITH SOUTHEAST ASIA

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in rural development policies to account for important economic changes and the new approach to governance that these policy approaches require

The OECD Development Centre is carrying out a study to better understand how developing countries can benefit from collective action and the accumulation of social capital in order to promote sustainable and self-reliant rural development The comparative study will build on the experience and lessons learned from the transition of Korearsquos economy and analyse two developing countries (in Southeast Asia and Africa) from a comparative perspective Based on these findings the Development Centre will build a toolkit that provides policy guidance on designing and implementing development programmes that strengthen social capital and promote local development in rural areas

wwwoecdorggovregional-policyurbandevelopmenthtmwwwoecdorggovregional-policyoecdworkonruraldevelopmenthtmwwwoecdorgdev

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

SUSTA

INA

BLE G

ROW

TH

The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

wwwoecdorgstdwwwoecdorgstatistics wwwoecdorgdevasiapacificabcis wwwparis21org

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

wwwoecdorginvestmentwwwoecdorginvestmentseasiahtmwwwoecdorginvestmentcountryreviewshtm

18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

FUN

CTIO

NIN

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

FUN

CTIO

NIN

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ARK

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

22 ACTIVE WITH SOUTHEAST ASIA

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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CTIO

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

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EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 13

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INA

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Boosting productivity and innovation improving access to food and increasing agricultural trade flows will enhance food security in the ASEAN region

In recent years large population groups in Southeast Asia have been exposed to risks of food insecurity Improving long term food security remains a high priority in the region and a number of regional initiatives are underway The OECD provides evidence-based analysis and policy advice in support of enhanced food security in particular through rigorous risk assessment and management and in the areas of improved productivity and access to trade

In 2013 the OECD launched a project on transitory food insecurity in Indonesia The aim of the project is to engage with Indonesia in an evidence-based policy dialogue and analysis of the best policy responses to food insecurity risks Together with the relevant Indonesian authorities and stakeholders the project will analyse the sources of risk that threaten food security in the country and the profile of assessed risks and impacts of policy responses The project is part of the OECDrsquos broader work on food security that includes work on other important aspects such as trade policy agriculture productivity and innovation agriculturersquos enabling environment and reviews of agricultural policies in countries such as Indonesia and Viet Nam A regional conference on food security is planned in Indonesia in November 2014 to further engage interested countries from the region in this policy dialogue The conference will be co-organised with the ASEAN Secretariat and the Asian Development Bank (ADB)

The OECD works closely with the Indonesian government on several agricultural policy projects The first is the OECD Review of Agricultural Policies Indonesia 2012 ndash a two year project with the Ministry of Agriculture The resulting policy dialogue between OECD and Indonesian officials on the policy recommendations from the Review helped to identify potential further areas of engagement in particular the notion of self-sufficiency that appears to drive many agricultural policy measures in Indonesia including the new

Increasing agricultural productivity and food security

Food Law The second area of engagement with Indonesia is in the 2013 edition of Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies The Indonesia chapter provides policy recommendations based on the latest agricultural policy developments in the country and on updated estimates of the level of support of Indonesian farming sector

The OECD and the UN Food and Agriculture Organisation (FAO) annually publish the OECD-FAO Agricultural Outlook The 2013 edition includes detailed projections of the medium-term outlook for commodities for OECD countries and emerging economies for 2013-2022 including Indonesia The OECD has begun work on OECD Review of Agricultural Policies Viet Nam which will be completed in 2015 It will pave the way for Viet Nam to be included in the OECDrsquos regular reports on Agricultural Policy Monitoring and Evaluation OECD Countries and Emerging Economies wwwoecdorgagriculturewwwoecdorgfisherieswwwoecdorgtadagricultural-policiesrisk-management-agriculturehtm

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

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The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

wwwoecdorgtradewwwoecdorgtradestri

SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

wwwoecdorgtradehttpoecdgvchttpoecdtiva

20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

22 ACTIVE WITH SOUTHEAST ASIA

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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ETS

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The OECD Strategy on Development adopted in the 2012 Ministerial Council Meeting gives fresh impetus to OECDrsquos founding mission of contributing to the development of all countries by sharing knowledge and policy experiences As the Southeast Asia regionrsquos international assistance continues to expand the OECD stands ready to support countries to improve its management of the South-South Co-operation and the effectiveness of its foreign aid

The OECDrsquos Development Assistance Committee (DAC) is a unique international forum where bilateral providers of development co-operation and multilateral agencies work together to improve the quality and quantity of their development co-operation The DAC collaborates with many countries and regional bodies in Southeast Asia to advance mutual learning and joint action on development and development co-operation This includes participation in DAC subsidiary bodies which cover development finance statistics development evaluation gender governance conflict and fragility and environment and development co-operation The DAC engages with a range of public and private stakeholders to promote mutual learning and facilitate innovative integrated approaches to development co-operation A key forum for such engagement is the Global Partnership for Effective Development Co-operation established after the Busan High-Level Forum on Aid Effectiveness Indonesia is an important partner in this work ndash Armida Alisjahbana Minister of State for National Development Planning of Indonesia co-chairs the Global Partnership ndash and plays a specific lead role in work on knowledge sharing an important component of southndashsouth co-operation

Through the Global Network of Foundations Working for Development (netFWD) the OECD Development Centre has established strong partnerships with foundations and philanthropists groups in OECD and non-OECD member countries The network allows foundations to engage with stakeholders ranging from policy makers to practitioners while collectively looking into the challenges linked to project implementation

Promoting development and effective cooperation worldwide

14 ACTIVE WITH SOUTHEAST ASIA

effectiveness impact and sustainable results The Network is actively contributing to the post-2015 debate by promoting dialogue between foundations and governments eg through the development of a set of Guidelines for Effective Philanthropic Engagement (GEPEs) aimed at providing guidance on how these two actors could better co-operate netFWD collaborates with the Asian Venture Philanthropy Network ndash AVPN ndash which is growing the venture philanthropy community across the Asia Pacific region

Knowledge sharing in different policy areas is taking a prominent role in todayrsquos changing global landscape of international cooperation especially in the Southeast Asian region Achieving sustainable and inclusive development is now at the heart of countriesrsquo efforts as economies progress towards improving the quality of life for all As policy dialogues move from discussion to learning on equal footing more purpose-focused knowledge sharing tools and practices are increasingly being used attracting interest in efforts to support exchanges of experiences and new approaches between countries and regions The Knowledge Sharing Alliance (KSA) created in January 2013 is one of the outputs of the OECD Strategy on Development It aims to leverage the OECDrsquos multi-disciplinary expertise engage in conversations and mutual learning processes with emerging and developing economies and increase impact by working closely with bilateral and multilateral and other organisations having a field presence and implementation capacities andor networks wwwoecdorgdacwwwoecdorgsitenetfwdwwwoecdorgknowledge-sharing-alliance

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

SUSTA

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TH

The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

wwwoecdorgstdwwwoecdorgstatistics wwwoecdorgdevasiapacificabcis wwwparis21org

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

wwwoecdorginvestmentwwwoecdorginvestmentseasiahtmwwwoecdorginvestmentcountryreviewshtm

18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

FUN

CTIO

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

FUN

CTIO

NIN

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

22 ACTIVE WITH SOUTHEAST ASIA

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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CTIO

NIN

G M

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

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IAL D

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

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EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

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In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

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USTRTY amp

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

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ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

SUSTAINABLE BALANCED AND INCLUSIVE GROWTH 15

SUSTA

INA

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ROW

TH

The OECD maintains comprehensive databases of comparable statistics to support its analytical and policy work The Organisation also works with countries to develop their knowledge in producing and managing statistics

Indonesia has been included for a number of years now in some of the most high profile and important OECD databases These include a range of short-term economic statistics for example international trade monthly financial statistics such as monetary aggregates and interest rates balance of payments production indices and prices These frequently consulted statistics provide an overview and comparison of recent international economic development and are used in the modelling of the business cycle

The OECD-hosted Partnership in Statistics for Development in the 21st Century (PARIS21) is in initiative that aims to promote better use and production of statistics throughout the developing world In Southeast Asia PARIS21 has provided assistance in the design and implementation of National Strategies for the Development of Statistics (NSDS) in

Better data for better policies

Cambodia Lao PDR and Viet Nam review and updating of the statistics law in Cambodia facilitation of a user-producer dialogue on inclusive growth in the Philippines and preparation of the Myanmar NSDS roadmap At the sub-regional level it provides support to the ASEAN Community in strengthening its regional statistical system particularly in the review of its existing Regional Strategy for the Development of Statistics (RSDS) and in designing one for 2016-20

The OECD is working closely with ASEAN countries to build comparable statistical data on tax revenues The Revenue Statistics Trends and Policy Challenges in Asia the Case of Indonesia and Malaysia publication will provide comparisons on fiscal performance and tax mix of these countries with that of Japan Korea and OECD countries as a whole The objective of the report is to endow policy makers with a solid basis for better informed decisions on how to enhance taxation and how to best spend revenues to leverage inclusive growth The current edition will be released in early 2014 The second edition of the report will be delivered by early 2015 expanding the coverage of countries

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

wwwoecdorginvestmentwwwoecdorginvestmentseasiahtmwwwoecdorginvestmentcountryreviewshtm

18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

wwwoecdorgtradewwwoecdorgtradestri

SMOOTH FUNCTIONING OF MARKETS 19

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CTIO

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

wwwoecdorgtradehttpoecdgvchttpoecdtiva

20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

FUN

CTIO

NIN

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ETS

Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

22 ACTIVE WITH SOUTHEAST ASIA

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

wwwoecdorggovbudgeting

SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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REPORT

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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REPORT

The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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REPORT

The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

ENT

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

16 ACTIVE WITH SOUTHEAST ASIA

The Asian Business Cycle Indicators (ABCIs) is a tool which provides comparable information on the short-term economic climate of the Asian economies Its purpose is to produce early warning of potential macroeconomic risks and act as a tool to trace business cycle synchronization in Asia The ABCIs are constructed jointly by the OECD Development Centre and OECD Statistics Directorate and are based on the growth cycle approach like the OECD composite leading indicators (CLIs) This Quarter in Asia compiles these ABCIs and includes data from 7 major Asian economies China India Indonesia Malaysia the Philippines Singapore and Thailand

The joint OECD ndash WTO Trade in Value-Added (TiVA) was launched in March 2012 to provide the statistical tool and evidence needed for the development of both industrial and trade policies in the light of increasing international fragmentation of production The database contains a suite of indicators for 57 economies (including 8 ASEAN countries providing important statistics on the integration and evolution of Factory Asia value chains) and covering 18 industries The OECD is continuing to engage with national standardisation organisations and other international agencies to expand the timeliness and country coverage of this database and also to develop the statistical capacity of countries to provide the necessary inputs It also identifies improvements in core statistics that improve the quality of results notably by encouraging links between trade and business registers and in the level of detail provided in national tables in particular by motivating new breakdowns that better reflect the characteristics of firms engaged in international trade

The OECD has organised Asia Regional Seminars on insurance statistics and monitoring in Southeast Asia to examine avenues to enhance transparency and monitoring of the insurance industry as a means to assist policymakers and supervisors in assessing its financial strength and performance Five non-OECD partners including Indonesia Malaysia and Thailand have subsequently joined the OECDrsquos Global Insurance Statistics (GIS) exercise and provide statistics on an annual basis Given regional interest in the seminars as a platform for the sharing country insurance monitoring experiences the OECD will continue organising regional seminars in Southeast Asian in co-operation with other relevant international organisations

wwwoecdorgstdwwwoecdorgstatistics wwwoecdorgdevasiapacificabcis wwwparis21org

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Better data for better policies

