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October 17, 2014

Discussing Challenges and Strategies to Realize Sustainable Growth in Asia
The Fifth Asian Development Forum held in Viet Nam

photoJICA Vice President Kiyoshi Kodera acts as a moderator for sub-session 2 of session 1.

The Fifth Asian Development Forum was held September 19 in Hanoi, Viet Nam to share the views on and discuss development challenges, partnership direction, and the role of Asian countries in the international community.


The forum was hosted by the Government of Viet Nam, in cooperation with JICA. Policymakers were invited from 13 Asian countries (Bangladesh, Cambodia, India, Indonesia, Japan, Republic of Korea, Laos, Malaysia Philippines, Singapore, Sri Lanka, Thailand, and Viet Nam), and experts from the World Bank, the Asian Development Bank (ADB), the United Nations Development Programme (UNDP), the Organisation for Economic Co-operation and Development (OECD) and many other international organizations. Approximately 100 people participated in the forum.

Prior year Asia Development Forum discussions were held in: Jakarta, Indonesia in 2013; Bangkok, Thailand in 2012; Tokyo,Japan in 2011; and Seoul, Republic of Korea in 2010. This year’s theme was “Challenges and Strategies towards Sustained Growth of Asia,” and some of the focus areas for discussion were: the sharing of experiences and best-practices with regard to addressing challenges of middle income countries, such as “the middle income trap(1);” the mobilization of private funding for development; and the role of ODA in addressing these types of current challenges to sustained growth.

Viet Nam’s minister of Planning and Investment, Bui Quang Vinh, opened the forum with an inaugural address, in which he stated,

“In two scenarios analyzed in ADB’s report ‘Asia 2050: Realizing the Asian Century,’ I expect fulfilling discussions on how to keep sustainable growth without falling into the middle income trap.”

Overcoming the middle income trap

photoAt session 1, participants discuss the theme “Overcoming the Middle Income Trap.”

At session 1, with the theme “Overcoming the middle income trap,” two sub-sessions were held: “Infrastructure and institutional capacities for productivity improvement, innovation, and economic transformation” and “Human resource development to encourage productivity improvement, innovation and economic transformation.”

At the beginning of the session, ADB President Takehiko Nakano delivered a keynote speech. He pointed out eight points that were critical for sustainable growth in Asia. They are: 1) security and political stability; 2) macro-economic stability; 3) infrastructure investment; 4) investment in education and health; 5) open trade and investment regimes; 6) good governance,; 7) inclusiveness; and 8) clear development vision and strategy.

At sub-session 1 on infrastructure and institutional capacities, Keun Lee, professor of Economics at Seoul National University, stated that the development experience of the Republic of Korea demonstrates that a key to overcoming the middle income trap is creating innovation through the promotion of research and development.

Next, Masanori Yoshida, deputy director-general of the Ministry of Finance of Japan, underlined the importance of fund mobilization through Public-Private Partnerships (PPP) to meet massive infrastructure needs. He cited the successful JICA PPP initiatives that have made use of innovative financial tools such as Viability Gap Funding (2) and Equity Back Finance (3), and stressed appropriate risk-sharing between the public and private sectors as key to success.

In subsequent discussions, the “low-income trap,” in which low-productivity will continue indefinitely in developing countries, was spotlighted among other serious development-related issues, as the type of continuing problem in serious need of attention.

At sub-session 2 on human resource development, JICA Vice President Kiyoshi Kodera moderated discussions on the role of capacity development and institutional reform including the promotion of R&D and industry-academia partnership.

Sungsup Ra, director of South Asia Human and Social Development for the ADB, argued for the shortage of skilled workers and solutions.

Viet Nam’s Ministry of Planning and Investment (MPI) shared their experiences to date, as well as anticipated challenges ahead, with regard to creating and securing a highly skilled workforce who can, in-turn, leverage the “demographic dividend” (4), a comparative advantage it enjoys.

Ajay Shankar, member secretary of the National Manufacturing Competitiveness Council of India, outlined the project “Champions for Societal Manufacturing”, for which JICA has been providing technical assistance since 2007. In his presentation, he enumerated keys to innovation, such as in-depth understanding of the nature of the market, as well as the facilitation of a change in the mindset of management.

Following these presentations, forum attendees exchanged opinions on several common challenges, such as how to bridge the gap between industry’s need for a highly skilled labor force, and the social stigma against pursuing the type of vocational training necessary to obtain those practical and technical skills sets; rather than pursuing higher education. At the end of the sub-session, the participants agreed that investment in “human resources” is a key to promoting innovation, thereby overcoming the middle income trap.