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

wwwoecdorginvestmentwwwoecdorginvestmentseasiahtmwwwoecdorginvestmentcountryreviewshtm

18 ACTIVE WITH SOUTHEAST ASIA

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18 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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22 ACTIVE WITH SOUTHEAST ASIA

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

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PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

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30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

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36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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REPORT

There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

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L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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REPORT

Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

SMOOTH FUNCTIONING OF MARKETS 17

SMOOTH FUNCTIONING

OF MARKETSWell-functioning markets are essential to growth and development

Southeast Asian countries have been moving towards an open outward-looking inclusive economy as part of the ASEAN Economic Community

plan Making rules more open fair transparent and predictable for trade investment competition and financial sector will be key to accelerating

regional integration

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

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PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

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36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

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In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

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USTRTY amp

INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

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50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

International investment has been a driver of Southeast Asiarsquos economic dynamism and integration into the global economy Some countries in the region were among the first to welcome foreign direct investment (FDI) as part of a strategy of export-led development

The OECD promotes investment policy reform and international investment co-operation with a view to enhancing the contribution of international investment to growth and sustainable development In particular the OECD monitors investment protectionism in the context of the G20 produces statistics on foreign direct investments and develops international instruments and tools which are used worldwide The OECD also hosts the inter-governmental Freedom of Investment (FOI) Roundtable through which governments exchange information and experiences on investment policies and emerging issues ndash for instance recipient countriesrsquo policies towards sovereign wealth funds international investment law and the investor-state dispute settlement system

The OECD is deepening its co-operation with Southeast Asia on investment through Investment Policy Reviews conducted in collaboration with the ASEAN Secretariat and through regular regional investment policy dialogue and training for government officials using the Policy Framework for Investment (PFI) Indonesia Lao PDR Malaysia Myanmar the Philippines and Viet Nam participate in the Investment Policy Reviews

The regional component of the OECDrsquos investment co-operation with ASEAN effectively links strengthening national investment policy frameworks to regional investment policy development and harmonisation This has given individual ASEAN member states a platform to showcase their reforms and to learn from peers while at the same time strengthening regional integration initiatives and national reforms

Enhancing cooperation on international investment

Southeast Asia was the host of the first meeting of the Task Force to update the Policy Framework for Investment - a cornerstone of OECD investment work - at the margins of the 2014 OECD Southeast Asia Regional Forum in Bali

ldquoThe recommendations from the Reviews are candid impartial and highly practicalrdquo

Aung Naing Oo Director General at the Ministry of National Planning and Economic Development of Myanmar

ldquoThe Reviews provide the necessary impetus for countries within the region to work towards realising the ASEAN Economic Community in 2015rdquo

YB Datorsquo Sri Mustapa Mohamed Minister of International Trade and Industry of Malaysia

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18 ACTIVE WITH SOUTHEAST ASIA

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The Regional Policy Network for investment will strengthen co-operation on investment policies and promotion

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

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Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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REPORT

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Trade liberalisation has played a key role in the economic transformation of Indonesia and other counties in Southeast Asia International production trade and investment are increasingly organised within global value chains (GVCs) in which the different stages of the production process are located across different countries

Today trade in intermediate inputs makes up over 50 of goods and 70 of services trade This change presents new opportunities for those emerging and developing countries that can reduce their trade costs By reducing the costs of importing as well as exporting and by deepening connectivity with the global market they can tap into GVCs to accelerate their trade jobs and income growth However the emergence of GVCs poses new challenges Countries without adequate infrastructure or with trade related policy barriers to integration may not reap full benefits from GVCs

The ASEAN framework and its core goal of establishing the ASEAN Economic Community by 2015 has promoted trade and investment liberalisation which in turn has facilitated GVCs throughout the Southeast Asia region To help countries reap the full benefits of GVCs the OECD is currently undertaking work along a range of different dimensions to address the new challenges GVCs create for policy makers in Southeast Asia and beyond More broadly the OECD is actively working with other international agencies to improve the effectiveness of aid for trade and welcomes the active engagement of Southeast Asian countries in the OECDWTO Aid for Trade Initiative Current data show that Asia is now the largest recipient of Aid for Trade

OECDrsquos work underscores that GVCs impact an economyrsquos competitiveness and shows that in addition to openness to trade and investment investment in knowledge-based capital (KBC) - and innovation more generally - has an important role to play in increasing productivity and helping countries move up the value chain (see section on Innovation and Industry)

Promoting trade and upgrading in global value chains

The OECD is compiling a regulatory database of services regulations ndash Services Trade Restrictiveness Index (STRI) ndash encompassing 17 services sectors and sub-sectors in 40 countries including Indonesia The project is developing a toolkit that contains two distinct but complementary instruments which allows countries to consider specific regulatory provisions that may be restrictive and may reduce sector efficiency in their economy and to contrast their own situation in a given sector with that in less restrictive and more efficient jurisdictions It provides the core information for countries to pursue desirable policy reforms whether on a unilateral plurilateral or multilateral basis The STRI will be released in May 2014 at the OECD Ministerial Conference in Paris

A critical issue for many countries today is the importance of reducing trade costs through trade facilitating measures Following the conclusion of the WTO Trade Facilitation Agreement 2013 December in Bali the OECD re-estimated the potential trade costs reductions from the full implementation of this Agreement to be as high as 15 for many individual developing countries The indicators allow individual countries to benchmark their performance relative to best practice in their region and globally and to highlight priority areas for action The OECD also tracks

donorsrsquo efforts targeted towards assisting countries to implement trade facilitation reform

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SMOOTH FUNCTIONING OF MARKETS 19

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The Trade Initiative is identifying areas for further engagement on trade issues relevant to enhancing connectivity in Southeast Asia

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

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20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

wwwoecdorgcompetition

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REPORT

The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

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22 ACTIVE WITH SOUTHEAST ASIA

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REPORT

Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

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SMOOTH FUNCTIONING OF MARKETS 23

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G M

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ETS

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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REPORT

PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Eliminating subsidies and unfair practices in economic competition helps form the foundation of a healthy and dynamic global economy OECD export credits work is precisely one of the basic building blocks of the ever-growing structure of global trade agreements that aim to maintain open and efficient markets

The OECD provides a forum for discussion and coordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending OECD-housed rules ensure that export credit programmes conform to anti-subsidy obligations made under the auspices of the WTO and contribute to open markets and fair trade

Governments provide official export credits through Export Credit Agencies in support of national exporters competing

Regulating export credits

for overseas sales The OECD provides a forum for discussion and co-ordination of national export credit policies relating to good governance issues such as anti-bribery measures environmental and social due diligence and sustainable lending In addition the Arrangement on Officially Supported Export Credits stipulates the most generous financial terms and conditions for officially supported export credits These OECD housed rules ensure that export credit programmes comply with anti-subsidy obligations made under the auspices of the World Trade Organisation (WTO) and contribute to open markets and fair trade Non-members are also invited to fully participate in negotiating and administering these rules and may do so without assuming any OECD non-export credit obligations

wwwoecdorgtradehttpoecdgvchttpoecdtiva

20 ACTIVE WITH SOUTHEAST ASIA

SMOOTH FUNCTIONING OF MARKETS 21

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Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

wwwoecdorgcompetition

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REPORT

The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

22 ACTIVE WITH SOUTHEAST ASIA

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REPORT

Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

wwwoecdorggovbudgeting

SMOOTH FUNCTIONING OF MARKETS 23

FUN

CTIO

NIN

G M

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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REPORT

PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

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36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

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L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

SMOOTH FUNCTIONING OF MARKETS 21

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CTIO

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ARK

ETS

Regulatory barriers to competition can potentially hamper development and prevent consumers from benefiting from economic growth

In order to promote sound competition principles and build mutual understanding and cross-border convergence the OECD has developed international best practices on co-operation between competition enforcers on hard core cartels and on assessment of government policies for anti-competitive effects The OECD has developed a Competition Assessment Toolkit that provides a highly functional methodology to review laws and regulations that could restrain competition It has also developed Guidelines for Fighting Bid Rigging in Public Procurement to assist governments in raising awareness of the risks and costs of collusion in this sector

Indonesia was one of the first ASEAN members to introduce competition law more than a decade ago Competition policy has played a substantial role in underpinning Indonesiarsquos economic achievements since 1999 Peer reviews of Indonesia including the OECDrsquos 2012 Regulatory Reform Review have highlighted the policy measures necessary to strengthen the competition regime and its contribution to Indonesiarsquos National Development Plan in particular by promoting further pro-competitive regulatory reforms

The OECD works closely with ASEAN member countries and the ASEAN Secretariat to support their efforts to introduce national competition law and policy by 2015 Through targeted national and regional workshops the OECD helps Indonesia and other ASEAN members build domestic competition capacity which lays the foundations to improve regional enforcement co-operation and policy convergence In particular ASEAN member state competition authorities are active participants in the Competition Programme of the OECD Korea Policy Centre which serves as a hub to train and assist officials from across the Asia-Pacific in developing and implementing effective competition

Promoting sound competition

law and policy In 2013 competition officials from across the region met in Malaysia to participate in an OECD Korea Policy Centre workshop co-hosted by the Malaysia Competition Commission on the topic of fighting bid rigging In 2014 the OECD Korea Policy Centre plans to hold a dedicated workshop for ASEAN member states in Thailand on fighting cartels

Indonesiarsquos Commission for the Supervision of Business Competition (KPPU) is an active participant in the work of the OECDrsquos Competition Committee and a regular contributor to the debates in the Global Forum on Competition The Forum is an annual event in Paris and open to all competition authorities from across Southeast Asia and the rest of the world The OECD Global Forum on Competition provides an opportunity for competition authorities from around the world to meet and exchange policy experiences and lessons-learned through open and multilateral debates with peers

wwwoecdorgcompetition

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The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

22 ACTIVE WITH SOUTHEAST ASIA

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Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

wwwoecdorggovbudgeting

SMOOTH FUNCTIONING OF MARKETS 23

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The OECD promotes efficient open stable and sound market-oriented financial systems based on high levels of transparency confidence and integrity It monitors and surveys current market developments and structural changes publishing its key findings in the biannual publication Financial Market Trends

The OECD also suggests reform measures related to banking securities and institutional investors in particular with regard to insurance companies and private pension schemes In addition it facilitates policy dialogue and exchange of experiences on capital market reform insurance private pensions financial education and financial consumer protection

The OECD seeks to enhance policy analysis and dialogue on disaster risk financing strategies for natural and man-made disasters and develop good practices where relevant Building on long-standing work in disaster risk management and risk financing the OECD developed a G20OECD Methodological Framework for Disaster Risk Assessment and Risk Financing

Developing a robust financial system

that supports the development of effective strategies to manage the financial impacts of disasters The OECD is actively supporting an Asia-Pacific Economic Co-operation (APEC) Finance Minister initiative on disaster risk financing that seeks to promote information exchange and good practices among APEC economies some of which are from Southeast Asia An APEC seminar on disaster risk financing in the Asia-Pacific region will be held in Indonesia in June 2014 Countries from Southeast Asia will be invited to participate in this major event

Established in 1999 the OECD-Asian Development Bank Institute Roundtable on Capital Market Reform in Asia meets annually in Tokyo to allow Asian and OECD country regulators policymakers experts practitioners and scholars as well as international organisations to discuss the latest developments in capital market reform in Asia The Roundtable has examined the development of Asian bond markets as well as policy frameworks for effective and efficient financial regulation in Southeast Asia

wwwoecdorgfinance

22 ACTIVE WITH SOUTHEAST ASIA

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REPORT

Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

wwwoecdorggovbudgeting

SMOOTH FUNCTIONING OF MARKETS 23

FUN

CTIO

NIN

G M

ARK

ETS

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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REPORT

PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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VERN

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REPORT

Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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REPORT

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

GO

VERN

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REPORT

The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

AN

CE

PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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REPORT

The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

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EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Infrastructure gaps present a major challenge for deepening regional economic integration and establishing the ASEAN Economic Community in 2015

The OECD Economic Outlook for Southeast Asia China and India 2014 identified infrastructure investments as a critical component for ASEAN countries to foster economic growth and reduce poverty According to ADB estimates ASEAN Member countries need to invest USD 60 billion annually until 2020 to maintain and expand the existing infrastructure To raise the required resources public funds need to be complemented by privately-financed infrastructure investments including public-private partnerships (PPPs)

PPPs are an important tool for decision makers to strengthen economic and social development By harnessing private sector expertise and allocating risks to the parties governments can make great strides in ensuring value for money The OECD Network of Senior PPP Officials was established to ensure that PPPs and capital investment projects bring value for money and that potential risks are managed properly The Network

Strengthening connectivity capital investment and public-private partnerships

has developed the OECD Principles for Public Governance of PPPs which examine institutional capacities selection of PPP projects based on value for money and use the ordinary budget process to ensure fiscal sustainability

The OECD has also developed conceptual frameworks on how to manage fiscal risks through good capital budgeting ensure value for money from capital procurement and set up dedicated PPP units

wwwoecdorggovbudgeting

SMOOTH FUNCTIONING OF MARKETS 23

FUN

CTIO

NIN

G M

ARK

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The Regional Policy Network for connectivity and PPPs will strengthen the regulatory PPP environment providing a dialogue platform for OECD and ASEAN countries

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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REPORT

PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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REPORT

Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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REPORT

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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REPORT

The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

AN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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REPORT

The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The importance of financial literacy and the need to promote financial education are now globally recognised to improve financial inclusion foster individualsrsquo financial well-being and support financial stability

Southeast Asian countries are actively promoting financial education as a powerful tool for economic growth and financial stability and as a starting point for more inclusive societies Indonesia developed a national strategy for financial education following the OECD recommendations as detailed in Indonesiarsquos contribution to the G20-OECD publication Advancing National Strategies for Financial Education Indonesia Malaysia and Thailand also used OECD methodology to assess the financial literacy of their populations and develop their national strategies for financial education Indonesia has promoted the importance of financial literacy at G20 level and has contributed to making financial education policies a policy priority within ASEAN and APEC

The OECD formulates financial education recommendations through the International Network on Financial Education (INFE) and through its participation in the work of the G20 Established in 2008 the OECDINFE brings together public experts from 270 public institutions and 107 economies in order to undertake analytical work and develop good practices Cambodia Indonesia Malaysia the Philippines Singapore and Thailand are members of the Network Indonesia is an especially important partner having hosted the 2nd meeting of the OECDINFE in 2008 and an OECD Asian Roundtable on the Role of Central Banks in Financial Literacy and Inclusion in 2011 Moreover Indonesia is a member of the OECDINFE Advisory Board and co-Leader of the OECDINFE Expert Subgroup on the Role of Financial Education in Financial Inclusion

Improving financial education

Co-operation between the OECD and Southeast Asian countries will continue through the organisation of an Asian Regional Meeting and Roundtable of Central Banks on Financial Literacy and Inclusion in Thailand in December 2014 and of a meeting of the OECDINFE in Malaysia in 2015 Moreover the OECDINFE will carry out a survey on financial education in Asia with a focus on ASEAN countries

ldquoDeveloping peoplersquos financial literacy is as important as developing financial capability It is critical that people be taught about the importance and benefit of accessing financial servicesrdquo

HE Dr Susilo Bambang Yudhoyono President of the Republic of Indonesia 2010

wwwoecdorgfinancefinancial-education

24 ACTIVE WITH SOUTHEAST ASIA

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PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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VERN

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SCAN TO READ THE

REPORT

Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

wwwoecdorggovethicsintegrityinpublicprocurementhtm

28 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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VERN

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REPORT

The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

AN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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REPORT

The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

SCAN TO READ THE REPORT

EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

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36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

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wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

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L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

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L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

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In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

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USTRTY amp

INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

PUBLIC AND CORPORATE

GOVERNANCEEffective public sector management reduced lsquored tapersquo and sound

corporate governance are key to promoting growth and development Good governance of the public and private sectors requires streamlining

administrations reforming tax and fiscal relations across levels of government combating corruption in business and public sectors and

strengthening the efficiency and transparency of corporate practices for both private and state-owned enterprises

PUBLIC AND CORPORATE GOVERNANCE 25

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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REPORT

Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

wwwoecdorggovethicsintegrityinpublicprocurementhtm

28 ACTIVE WITH SOUTHEAST ASIA

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REPORT

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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VERN

AN

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REPORT

The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

AN

CE

PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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REPORT

The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

AN

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

SCAN TO READ THE REPORT

EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

SCAN TO READ THE

REPORT

HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

SCAN TO READ THE

REPORT

There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

SCAN TO READ THE

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Discussions are underway between ASEAN and the OECD to develop Product Market Regulation and Regulatory Management Systems indicators to support reforms in Southeast Asia This work supports ASEAN member states adherence to the 2009 ASEAN Good Regulatory Practice Guide and 2011 APEC Leadersrsquo (Honolulu) Declaration Toward a Seamless Regional Economy It also encourages coherence with the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance

ldquoWe are fortunate to have OECD as our strategic partner to assist us in this journey towards the implementation of good regulatory practices in our country I would also like to urge all ministries and agencies to leverage on OECDrsquos expertise in providing advisory services and assistancerdquo

Tan Sri Dr Ali Bin Hamsa Chief Secretary to the Government of Malaysia

ldquoHigh quality regulation and simple transparent and public administrative procedures together with accountability shall create a favourable environment for investment remove corruption and waste and remarkably contribute to overall competitiveness of Viet Nam economyrdquo

Nguyen Tan Dung Prime Minister of Viet Nam

wwwoecdorggovregref

Regulatory reform is a cross-cutting theme for ASEAN economic integration and regulatory coherence as well as for individual ASEAN member statersquos structural and rule of law reforms

Regulations are indispensable to the proper function of economies and societies They underpin markets and their integration protects the rights and safety of citizens and ensures the delivery of public goods and services At the same time regulations are not costless Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork Regulations can also have unintended costs if they become outdated or inconsistent with the achievement of policy objectives

The OECD has a long standing engagement with Southeast Asia on regulatory reform both regionally through APEC and ASEAN and bilaterally with individual ASEAN member states Highlights of this engagement include the 2005 APEC-OECD Integrated Checklist on Regulatory Reform 2011 Review of Administrative Simplification in Viet Nam and 2012 Regulatory Reform Review of Indonesia In 2013-14 the OECD has been assisting Malaysia to build institutional capacity on regulatory impact analysis (RIA) a new requirement under the ldquoNational Policy on the Development and Implementation of Regulationsrdquo

In Viet Nam regulatory reforms between 2007 and 2010 resulted in 10 000 administrative procedures at the communal level and 700 at the district level being standardised and simplified into 63 at both levels These and other regulatory reforms were estimated to provide annual compliance cost savings for businesses and society of USD 14 billion In Indonesia regulatory reforms have included efforts to strengthen coherence between national and subnational regulations with 37 of 13 200 sub-national regulations invalidated between 2010-12 Following the 2012 Regulatory Reform Review of Indonesia the OECD is supporting the governmentrsquos efforts to develop guidelines on public consultation in regulatory processes

Regulatory reform and administrative simplification

26 ACTIVE WITH SOUTHEAST ASIA

The Regional Policy Network for regulatory reform will work with regional and OECD partners to improve government capacities for efficient and effective regulations

SCAN TO READ THE REPORTS

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

GO

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REPORT

Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

wwwoecdorggovethicsintegrityinpublicprocurementhtm

28 ACTIVE WITH SOUTHEAST ASIA

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REPORT

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

GO

VERN

AN

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REPORT

The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

AN

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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REPORT

The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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REPORT

There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Maintaining fiscal discipline allocating resources to where they are most valued and achieving greater efficiency in government operations have a crucial impact on overall national economic performance

The OECD carries out research across the full range of budgeting issues through reviews of country budgeting systems comparative analysis of specific aspects of the budgeting system across countries and maintains a comprehensive database on International Budget Practices and Procedures covering 97 countries The results of this work are published in the OECD Journal on Budgeting

The OECD Senior Budget Officials (SBO) meet annually to consider latest developments in international budget practice An Asian SBO meeting held annually in Bangkok Thailand is open to all countries in Southeast Asia and across the region In addition the OECD is developing a Regional Policy Network on Public-Private Partnerships and Connectivity so that the extensive body of analysis and expertise within the OECD member countries is accessible to countries in Southeast Asia (see page 21)

As an example of country-specific analysis the recent report on Budgeting in Indonesia shows that since the economic crisis important improvements have been made such as the creation of a modern legal framework for budgeting and unification of the budget Acknowledging the proactive role that the Indonesian Parliament has taken in the budget process and the introduction of a national planning function alongside budgeting the report suggests that further progress could be achieved by introducing an operational expenditure-based fiscal rule avoiding the concentration of spending in the last months of the fiscal year and reducing unnecessary detail in its official budget documentation as excessive detail could hamper reform initiatives under consideration in Indonesia

wwwoecdorggovbudgeting

Budgeting and public expenditures

PUBLIC AND CORPORATE GOVERNANCE 27

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Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

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28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

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PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Public procurement is a visible high-spend activity that accounts for 13 of GDP and 30 of total public expenditures in OECD countries Ensuring the efficiency and effectiveness of their public procurement system while assuring transparency and fair competition is part of the government reform agenda in many countries

The Principles on Enhancing Integrity in Public Procurement is one OECD instrument for accessing public procurement governance On the basis of these principles and depending on countriesrsquo demands the OECD conducts public procurement peer reviews of national procurement or sector procurement systems The OECD is now revising the Principles to include new concepts by the end of 2014 and will be adaptable to policies at sub-central level and sector-specific procurement such as health or energy procurement On the basis of its experience in assessing procurement systems the OECD was requested by the G20 to develop a guide of public procurement good practices also to be ready in 2014

The OECD is partnering with several Southeast Asian countries to support decisions and integrity safeguards in procurement and increase transparency and effectiveness of public spending India Indonesia and Thailand participate regularly in the Leading Practitioners on Public Procurement Meetings which brings together senior procurement experts from OECD and G20 countries as well as international organisations and the private sector to share experiences and provide a global view of procurement best practices

Public procurement

In addition the OECD is collaborating with the Asia-Pacific Economic Co-operation (APEC) in particular on green public procurement Green public procurement promotes shifting towards environmentally friendly goods and services and ultimately towards a low-pollution resource-efficient economy The OECD is also developing a compendium of good practice on green public procurement for OECD and G20 countries to be ready by the end of 2014 which will include data on Southeast Asia

wwwoecdorggovethicsintegrityinpublicprocurementhtm

28 ACTIVE WITH SOUTHEAST ASIA

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OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