To mobilize development finances for sustained growth

The session 2 in the afternoon featured the theme of “Mobilization of Development Finances for Sustained Growth.”

Thomas Beloe, governance and development effectiveness advisor for UNDP’s Asia-Pacific Regional Office, emphasized the relevance of multi-dimensional discussions that include a wide variety of stakeholders, given various international for and frameworks on development finances as well as the growing diversification of stakeholders.

Kihwan Nah, director general of the Export-Import Bank of Korea, provided an overview of the mobilization of private funds in response to enormous development demand, and spoke about the continuing importance of the role of ODA in these efforts.

Takeshi Osuga, ambassador, deputy director general for International Cooperation and Global Issues of Japan’s Ministry of Foreign Affairs, echoed the important catalytic role of ODA in the mobilization of private financing for development. He also stressed the importance of viewing development through the perspectives of inclusiveness, resilience, and capacity building, all anchored in a people-centered approach to development finance, citing successful JICA initiatives that relate to each of these perspectives.

In subsequent discussions, it was widely agreed that ODA plays a significant and catalytic role in development finance, and challenges to promoting PPP were also discussed.

Confirming the importance of knowledge sharing and mutual learning

photoMami Sakurai, Assistant Director, Partnership and Triangular Cooperation, United Nations Office for South-South Cooperation

At session three, “Knowledge sharing and mutual learning,” Mami Sakurai, assistant director for Partnership and Triangular Cooperation of the United Nations Office for South-South Cooperation, delivered a keynote speech. She shared case-studies on knowledge sharing, including several Japanese contributions to South-South cooperation, and pointed out the possible shift in priority from “creating knowledge” per se, to “diffusing knowledge and technology through South-South cooperation” and further investment in multilateral South-South cooperation.

Next, Hogeun Lee, director of the Ministry of Strategy and Finance of Republic of Korea, introduced the country’s Knowledge Sharing Program (KSP), which was devised to promote sharing the experiences of South Korean economic development with other countries.

Wimal Karandagoda, director of Medical Services for Lanka Hospitals in Sri Lanka, a counterpart of JICA’s technical assistance project, “Total Quality Management for Better Hospital Services (5)," argued for the effectiveness of South-South cooperation based on the “5S- Kaizen Project” experience.

Victoria Kwakwa, country director for the World Bank, Viet Nam, used a case study to emphasize the significance of knowledge creation in middle income countries.

Discussions afterward included “The need to introduce incentives to promote South-South cooperation” by Tubagus Achmad Choesni, director of International Development Cooperation for the State Ministry of National Development Planning (BAPPENAS) from Indonesia; “The importance of implementing programs by responding to needs,” commented upon by Zainol Rahim Zainuddin, director general of the Department of Policy and Strategy Planning of Ministry of Foreign Affairs of Malaysia; and “South-South cooperation can supplement assistance by donors in developing countries,” by Perames Vudthitornetiraks, vice president of Neighboring Countries Economic Development Cooperation Agency (NEDA) of Thailand. They confirmed the importance of knowledge -sharing, South-South-cooperation, and triangular cooperation (6); as well as future issues.

To close the forum, Nguyen Chi Dzung, vice minister of MPI, invited representatives from Japan and the Republic of Korea (who constituted the secretariat together with MPI), to make concluding remarks: Takeshi Osuga, deputy director general of International Cooperation Bureau of the Ministry of Foreign Affairs of Japan said that stability in the region is an essential prerequisite for the development of Asia as a growth center, and thus, it is important that Japan, China, the Republic of Korea, ASEAN, and South-Asian countries to promote regional cooperation by sharing the core values of inclusiveness and the rule of law.

Dzung said that the Asian Development Forum was a valuable opportunity for Asian countries that have common objectives in the region to discuss a wide range of issues, and thanked the participants, including Japan and the Republic of Korea, which supported MPI in hosting the event.


Notes:

1: A sluggish growth situation in middle income countries, after they cease to be low-income countries, by achieving a certain level of development. These countries become less competitive in price compared to low-income countries, and thus cannot reach the level of developed countries in terms of technical skills.
2: To compensate investments of developing countries toward infrastructure development projects.
3: Grant funding by the governments of developing countries with the aim of equalization in cash-flow throughout project phases.
4: Demographic composition featuring fewer children and elderly, and a big population of productive age (15-64) individuals, which enables high economic growth due to this ample workforce.
5: One of the frameworks of JICA’s ongoing Asia-Africa Knowledge Co-Creation Program (AAKCP), an initiative for Asia and Africa to share knowledge and experiences with regard to seeking solutions to challenges that match the situation on the ground. It started in 2007.
6: Form of cooperation where a developed country, an international organization, and a developing country jointly assist another developing country’s development.

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