GO

VERN

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

AN

CE

PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

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36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

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launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

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EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

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In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

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USTRTY amp

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

OECD analyses can assist the public sector in responding to growing pressure to enhance performance and ensure better value for money

The OECD compiles internationally comparable data and indicators on public governance and performance in its bi-annual Government at a Glance publication that covers the OECD countries as well as selected accession partner and observer countries It is currently in discussions with the Asian Development Bank (ADB) to jointly collect data on public governance and performance in order to publish an Asia-Pacific Government at a Glance These data would be used by politicians experts in government practitioners academics researchers and students in analysing the performance of their public sector and for designing public policies

The Observatory of Public Sector Innovation support member countries to implement innovative approaches to improve the responsiveness and performance of their public sector The Observatory provides access to a database of innovations from around the world to inspire innovators in other countries connects innovators through an online platform enabling the sharing of experiences and collaboration in the development of innovations and develops practical guidance on how to source develop support scale and diffuse innovations The Observatory has initiated a dialogue with Indonesia on public sector innovation and taken steps to explore the potential engagement of non-members in the Southeast Asian region through a regional forum to take place in June 2014 in Indonesia

Increasing performance in the public sector

In addition work on cutting edge practices in human resource management and e-government management helps to support a forward looking and efficient public sector Reviews of Human Resource Management in the Public Sector are key to ensure a professional and well performing public service building capacity for effective governance Such reviews can be done in non-member countries depending on the needs and demand E-government can also help to ldquoleapfrogrdquo economic development providing ubiquitous access to public services in a context where users may predominantly rely upon mobile phones Case studies could be developed following the framework of the ldquoM-Governmentrdquo report prepared in collaboration with the United Nations and the International Telecommunication Union (ITU)

wwwoecdorggov

PUBLIC AND CORPORATE GOVERNANCE 29

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The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

AN

CE

PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

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L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The OECD is committed to fostering public sector reforms inspired by the principles of transparency integrity accountability and citizenrsquos participation

Building on years of experience in gathering data providing policy advice and in setting international principles and standards in the area of good governance for its member countries the OECD is now expanding its activities on open government in non-member countries This stems in part from the successful implementation of the mandate received by G8 countries to assist Middle East and North African (MENA) countries in joining the Open Government Partnership (OGP) This initial collaboration rapidly grew in scope to cover countries in Latin America Africa and Southeast Asia and culminated with the OECD being granted the status of OGP Official Multilateral Partner Organisation

Several projects have been launched and are under discussion at the national and regional levels In particular following the intention of the Government of Myanmar to join the OGP in 2016 the OECD has assessed the ongoing public sector reforms in light of OECD open government principles and good practices in order to identify strengths and opportunities for improvement This project is the first step of a broader support the OECD is providing to the Government of Myanmar in its wide-ranging reform process as expressed in the ldquoNay Pyi Taw Accord for Effective Development Co-operationrdquo and in the ldquoFramework for Economic and Social Reforms (FESR) Policy Priorities for 2012-15 towards the Long-Term Goals of the National Comprehensive Development Planrdquo both of which identify good governance as a priority area The project has disseminated principles and practices of Open Government and of the OGP in Myanmar created an Open Government Network made up of policy makers and practitioners in the country and produced the OECD Open Government Preliminary Diagnostic Assessment

Disseminating open government

Moreover in collaboration with the Government of Indonesia and the OGP the OECD will host a regional seminar on ldquoMeasuring Citizensrsquo participation to improve open government policiesrdquo within the context of the OGP Asia-Pacific Regional Conference in Bali in May 2014 The OECD Open Government Review of Indonesia will be launched together with the OECD-SEA Network on Open Government and Connectivity This is the beginning of a larger engagement by the OECD with Southeast Asian countries in order to meet their requests for policy advice technical assistance and capacity building in the areas of public governance and open government

wwwoecdorggov

30 ACTIVE WITH SOUTHEAST ASIA

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

AN

CE

PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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REPORT

The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

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PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

SCAN TO READ THE REPORT

EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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REPORT

There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Integrity transparency and accountability are key components to restore citizensrsquo trust in government create a level playing field for business and contribute to economic performance

For over a decade the OECD has helped member countries to build evidence-based regulatory and institutional frameworks to promote integrity and efficiency within the public sector Although governments play a central role in upholding core values and safeguarding public interest other stakeholders such as the private sector or citizens also share responsibility in ensuring integrity accountability and transparency across societies

Enhancing public sector integrity

Southeast Asian countries are paying increasing attention to enhancing their public sector integrity systems The ADBOECD Anti-Corruption Initiative for Asia and the Pacific provides a forum through which peers from the region meet regularly to discuss shared integrity challenges and innovative and effective ways to address them

The OECD has initiated a programme on Illicit Trade and Corruption with a special focus on the Southeast Asia region In this context the OECD in collaboration with the Asia-Pacific Economic Co-operation (APEC) has developed Principles to Prevent and Combat Trading in Persons-related Corruption which has been widely accepted by stakeholders and their application is being piloted in 2014

wwwoecdorggovethicswwwoecdorggovethicsintegrityframework

GO

VERN

AN

CE

PUBLIC AND CORPORATE GOVERNANCE 31

L The 12th Regional Seminar of the ADBOECD Anti-Corruption Initiative brought together 27 members to strengthen anti-corruption agencies and promote whistleblower protection in the region Dili East Timor July 2013

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

wwwoecdorgcorruptionwwwoecdorgcorruptionasiapacific

32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

AN

CE

PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

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EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Corruption is a major obstacle to economic development as it undermines good governance sustainable development and fair business practices The OECD has developed a Convention on Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) and monitors its implementation through peer reviews that are discussed by the OECD Working Group on Bribery This international instrument has been adopted by 40 countries around the world

The Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective It is the first and only international anti-corruption instrument focused on the lsquosupply sidersquo of the bribery transaction

The OECD participated in a number of events in Indonesia Malaysia and Thailand These events include discussions on establishing a foreign bribery offence and corporate liability for the offence in Indonesia and Thailand and strengthening legislative frameworks for combating the supply-side of the bribery of foreign public officials in Malaysia Future work with Indonesia Malaysia and Thailand will focus on exchanging expertise on establishing an effective legislative framework for criminalising the supply side of bribing foreign public officials and corporate liability for the offence Once the legislative frameworks are fully established knowledge and expertise could be usefully shared on effectively enforcing the foreign bribery offences in these three countries In addition all three countries have voiced interest in exchanging information on the non-tax deductibility of bribe payments as well as working together with the OECD on private sector initiatives on fighting foreign bribery

Fighting transnational corruption

Thirty-one countries in the Asia-Pacific region have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADBOECD Anti-Corruption Initiative for Asia and the Pacific The Initiative supports membersrsquo national and multilateral efforts to reduce corruption by focusing on the effective implementation of the UN Convention against Corruption (UNCAC) Indonesia Viet Nam Thailand Malaysia Singapore the Philippines and Cambodia are also active members of ADBOECD Anti-Corruption Initiative for Asia and the Pacific

In 2013 the Initiative launched a Thematic Review on Accounting and Auditing Internal Control and Ethics Measures for Preventing Corruption in the Private Sector The Review will be finalised and published in 2014

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32 ACTIVE WITH SOUTHEAST ASIA

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The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

AN

CE

PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The rapidly increasing integration of Southeast Asian countries into the global economy highlights the importance of continuing and strengthening co-operation between Southeast Asia and the OECD on taxation issues Such co-operation has already helped countries in the region to design and implement taxation and administrative measures that reflect international best practices

The OECD plays a lead role in the development of international tax standards and guidelines In response to the G20 leadersrsquo call to address base erosion and profit shifting (BEPS) the OECD is currently working on adapting the current international tax system to meet the challenges of globalisation and develop approaches to counter BEPS issues

As the OECDG20 BEPS Project will have a global impact the OECD is working directly with countries in the Southeast Asia region to ensure that the revised international tax rules reflect their needs A regional consultation on BEPS among countries in the Southeast Asia region was held in February 2014 in Korea as a start of an ongoing engagement between the region and the OECD on BEPS and other issues of significance in the international tax policy landscape including for example wasteful tax incentives and transfer pricing comparability data Indonesia is an Associate in the OECDG20 BEPS Project and participates on an equal footing with OECD and other G20 countries Malaysia and Singapore participate in the Committee on Financial Affairs (CFA) and engage in the discussions of the CFA and its subsidiary bodies The Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia and the OECD signed a Memorandum of Understanding (MoU) for a three-year project on taxation The project will provide a framework for collaborating in a focused and flexible way and enhance co-operation between Indonesia and the OECD

Improving tax transparency and compliance

The OECD organises approximately 20 tax seminars and policy dialogue events per year for the Southeast Asian countries which are hosted by Malaysia Singapore Thailand and the Korean Policy Centre (Tax Programme) The events bringing together tax officials from the region as well as OECD countries to share experiences and expertise on technical policy and administrative issues such as tax treaties transfer pricing exchange of information tax administration and other important tax matters The OECD through its Tax and Development programme is also working with tax administrations in the region to carry out in-depth programmes on issues including tax incentives and transfer pricing and its Tax Inspectors Without Borders project will soon begin work in partnership with countries in the region

Indonesia Malaysia the Philippines and Singapore play a key role as members of the Global Forum on Transparency and Exchange of Information for Tax Purposes The Forum gathering about 120 OECD and non-OECD jurisdictions monitors the implementation of internationally-agreed tax transparency standards through country peer reviews Peer reviews of the legal and regulatory framework for transparency and exchange of information for tax purposes were conducted in Singapore the Philippines and Indonesia These reviews published in the phase report shows that all four countries have endorsed and substantially implemented international standards for transparency and exchange of information for tax purposes Phase 2 reviews look at the exchange of information in practice wwwoecdorgtaxwwwoecdorgtaxbepshtmwwwoecdorgtaxtransparency

GO

VERN

AN

CE

PUBLIC AND CORPORATE GOVERNANCE 33

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

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

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EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

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EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

34 ACTIVE WITH SOUTHEAST ASIA

Good corporate governance is central to developing robust and healthy capital markets and essential to sustaining growth in Southeast Asia

Southeast Asian countries have invested significant efforts in promoting good corporate governance However considerable challenges remain in order for the region to fully reap the benefits of capital market integration such as the availability of a larger pool of funds

Members of ASEAN have embraced transparent corporate governance in their activities under the ASEAN Capital Market Forum to achieve effective regional capital market integration The ASEAN Corporate Governance Scorecard provides country reports and assessments of the top listed companies based on the OECD Principles of Corporate Governance Given the growing importance of the region to the world economy efforts to reform governance practices are of global relevance The OECD has engaged actively with some countries in the region for over a decade

The Principles are intended to help countries evaluate and improve their legal institutional and regulatory framework for corporate governance and to provide guidance and suggestions for stock exchanges investors corporations and other parties involved in the development of good corporate governance They are recognised by the Financial Stability Board (FSB) as one of the key standards for international financial stability and form the basis for the corporate governance component of the World Bank Reports on the Observance of Standards and CodesRaising the bar on corporate governance

The Guidelines developed based on the Principles take as a starting point that state-owned enterprises (SOEs) should be as accountable to the general public as private enterprises should be to their shareholders They help governments organise their ownership and regulatory roles while ensuring efficient and

Raising the bar on corporate governance

transparent governance of individual SOEs Well-governed SOEs can in turn help boost national competitiveness and limit the risk of fiscal drainage A number of countries in Asia have undertaken SOE reforms that are consistent with these recommendations the Philippines directly citing the OECD instrument as a source of inspiration

In 2014 the OECD is undertaking a review of the Principles and the Guidelines Indonesia and Singapore along with other FSB members participate in the review as an Associate (ie on an equal footing with OECD members so as to ensure that the updated standards truly reflect an international perspective) Malaysia participates in the Committee as an Invitee

ldquoThe OECD Principles of Corporate Governance (OECD Principles) were used as the main benchmark for developing the Scorecard given its global acceptance by policymakers investors and other stakeholdersrdquo

ASEAN Capital Market Forum (AMCF) Corporate Governance Scorecard Working Group 2012

SCAN TO READ THE REPORT

EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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REPORT

There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

ENT

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

EMPLOYMENT AND SOCIAL

DEVELOPMENT Southeast Asian countries have increased efforts to put in place an efficient and equitable

welfare model covering a greater proportion of its population Health pensions education vocational training and consumer policy are key components to building

an effective social security system All these are essential to enhancing human capital increasing social cohesion and achieving more inclusive economic growth

EMPLOYMENT AND SOCIAL DEVELOPMENT 35

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

SCAN TO READ THE

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

SOCIETY OECDrsquos work on social policy covers a wide range of issues and continuously seeks new best policy practices that help countries adapt to changing socio-economic and demographic conditions

Society at a Glance ndash AsiaPacific offers an overview of the state of Asia-Pacific economies on social issues ndash such as demography and family characteristics employment and unemployment poverty and inequality social and health care expenditure and trust and tolerance - to help inform policies The report also demonstrates how social indicators can be used to measure lsquowell-beingrsquo in Southeast Asian economies The OECD jointly published the 2011 edition with the OECD Korea Policy Centre which includes a special focus on unpaid work and the ways to facilitate womenrsquos access to employment in the AsiaPacific region A new edition is scheduled to be released mid-2014 and will feature a special chapter on gender equality in education employment and entrepreneurship (the three ldquoEsrdquo)

wwwoecdorgelssocialindicatorsasia

Seeking best practices of social and health policies

PENSIONS Many of Asiarsquos pensions system are ill-prepared for the rapid population ageing that will occur over the next two decades Pensions are a major policy issue in Southeast Asian and OECD economies alike The OECD has developed international standards and statistical data to help monitor the pensions industry and is currently drawing up guidelines on the security of investments in pension funds

The OECD also analyses retirement income systems around the world providing a reference for pension comparison across the OECD and the Asia-Pacific region The biennial publication Pensions at a Glance AsiaPacific covers selected Southeast Asian economies presenting key pension indicators such as replacement rates and pension wealth The 2013 edition provided a reference for pension comparison throughout the region

wwwoecdorgelssocialpensions

36 ACTIVE WITH SOUTHEAST ASIA

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HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

SOC

IAL D

EVELO

PM

ENT

EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

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EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

IND

USTRTY amp

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

HEALTH As the global financial and economic crisis is forcing countries to seek ways to rein in public spending health systems need to increase their efficiency and deliver value for money The OECD helps Southeast Asia economies measure progress towards attaining universal health coverage and monitor health system performance by advising on the implementation of global standards to track health expenditure and by helping them collect indicators on health status health care resources and quality of care The 2012 edition of Health at a Glance AsiaPacific presents a set of key indicators on health systems for 27 AsiaPacific economies

Through the OECD Korea Policy Centre experts and policy makers in the region share policy experiences including on policies to improve health care quality OECD also helps countries improve value for money by designing pharmaceutical policies and methods for rewarding providers for delivering high-quality and efficient care Collaborative OECD and WHO work has shown that investing in preventive aimed at effectively tackling the main risk factors such as obesity and harmful alcohol consumption is a highly cost-effective strategy

wwwoecdorghealth

wwwoecdkoreaorg

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IAL D

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EMPLOYMENT AND SOCIAL DEVELOPMENT 37

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There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

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The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

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EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

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L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

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In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

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INDUSTRY AND INNOVATION 47

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USTRTY amp

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

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Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

REPORT

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

There is now widespread consensus that gender equality matters for development economic growth and poverty reduction

Although the gender gap is narrowing in areas such as education and employment gender equality remains an issue in the Southeast Asia region According to UNESCO statistics the gender gap in education attainment in secondary education has narrowed from 2002 to 2012 However across countries women are more likely to engage in unpaid work and work in the informal sector and less likely to be in leadership roles

Improving womenrsquos education employment and health outcomes not only delivers benefits for women but for whole communities and economies However there remain significant obstacles to achieving equal outcomes for women and men on key economic and social indicators The OECD Development Centrersquos research on discriminatory social norms covers all Southeast Asian countries through the Social Institutions and Gender Index (SIGI) The Index highlights the importance of tackling discriminatory social norms to promote gender equality Also SIGI data highlights the relationship between discriminatory social norms and key development outcomes such as maternal mortality educational attainment poverty reduction and food security The specific country profiles reflect the performance of the Southeast Asian countries The SIGI helps policy-makers and researchers understand what drives gender inequality and make better-informed policies to enhance womenrsquos health education and employment in their countries

Gender equality in public life has been recognised as a driver for inclusive growth This was reaffirmed by the discussions at the 2014 OECD Global Forum on Womenrsquos leadership in Public Life which brought together a global network of leading gender equality actors from the government parliaments justice institutions civil society and businesses from over 60 countries including Indonesia Thailand and the Philippines

Tackling gender inequality

The path-breaking 2014 OECD publication on Women Government and Policy-Making in OECD countries Fostering Diversity for Inclusive Growth presented comparative data and policy benchmarks on womenrsquos access to decision-making roles The report showed that lower levels of inequality in countries are correlatively linked with a greater share of women in legislatures It also underlines that gender mainstreaming and strategic government capacities to adopt a co-ordinated and whole-of-government approach were crucial to promote gender equality and integrate gender into all stages of policy-making and service delivery cycles and close remaining gaps in public and economic life This work provides the foundation for the upcoming OECD Guidelines on Gender Equality in Public Life and contributes to the OECD Gender Initiative and the OECD Development strategy

38 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE REPORT

The OECD will work with regional partners to improve womenrsquos economic development through the development of an OECD Southeast Asia Gender Initiative

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

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In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

A report on Closing the Gender Gap Act Now was published in December 2012 as part of the OECD Gender Initiative together with the new OECD Gender Data portal that covers OECD members and Brazil China India Indonesia Russia and South Africa The report examined latest trends on gender equality in the three ldquoEsrdquo and discussed ways to best close the remaining gender gaps in these areas

wwwoecdorggenderequalityhttpgenderindexorgwwwoecdorgdevpovertygenderatthedevelopmentcentrehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 39

SOCIA

L DEV

ELOPM

ENT

L Left to right Ms Flaminia Bussacchini Head of Unit Equal opportunities and Working Conditions DG Human Resources and Security European Commission Ms Helen Silver Chief General Manager Allianz Australia former Secretary of the Victorian Department of Premier and Cabinet Head of the Victorian State Public Service Australia Ms Geraldine Byrne-Nason Second Secretary General EU Affairs and Coordination Division Department of the Taoiseach (Prime Minister) Ireland

I Cambodian Minister of Womenrsquos Affairs HE Dr Kantha Phavi Ing speaking at the 2014 OECD Southeast Asia Regional Forum on the importance of tapping womenrsquos potential to drive jobs and growth March 2014 Bali

Mr Robert Cloarec Chair OECD Public Employment and Management Network Swedish Agency For Government Employers Ms Uschi Schreiber Global Leader Ernst and Young United States Mr Areepong Bhoocha-oom Secretary-General Office of the Public Sector Development Commission Thailand and Ms Nathalie Loiseau (not pictured) Director Eacutecole nationale drsquoadministration (ENA) France at the OECD Global Forum on Public Governance April 2014 Paris

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

ELOPM

ENT

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The Regional Policy Network for SMEs will strengthen co-operation in the region to support the design and implementation of SME policies and enterprise development

40 ACTIVE WITH SOUTHEAST ASIA

Governments around the world including Southeast Asian economies have recognised the importance of small and medium-sized enterprises (SMEs) and their contribution to economic growth employment and social cohesion They are stepping up efforts to provide a more enabling business environment and to promote entrepreneurship and SME development

Access to finance for micro and small companies in particular remains difficult Moving beyond microfinance to longer-term financial products and services remains a major challenge and is critical to achieving greater growth The OECD monitors closely the situation of SMEsrsquo access to finance around the world Financing SMEs and Entrepreneurs 2013 An OECD Scoreboard analyses trends in access to financing in 25 countries including Thailand based on annual and quarterly data from central banks and national statistical agencies Participation in this exercise is free of charge and is open to all Southeast Asian economies

The OECD has recently developed a partnership with the Asian Development Bank in SME finance In 2013 a joint project on ldquoEnhancing financial accessibility for SMEs Lessons from Asian and OECD Areasrsquo Crisesrdquo was launched which analyses policies and experiences to improve bank lending efficiency and to broaden the range of financing instruments available to SMEs and entrepreneurs The results of the project were discussed at the joint OECD-ADB workshop held in October 2013 in Paris

The official OECD body responsible for policy advice on SMEs and entrepreneurship is the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) The WPSMEE enables an exchange of views lessons and analysis among SME policy makers from across the world on ground-breaking issues of importance to SMEs and entrepreneurs Policy makers from Member

Supporting SME development and entrepreneurship

and partner economies to come together to discuss policy experiences and to identify best practices for the promotion of entrepreneurship and SME development Topics reviewed include the business environment and regulatory framework innovation financing taxation skills and internationalisation Thailand participates regularly in the WPSMEE and Indonesia will be invited to join this group as a participant

Since April 2011 the OECD the ASEAN Secretariat and the Economic Research Institute for ASEAN and East Asia (ERIA) have been collaborating on assessing SME policies in the ten ASEAN member countries to support enterprise policy development and enhance the dialogue among policy makers in the ASEAN region The OECD-ERIA ASEAN SME Policy Index 2014 Towards Competitive and Innovative ASEAN SMEs was

SCAN TO READ THE REPORT

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

launched at the 2014 OECD Southeast Asia Regional Forum in Bali The report measures convergence towards the policy guidelines of the ASEAN Strategic Plan for SME Development (2010-2015) and illustrates a substantial disparity in SME policy performance between the CLMV(Cambodia Lao PDR Myanmar and Viet Nam) and the ASEAN-6 countries While Singapore and Malaysia exhibit high standards in SME policy (eg access to finance for SMEs support services for start-ups) further efforts are needed in CLMV countries to reduce development

gaps Structural reforms have been identified to enhance productivity human capital and enterprise performance and will be supported through workshops to exchange good practices in SME policy between ASEAN-6 and the OECD capacity building events for CLMV countries and country-specific policy initiatives

wwwoecdorgcfesmeswwwoecdorgcfewwwoecdorgglobalrelationsregionalapproachesaseansmehtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 41

SOCIA

L DEV

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42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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SCAN TO READ THE

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

SCAN TO READ THE

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

SCAN TO READ THE

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

42 ACTIVE WITH SOUTHEAST ASIA

Skills are the new global currency Investment in education and training helps drive economic growth alleviate poverty and enhance social cohesion Education and training also develops the skills base which is necessary for the integration of Southeast Asian countries in the regional and global economy

The OECD helps policy makers foster human and social capital skills and leverage education and training systems for dynamic and sustainable economies Through comparative data and policy analysis it strives to promote efficient and effective systems and improve learning outcomes SEA countries have made significant investment in education and have facilitated access of young people to learning opportunities from early childhood to tertiary education in most countries in the region primary and lower-secondary attainment is relatively high However major challenges remain in both quality and equity

While students in Singapore lead the world in problem solving and Viet Namrsquos 15 year-old students perform at levels above the OECD average in Indonesia Malaysia and Thailand significant numbers of students do not attain minimum skill levels The disparity among countries may hinder regional economic integration While in some countries a very high proportion of students continue to study beyond compulsory education less than a third of students who entered primary schools go on to secondary level in Cambodia for example

Qualified teachers are the key to success and shortages of teachers in secondary schools are severe in some parts of the region especially in remote areas More than 85 per cent of teachers in Malaysia have bachelor degrees or post graduate diplomas in education but Lao PDR has many teachers with low levels of formal schooling ndash 37 per cent of them have had no more and sometimes even less schooling than the level of students they teach The capacity of education systems to respond to the economyrsquos current and future skills needs is crucial There should be a good match between the skills required by industry and

Fostering skills through education and training

those provided by schools colleges and universities In Southeast Asia training systems are often outdated and the region is facing a growing demand for higher skills in global value chains in particular in middle income ASEAN countries

The current and planned work of the OECD in Southeast Asia has three pillars promoting participation in international education surveys country education policy reviews and regional policy peer-learning

Through the Programme for International Student Assessment (PISA) the OECD has been evaluating the knowledge and skills of the worldrsquos 15-year-olds since 2000 The recent PISA for Development initiative has adjusted and enhanced the existing survey instruments to make them more relevant to emerging and developing countries PISA for Development is well placed to to help countries set national learning targets monitor progress towards them and analyse the factors that affect student outcomes particularly among poor and marginalised populations

Countries can also participate in the Teaching and Learning International Survey (TALIS) and the Survey of Adult Skills (PIAAC)

TALIS studies teaching practices and environments in order to improve teaching and teachersrsquo capacities to provide quality education while the Survey of Adult Skills measures the key cognitive and workplace skills needed for individuals to participate in society and to be active in the labour market Indonesia will participate in the third round of the survey

OECD Education Policy Reviews provide countries with tailored policy advice and support for the design and implementation of reforms Country education policy reviews cover a wide range of aspects of education systems depending on the priorities of the country Based on an in-depth analysis of a countryrsquos strengths and weaknesses reviews draw upon policy lessons and

The Regional Policy Network for education and skills will strengthen the networks on knowledge sharing and improve educational quality and skills

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

SCAN TO READ THE

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

SCAN TO READ THE

REPORT

EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

recommendations supported by international best practices The OECD is currently conducting education policy reviews for Thailand (jointly with UNESCO) and Indonesia

ldquoUltimately education is not what we do to our children Rather it is what we do with them and for them to bring out the best in each of them so that they grow up to embrace the best of the human spirit ndash to strive to be better to build deeper wells of character and to contribute to societyrdquo

Heng Swee Keat Minister of Education of Singapore

EMPLOYMENT AND SKILLS STRATEGIES IN SOUTHEAST ASIAThe Employment and Skills Strategies in Southeast Asia (ESSSA) initiative is led by the OECDrsquos Local Economic and Employment Development (LEED) Programme in collaboration with the International Labour Organisation (ILO) ASEAN the Asian Development Bank and supported by the European Commission Since 2008 ESSSA aims to help countries within the Southeast Asia region design policies which tackle cross-cutting labour market issues build the capacity of practitioners in implementing effective employment and economic development strategies and develop governance mechanisms which foster greater policy coordination and integration

ESSSA gathers policy makers practitioners and researchers from both developed and emerging economies including Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar the Philippines Singapore Thailand and Vietnam the Peoplersquos Republic of China Chinese Taipei Mongolia India Japan Korea Australia and New Zealand Key outcomes from ESSSA include identifying best practices of national and local initiatives surveys on employment and skills development policies in the region and other policy research to provide guidance on ways to build sustainable job creation and employment at the local level

The ESSSA initiative builds on the work of the OECD Local Economic and Employment Development Programme (LEED) which provides guidance to government and communities since 1982 on how to respond to economic change and tackle complex problems in a fast-changing world It builds on comparative analysis of policy experiences from some 50 countries from the five continents in fostering economic growth employment and inclusion LEED has been increasingly present in Southeast Asia to learn from the regionrsquos innovative skills development strategies In exchange the region has learned from the OECDrsquos experience in building effective partnerships and breaking down policy silos The LEED Committee the Programmersquos governing board invites Southeast Asian countries to join as full participants in its regular activities

wwwoecdorgeduwwwoecdorgpisawwwoecdorgcfeleedwwwoecdorgcfeleedemploymentesssahtm

EMPLOYMENT AND SOCIAL DEVELOPMENT 43

SOCIA

L DEV

ELOPM

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Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

SCAN TO READ THE

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

SCAN TO READ THE

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EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

SCAN TO READ THE

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Governments have an important role to play in helping consumers understand their rights and protect their interests

The OECD helps governments design effective consumer policies to support the development of efficient transparent and fair global markets for consumers In 2010 a Consumer Policy Toolkit was developed to improve consumer policy making Both member and partner governments are using the Toolkit to address specific consumer issues The lessons learned have been codified in a Recommendation adopted by the Council in 2014

The OECDrsquos work on consumer policy currently focuses on e-commerce and product safety In the field of e-commerce the Guidelines for the Protection of Consumers developed in 1999 are being updated special attention is being paid to issues concerning mobile and online payments digital content products and participative e-commerce

Promoting effective consumer policy

In product safety a web-based global database was launched in October 2012 that draws together information on product recalls worldwide A second database has been developed to help track policy and regulatory developments A third database will provide a platform for sharing information on injuries

Enhancing engagement with non-members is of keen interest to the Committee on Consumer Policy Closer contact with Southeast Asian countries has been established through participation in ASEAN activities and the Asia Consumer Policy Forum organised by Korea wwwoecdorgsticonsumer-policywwwoecdorgsticonsumer-policyproductsafety

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44 ACTIVE WITH SOUTHEAST ASIA

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

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REPORT

EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

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ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

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Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The OECD supports Southeast Asia countries to better manage labour migration by providing timely information on migrants and migration trends

Immigrants born in Southeast Asia represent 6 of all immigrants living in OECD countries and 40 of them are highly educated More than 400 000 citizens of Southeast Asian countries have emigrated to an OECD country in 2012 accounting for 8 of total migration flows to the OECD area Furthermore in 2011 7 of international students in OECD countries are Southeast Asian nationals

Since 2011 the OECD ADBI and ILO jointly organise an annual roundtable on labour migration which brings together policy makers from more than 17 Asian countries together with delegates from OECD countries This constitutes a platform for exchanging experience and ideas regarding the management of labour migration in Asia and to better understand the dynamics and challenges of international migration between OECD and Southeast Asian countries as well as within the region In 2013 this meeting was organised in Bangkok and focused on ldquolabour migration skills and student mobility in Asiardquo In 2014 the meeting was held in Tokyo and focused on ldquoBuilding human capital across bordersrdquo

In January 2013 the OECD Development Centre launched the ldquoInterrelations between public policies migration and developmentrdquo of partner countries project which aims at enhancing partner countriesrsquo capacity to incorporate migration into the design and implementation of their development strategies The project is carried out in 10 low and middle-income countries among which three are in Southeast Asia Cambodia Malaysia and the Philippines It will provide empirical evidence based on quantitative and qualitative fieldwork at the country level and a comparative analysis of the partner countries

wwwoecdorgelsmigwwwoecdorgmigrationmigrationatthedevelopmentcentrehtm

Managing international migration

ldquoLabour migration is not a new phenomenon It has been a long discussed topic but we again must bring it to the table because labour migration plays a vital role in promoting the economic growthrdquo

Phadermchai Sasomsub Former Minister of Labour of ThailandQuote from his opening speech in 2013 OECD-ADBI-ILO roundtable on labour migration in Asia January 2013 Bangkok

ldquoHelping to design better policies for managing migration is what the OECD is about and what this roundtable with ILO and ADBI partners is trying to achieve in the Asian contextrdquo

Yves Leterme Deputy Secretary-General of the OECDQuote from his opening speech in 2014 OECD-ADBI-ILO roundtable on labour migration in Asia January 2014 Tokyo

SCAN TO READ THE

REPORT

EMPLOYMENT AND SOCIAL DEVELOPMENT 45

SOCIA

L DEV

ELOPM

ENT

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

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INN

OVATIO

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The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

REPORT

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

In the knowledge economy of the 21st Century science and technology and their applications to industrial and services sectors are major sources of economic growth As

costs and wages rise and competition from other low-cost economies intensifies it has become a pressing issue for Southeast Asian countries to restructure and upgrade their

industrial and services sectors

INDUSTRY AND INNOVATION

46 ACTIVE WITH SOUTHEAST ASIA

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

SCAN TO READ THE

REPORT

The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

REPORT

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Southeast Asia is among the most dynamic regions in the world It is also in a period of transition as its national economies become more strongly integrated into global knowledge networks Science and technology offer opportunities for countries to ldquomove up the value chainrdquo and can help address social and environmental challenges

The OECD develops evidence-based policy advice on the contribution of science technology and innovation to well-being and economic growth The OECD Review of Innovation Policy Innovation in Southeast Asia assesses regional science technology and innovation capabilities through detailed country profiles of Cambodia Indonesia Malaysia Singapore Thailand and Viet Nam This work covers the performance and institutional profile of the innovation system and takes account of the economic environment and framework conditions for innovation An in-depth review of innovation policy in Viet Nam produced jointly with the World Bank will be released in 2014 An in-depth review of Malaysia will begin in 2014

Building a knowledge economy

Boosting innovative capacity ndash including intellectual property rights (IPRs) ndash plays a pivotal role in economic development The National Intellectual Property Systems Innovation and Economic Development project aims to support countries in strengthening the contributions their national intellectual property (IP) systems can make to their socio-economic development notably through their impacts on innovation performance Country studies including one for Indonesia that was prepared in collaboration with Indonesiarsquos Ministry of State for Research and Technology (RISTEK) provide concrete policy recommendations

Other work includes analysis to better understand how to make innovation more inclusive This project which is on-going will study how innovation policies can support developing and emerging countriesrsquo quest for competitiveness without compromising industrial social and territorial inclusiveness It will also explore some concrete policy solutions to support countries in reconciling their innovation and inclusive development agendas Several emerging economies including Indonesia are participating in this work

wwwoecdorgstiinnowwwoecdorgstisci-tech

INDUSTRY AND INNOVATION 47

IND

USTRTY amp

INN

OVATIO

N

SCAN TO READ THE

REPORT

The OECD will develop an innovation initiative to support Southeast Asiarsquos economic growth

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

REPORT

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

48 ACTIVE WITH SOUTHEAST ASIA

While China Korea and Japan are the worldrsquos main shipbuilding producers (accounting for 86 of world production in 2012) several Southeast Asian countries including Indonesia Malaysia the Philippines and Viet Nam also have significant shipbuilding sectors

The OECD encourages transparency in the shipbuilding and steel industries through data collection and analysis of the latest industry trends In addition it provides a platform to discuss multilateral problems in the shipbuilding and steel industries as well as to consider political solutions to those issues

The OECDrsquos Steel Committee is engaging increasingly with Southeast Asian economies in its work given the growing role that the region is playing in the global steel industry Along with significant growth in steel demand over the past decade local and foreign steelmakers are now investing very heavily in the Southeast Asian region Producers in the region expect steel demand to grow favourably in the future supported by rising incomes a young and growing working-age population and

significant infrastructure investments that will require large quantities of steel The region has traditionally been a large net importer of steel but growth in steelmaking capacity is expected to gradually reduce the regionrsquos dependency on imports This development has led to concerns that the industryrsquos expansion might eventually lead to over-supply problems also because a number of large-scale projects are expected to come on stream in neighbouring economies that export to Southeast Asia

The bi-annual publication Development in Steelmaking Capacity of Non-OECD Economies monitors steel industry trends in Malaysia Indonesia Thailand Viet Nam and other Southeast Asian economies The latest OECD analysis indicates that steel producers in the region are looking to expand their crude steel production capacity significantly particularly in Viet Nam and Indonesia where production capacity should increase to 145 and 102 million metric tonnes respectively by the end of 2014

wwwoecdorgstiindshipbuildinghtm wwwoecdorgstisteel

Developing first-class shipbuilding and steelmaking capacity

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

REPORT

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

INDUSTRY AND INNOVATION 49

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 49

OECD supports countriesrsquo efforts to protect human health and the environment by improving chemical safety making chemical control policies more transparent and efficient saving resources for government and industry and preventing unnecessary distortions in the trade of chemicals and chemical products

The chemicals industry is one of the worldrsquos largest industrial sectors Many countries have comprehensive regulatory frameworks for managing chemicals based on testing and assessing health and environmental impacts As many of the same chemicals are produced in more than one country (or are traded across countries) different national chemical control policies can lead to duplication in testing and assessment thereby wasting the resources of industry and government alike It is for these reasons that OECD and many countries from Southeast Asia (eg Singapore Malaysia and Thailand) are working together to harmonise the testing and assessment of chemicals and share the burden of testing

The OECD Mutual Acceptance of Data (MAD) in the Assessment of Chemicals is a multilateral agreement which allows the results of non-clinical safety testing done on chemicals and chemical products such as industrial chemicals and pesticides to be shared across adhering countries The MAD system requires that testing be carried out according to OECD Test Guidelines and OECD Principles of Good Laboratory Practice (GLP) By avoiding duplicative testing MAD saves adhering governments and chemicals producers over euro150 million per year

Several Southeast Asian countries such as Malaysia and Singapore are involved in the OECD MAD system as full adherents along with other partner countries Argentina Brazil India and South Africa Thailand is currently seeking full adherence as this will ensure that safety data developed in laboratories in Thailand following the OECD systems for

regulatory submissions (GLP) will be acceptable for registration or notification of chemicals and chemical products in other MAD-participating countries wwwoecdorgehsmad

ldquoAs one of Asiarsquos leading pharmaceutical and biomedical sciences RampD centres Singapore became the first non-OECD member from Asia to be accepted as a member of the OECDrsquos Mutual Acceptance of Data framework in 2010 We continue to support the OECDrsquos Environmental Policy Committeersquos work in protecting human health and the environmentrdquo

Lim Hng Kiang Minister for Trade and Industry of Singapore March 2011

Enhancing chemical safety

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

REPORT

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

NANOMATERIALS New technologies in the chemicals industry such as the manufacture of nanomaterials show much promise for innovation but they inevitably raise safety concerns The OECD has contributed to addressing these concerns not only by looking into possible applications of manufactured nanomaterials but also by addressing safety aspects which are essential to build public acceptance of the new technologies

OECD countries together with selected Partner countries have been working together to ensure that the approach to hazard exposure and risk assessment of nanomaterials is of a high science-based and internationally harmonised standard This includes Thailand for example which has been very active in this OECDrsquos programme and has a well-established strategy for addressing the emerging field of nanotechnology and nanoscience wwwoecdorgenvnanosafety

BIOTECHNOLOGY OECD countriesrsquo decision to harmonise approaches and share information used in the safety assessment of products of modern biotechnology lead to the establishment of programmes dealing with environmental safety and the safety of novel foods and feed Such OECD work helps countries to increase the efficiency of their risksafety assessment process and to reduce duplicative effort

The Philippines Indonesia and Thailand have played an active role in OECD work on the harmonisation of regulatory oversight in biotechnology and regulatory assessment of novel foods and feeds They have contributed to the development of information and methods used in risksafety assessments especially for genetically-modified crops grown in tropical climates such as rice and papaya wwwoecdorgbiotrack

PESTICIDES The OECD Pesticides Programme helps governments to co-operate in assessing and reducing the risks of pesticides and develops tools to monitor and minimise pesticide risk to human health and the environment

Given the extensive experience of governments and industry with pesticide registration and re-registration the Pesticide Programme has worked to streamline the process of pesticide approval and registration by helping governments work together to evaluate the risks of individual pesticides more quickly and thoroughly

wwwoecdorgenvpesticides

50 ACTIVE WITH SOUTHEAST ASIA

Enhancing chemical safety

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

REPORT

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

INDUSTRY AND INNOVATION 51

IND

USTRTY amp

INN

OVATIO

N

INDUSTRY AND INNOVATION 51

Tourism is an important economic driver in Southeast Asia

For emerging tourism economies such as Indonesia tourism plays an important role in promoting economic growth contributing over 4 to GDP and accounting for approximately 7 of total employment in 2010 In addition international arrivals to Indonesia totalled 76 million in 2011 generating foreign exchange earnings of US$ 85 billion ndash an increase of 125 over the previous year

The OECD Tourism Committee is a unique tool for multilateral co-operation which aims to strengthen the role of public policy and support the sustainable economic growth of tourism through multidisciplinary action Since 2008 Indonesia has played an active role in OECD Tourism Committee activities

The OECD flagship publication Tourism Trends and Policies analyses tourism data from over 50 countries including all OECD members and emerging tourism economies such as Indonesia Indonesia and Malaysia have been invited to contribute to the 2014 edition

wwwoecdorgcfetourism

Boosting tourism

SCAN TO READ THE

REPORT

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

ENVIRONMENT AND ENERGY

As affirmed in the Singapore Declaration on Climate Change Energy and the Environment Southeast Asian countries are committed to addressing the challenges of climate change

energy security and environmental issues Continued efforts are needed to further improve energy efficiency lower vulnerability to the impact of climate change and

promote policies to curb pollution The OECD has been working on these issues for many years and can support Southeast Asiarsquos policy makers in developing and implementing

adequate domestic and international policy responses

52 ACTIVE WITH SOUTHEAST ASIA

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

ENVIRONMENT AND ENERGY 53

As one of the most dynamic areas of the global economy Southeast Asia has experienced a remarkable development over the past few decades However Southeast Asia faces serious environmental challenges related to pollution climate change and depletion of natural resources following rapid economic development The OECD supports Southeast Asian policy makers in developing and implementing domestic and international policy responses to promote green growth

Sustainable growth cannot be achieved if pollution and depletion of natural resources are not taken into account The OECD helps countries to design environmental policies that are both economically efficient and environmentally effective The Environment Policy Committee (EPOC) oversees work on resource management climate change policy tools and evaluation environment and development as well as country reviews Efforts are made to support policy makers in addressing global challenges and in analysing the economic aspects of climate change water management resource efficiency and biodiversity conservation EPOC consisting of senior policy-makers from capitals meets up to twice per year Indonesia has actively participated in EPOC meetings since 2008

The OECD is also renowned for its fact-based analysis of policy instruments that help governments better integrate environmen-tal protection and economic growth OECD is currently looking for ways to broaden the coverage of the OECD Database on instruments used for environmental policy and natural resource management to the countries of the SEA region The OECD Global Forum on Environment (GFENV) is a forum for dialogue with wider group of countries on emerging environment related issues Indo-nesia and selected Southeast Asian countries are regularly invited to participate in these GFENV events with the next one focusing on ldquoExtended Producer Responsibility for Sustainable Materials Managementrdquo to be held on 17-19 June 2014 in Tokyo Japan

wwwoecdorgenvironmentwwwoecdorgenvpoliciesdatabase

Towards a cleaner andhealthier environment

CONSERVATION AND SUSTAINABLE USE OF BIODIVERSITYBiodiversity is fundamental to sustaining life providing critical ecosystem services such as nutrient cycling and climate regulation These services are essential to support human well-being and economic growth Yet despite its significance biodiversity worldwide is being lost and in some areas such as parts of the Southeast Asian region at an accelerating rate

OECD policy analysis focuses on the economic valuation of biodiversity and the use of economic instruments and other policy incentives to promote the conservation and sustainable use of biodiversity and associated ecosystem services This work also supports the UN Convention on Biological Diversity A 2013 publication on Scaling-up Finance Mechanisms for Biodiversity examines the potential of six instruments (including environmental fiscal reform payments for ecosystems services and markets for green products) to mobilise finance and how they can best be designed and implemented so as to more effectively achieve their objectives Environmental and social safeguards are also examined

A 2010 OECD publication on Paying for Biodiversity Enhancing the Cost-Effectiveness of Payments for Ecosystem Services identifies good practices in the design and implementation of Payments for Ecosystem Services (PES) programmes such as a pilot PES programme in the Sumberjaya watershed in Indonesia so as to enhance their environmental and cost-effectiveness Current OECD biodiversity work is focusing on inter alia biodiversity offset - including bio banking programmes

wwwoecdorgenvbiodiversity

ENV

IRON

MEN

T amp EN

ERGY

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

54 ACTIVE WITH SOUTHEAST ASIA

As is true for many other countries Indonesia and some other Southeast Asian countries face the major challenge of reducing growth in greenhouse gases emissions and lowering their vulnerability to the impacts of climate change while simultaneously securing stable economic growth

The OECD is assisting countries in their efforts to find lasting policy solutions to climate change and to improve the stability and performance of finance to support these actions In recent decades governments have been building an international framework for action on climate change and many countries have implemented policies to reduce emissions and adapt to the changing climate that is already locked in While this experience will be invaluable as a base for developing future climate policies and strengthening the framework for tackling climate change internationally the current actions are insufficient to significantly slow the progress of climate change

OECD has developed a Green Investment Policy Framework to help government to provide the conditions to scale-up private investment in low-carbon climate-resilient infrastructure This led to a 2012 report ldquoTowards a Green Investment Policy Framework The Case of Low-Carbon Climate ndashResilient Infrastructurerdquo Case studies are being developed to apply the Framework to specific countries financing entities and sectors A new report ldquoMobilising Private Investment in Sustainable Transport The Case of Land-based Passenger Transport Infrastructurerdquo provides a comprehensive toolkit of investment and climate policies regulations and innovative financial tools to scale-up private investment and shift toward sustainable transport modes The focus is on both developing and developed countries and is particularly well-suited for fast-growing cities in Southeast Asia context The OECD has also developed a Policy Guidance for Investment in Clean Energy Infrastructure a non-prescriptive tool to help host governments ndash particularly in developing countries and emerging economies ndash identify ways to mobilise private investment in clean energy infrastructure

Combating climate change

It raises issues for policy makersrsquo consideration in the areas of investment policy investment promotion and facilitation competition financial market and public governance policies The OECD has been asked by the G20 Study Group on Financing for Investment to move the work on this Policy Guidance forward Transitioning to clean energy creates opportunities for Southeast Asian countries including ldquoleapfroggingrdquo opportunities to avoid locking-in carbon-intensive development pathways due to the long lifetime of energy infrastructure

In addition to OECDrsquos work on climate finance for mitigation activities it also provides evidence and guidance to support the integration of climate change adaptation into policymaking The 2010 paper ldquoPlan or React Analysis of Adaptation Costs and Benefits Using Integrated Assessment Modelsrdquo provided estimates of costs and benefits of climate adaptation for countries from different regions including IndonesiaThe OECD and the International Energy Agency (IEA) jointly provide the secretariat for the Climate Change Expert Group on the United Nations Framework Convention on Climate Change (CCXG) This expert group provides analytical input to the international climate change negotiations and also holds regular seminars with country delegates and other experts Many Southeast Asian countries including Indonesia Singapore Thailand Philippines and Viet Nam have participated at CCXG Forums in the past Recent topics addressed include topics of importance to countries in Southeast Asia including the tracking and effectiveness of international climate finance issues in establishing emissions baselines effective and transparent functioning of market mechanisms and the design of the post-2020 climate agreement

wwwoecdorgenvccwwwoecdorgenvccfinancinghtm wwwoecdorgenvccccxghtm wwwoecdorgdafinvmnegreenhtmwwwoecdorgdafinvinvestment-policyclean-energy-infrastructurehtm

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

ENV

IRON

MEN

T amp EN

ERGY

ENVIRONMENT AND ENERGY 55

The OECD Water Programme promotes the design and implementation of integrated water policies that contribute to peoplersquos health and green growth Better water management is needed in the Southeast Asia to ensure there is enough good quality water to meet the needs of all users including the environment

The OECD is continuing its strong commitment to provide guidance on improving water policies through its work on economic and governance issues Working with a multi-disciplinary 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

Improving watermanagement

economic and governance information base for meeting the water challenge

The OECDrsquos work on water is currently focused on analyses regarding water security water management in the context of adaptation to climate change and managing water for green growth In the coming years it will address current and emerging policy priorities through the following projects Water Policies for Future Cities OECD Water Governance Initiative Allocation of Water Resources Water and Agriculture and Human Impacts on the Nitrogen and Phosphorous Cycle

wwwoecdorgwater

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The International Energy Agency (IEA) an autonomous body within the OECD works to ensure reliable affordable and clean energy for its 28 member countries and beyond

Southeast Asia is of key strategic importance as the ASEAN-10 countries are becoming larger energy consumers and as energy demand shifts from OECD countries to emerging Asia Recognising the magnitude of the challenges these changes bring the IEA strengthened its partnership with ASEAN through a Memorandum of Understanding in 2011 to jointly address the key issues of Southeast Asiarsquos energy landscape and support ASEANrsquos objectives to promote regional energy integration inter-connectivity and security In 2013 the IEA published the World Energy Outlook Special Report on the Southeast Asia Energy Outlook which found that ASEAN countriesrsquo energy consumption and oil import dependency are rising quickly demonstrating the need to fast-track energy security policy The power sector is a key component in ASEANrsquos rising energy demand underlining the urgent need for sustainable generation and infrastructure investments The report shows that dedicated action to increase efficiency and phasing-out of fossil fuel subsidies now would be the most effective measures to keep demand growth in check and promote low carbon energy solutions

The IEA also works with the 10 Southeast Asian countries bilaterally providing tailored advice on energy challenges It currently focuses its engagement with two of the largest energy consumers in the region Indonesia and Thailand Indonesia is a key global exporter of oil gas and coal As the country consumes more of its limited resource wealth energy policy makers are looking closely at the best policies to meet these needs at affordable prices for consumers and industry In a country exposed to the impacts of climate change this also involves policy decisions on how to best implement clean and sustainable energy solutions

Ensuring reliable affordable and clean energy

Since 2012 the IEA and Indonesia have formalised their long-standing partnership in a joint work program outlining an indicative list of issues and items for cooperation The IEA and the Government of Indonesia agreed to update the first In-Depth Review (IDR) of Indonesiarsquos Energy Policy in 201415 to assess the countryrsquos progress since the first IDR in 2008 and to provide expert recommendations on major focus areas for Indonesiarsquos next government namely gas markets energy policy-making and governance and meeting the fast-rising power demand on the basis of the IEArsquos knowledge of best practice and lessons-learned in member and non-member states Ongoing work further includes data and statistics subsidies and emergency questions Indonesia also joined China Brazil India Russia and South Africa in the Joint Multilateral Declaration on Association at the IEArsquos 2013 Ministerial Meeting confirming its intention to further enhance its partnership with the IEA under the ldquoAssociation Initiativerdquo

Thailand and the IEA have worked hard to promote sustainable energy region-wideThailand is a leader in renewable energy deployment in ASEAN and is highly dependent on oil gas and coal imports The IEA has supported Thailand in its effort to increase emergency preparedness through a series of capacity building and knowledge transfer workshops

wwwieaorg

56 ACTIVE WITH SOUTHEAST ASIA

SCAN TO READ THE

REPORT

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Annexes AN

NEX

XES

ANNEXES 57

The OECD has created several legal instruments which derive from the substantive work carried out in the Organisationrsquos Committees They are based on in-depth analysis and reporting undertaken within the Secretariat and cover a wide range of topics from anti-corruption to environment These instruments are of different types They can be formal agreements ratified by countries such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Codes of Liberalisation of Capital Movements and of Current Invisible Operations They can be standards and models for example the Standards of Transparency and Exchange of Information for Tax Purposes or Recommendations for

Instruments facilitating international coordination and diffusion of best practices

example the Recommendation on Fighting Bid Rigging in Public Procurement They may also take the form of Guidelines for example the Guidelines for Multinational Enterprises

Bringing Southeast Asian partner countries closer to OECD instruments is an important priority for the Organisation Currently a concerted effort is being made to further integrate the perspectives of Southeast Asia in the OECDrsquos standard-setting activities In particular the participation of Southeast Asian countries and other Key Partner countries in the development of new instruments and the revision of existing ones is crucial to ensure their global relevance

Adherence to OECD Instruments

Paris Declaration on Aid Effectiveness Indonesia Malaysia Philippines Thailand Viet Nam

Council Decisions on Mutual Acceptance of Data in the Assessment of Chemicals Malaysia Singapore Thailand (provisional)

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 Indonesia Malaysia Thailand Viet Namand Internationally Competitive SMEs

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

58 ANNEXES

Associate in2014 OECD Revision of the Corporate Governance Guidelines ndash Indonesia Singapore Malaysia (participant)

Board of Participating Countries for Programme for the International Assessment of Adult Competencies (PIAAC) ndash Indonesia Singapore

Board of Participating Countries of the Teaching and Learning International Survey (TALIS) ndash Malaysia Singapore

Coal Industry Advisory Board ndash International Energy Agency (IEA) ndash Indonesia

Joint Meeting of the Chemicals Committee and the Working Party on Chemicals Pesticides and Biotechnology ndash Malaysia Singapore

Working Group on Good Laboratory Practice ndash Malaysia Thailand (participant) Singapore

Working Group of National Co-ordinators of the Test Guideline Programme ndash Malaysia Thailand (participant) Singapore

Freedom of Investment Project ndash Indonesia

Member ofGoverning Board of the Development Centre ndash Indonesia Thailand

Viet Nam

Global Forum on Transparency and Exchange of Information for

Tax Purposes ndash Brunei Darussalam Indonesia Malaysia

Philippines Singapore

Global Forum Peer Review Group ndash Indonesia Malaysia Singapore

Participant in Fisheries Committee ndash ThailandCompetition Committee ndash IndonesiaCommittee on Fiscal Affairs ndash Malaysia SingaporeHealthcare Quality Indicators Expert Group ndash SingaporeProgramme for International Student Assessment (PISA) ndash Indonesia Malaysia Singapore Thailand Viet Nam Group National Experts Assessment of Higher Education Learning Outcomes (AHELO) Feasibility Study ndash SingaporeCommittee for Information Computer and Communications Policy ndash SingaporeWorking Party on Innovation and Technology Policy ndash MalaysiaSteel Committee ndash MalaysiaBusiness and Industry Advisory Committee (BIAC) ndash Indonesia Tourism Committee ndash Indonesia

AnnexesParticipation in OECD bodies and related organisations

L A Regional Consultation on Base Erosion and Profit Shifting held in Seoul Korea on 20-21 February 2014 brought together over 50 participants from 22 countries in the Asia-Pacific Region

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

OECD-Asian Roundtable on Corporate Governance ndash Indonesia Malaysia Philippines Thailand Viet NamADBOECD Anti-Corruption Initiative for the Asia-Pacific ndash Cambodia Indonesia Malaysia Philippines Singapore Thailand Viet NamAPECOECD Co-operative Initiative Regulatory Reform ndash Indonesia Malaysia Philippines Singapore Thailand Viet NamNetwork of Senior Budget Officials for Asia ndash Indonesia ThailandOECDADBI Roundtable on Labour Migration in Asia ndash Cambodia Indonesia Lao PDR Myanmar Philippines Thailand Viet Nam OECD Employment and Skills Strategies in Southeast Asia (ESSSA) ndash Cambodia Malaysia Philippines Singapore Thailand Viet NamOECD Development Centre-AMRO Joint Asian Regional Roundtable ndash Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Viet Nam

Participation in OECD Asian networks

ldquoFor many years the profound economic analysis of OECD in Indonesia helped us to benchmark economic policies and performances as well as execution of policies As a young and populous democracy with an upward-moving and quickly growing middle class our country faces social and political challenges Therefore the substantive work of OECD is a valuable input needed by decision-makers and the civil society supervising them Our national Chamber as the key representative of the vibrant Indonesian private sector benefitted tremendously from the work of OECD It is therefore only natural that we participate as an Observer in the good work of BIAC the Business and Industry Advisory Committee to the OECDrdquo

Suryo Bambang Sulisto Chairman of the Indonesian Chamber of Commerce and Industry KADIN Indonesia

L In September 2012 the Employment and Skills Strategies in Southeast Asia initiative held a meeting in Shanghai China where delegates discussed integrated approaches to skills development as a central element of lifting both competitiveness and living standards in Southeast Asian economies

ANNEXES 59

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

The OECD A Global Policy Network

The Organisation for Economic Co-operation and Development

(OECD) is an international organisation helping governments tackle

the economic social and governance challenges of a globalised

economy It provides a setting where governments can compare

policy experiences seek answers to common problems identify good

practice and work to co-ordinate domestic and international policies

The OECD Member countries are Australia Austria Belgium Canada

Chile the Czech Republic Denmark Estonia Finland France

Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea

Luxembourg Mexico the Netherlands New Zealand Norway Poland

Portugal the Slovak Republic Slovenia Spain Sweden Switzerland

Turkey the United Kingdom and the United States of America

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014

Global Relations SecretariatOECD 2 rue Andreacute Pascal75775 Paris Cedex 16France wwwoecdorgglobalrelations GRScontactoecdorg May 2014