ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2016

- ENHANCING REGIONAL TIES

Rintaro Tamaki

Deputy Secretary General, OECD

20 November 2015, Malaysia, ASEAN Business and Investment Summit

LAUNCH

• Growth prospects • 4 Regional integration challenges• Structural policy challenges – the

case of Malaysia

2

Outline

3

Growth shows mild moderation but will remain robust

Country 2014 2015 20162016-20

(average)2011-13

(average)

Brunei Darussalam -2.3 -1.4 0.5 1.8 0.9

Cambodia 7.0 7.0 7.1 7.3 7.3

Indonesia 5.0 4.7 5.2 5.5 6.2

Lao PDR 7.4 6.9 7.0 7.3 8.1

Malaysia 6.0 4.6 4.6 5.0 5.2

Myanmar 7.7 8.2 8.2 8.3 6.9

Philippines 6.1 5.9 6.0 5.7 5.9

Singapore 2.9 2.1 2.4 2.6 4.1

Thailand 0.9 2.7 3.1 3.6 3.2

Viet Nam 6.0 6.4 5.9 6.0 5.6

China 7.3 6.8 6.5 6.0 8.2

India 7.3 7.2 7.3 7.3 5.5Average of ASEAN 10 countries 4.6 4.6 4.9 5.2 5.4

Average of Emerging Asia 6.7 6.5 6.4 6.2 7.0

Real GDP growth of ASEAN, China and India (Annual percentage change)

Source: OECD Development Centre.

• Overall, the pace of progress of integration is slow. Progress has been varied (through the ASEAN, ASEAN+3 and ASEAN+6 frameworks) in key policy areas.

• Deeper integration can be facilitated through:– Better harmonization of regional, sub-regional and

national planning – Improved monitoring of progress– Co-operatively addressing a broader set of policy areas,

in particular, issues related to green/energy and private sector development.

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Integration in key policy areas is progressing slowly

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Key challenge 1: Improved co-ordination

Alignment of national and regional targets in ASEAN (Number of policy areas)

• Little overlap between AEC targets and national plans.

• The technical and country-specific expertise of national officials could be used to a greater extent.

0

20

40

60

80

Source: OECD Development Centre.

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Key challenge 2: Improved monitoring

ASEAN Economic Community Scorecard

• Lacks transparency (unclear methodology, details unavailable)

• Uses self-reported results• Not regularly updated

ASEAN Community Progress Monitoring System (ACPMS)

• Detailed data not available• Not updated

Examples of ASEAN regional integration indicators

• More detailed, transparent and regularly updated monitoring indicators will be needed in the region

• Existing indicators are a start, but of limited use

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Key challenge 3: Greater attention to green growth

Renewable electricity generation in ASEAN-6 countries (TWh) in 2013

For example, hydropower and geothermal resources are relatively well exploited but other sources are almost untouched in the region

Type of renewable Indonesia Malaysia Philippines Singapore Thailand Viet Nam

Hydropower 16.9 10.6 10.0 - 5.7 57.1

Geothermal 9.4 - 9.6 - 0.0 -

Solar 0.0 0.1 0.0 0.0 1.1 -

Wind 0.0 - 0.1 - 0.3 0.1

Biogas/biomass/waste 0.3 1.1 0.2 1.4 7.0 0.1

Total generation from renewables

26.6 11.9 19.9 1.4 14.1 57.3

Source: IEA.

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Key challenge 4: Expanding private sector cross-border opportunities

• Firms are engaging with the rest of the region, though these activities will need to be diversified beyond a limited range of countries and sectors

• Greater regionalisation and internationalisation will be needed to develop ASEAN enterprises

YearHome

countryHost

countryIndustry Acquirer Target

1 2012 Thailand Singapore Food and beverage Thai Beverage PCL Fraser & Neave Ltd

2 2007 Singapore Malaysia Food and beverage Wilmar International Ltd PPB Oil Palms Bhd

3 2013 Singapore IndonesiaAutomobiles and components

Gallant Venture Ltd Indomobil Sukses Internasional

4 2012 Thailand Singapore Metals and mining PTT Mining Ltd Sakari Resources Ltd

5 2013 Singapore IndonesiaAutomobiles and components

Gallant Venture Ltd Indomobil Sukses Internasional

6 2007 Singapore IndonesiaPaper and forest products

Investor Group LonSum

7 2011 Thailand Indonesia Chemicals SCG Chemicals Co Ltd Chandra Asri Petrochemical

8 2007 Singapore Malaysia Food and beverage Wilmar International Ltd PGEO Group Sdn Bhd

9 2012 Singapore Malaysia ChemicalsReliance Global Holdings Pte

BP Chemicals(Malaysia)Sdn Bhd

10 2010 Thailand MalaysiaContainers and packaging

Investor GroupMalaya Glass Products Sdn Bhd

Largest intra-ASEAN M&A investments in manufacturing, 2004-13

• Malaysian teachers are relatively well-paid and recent reforms to hire more educators have lowered the student-teacher ratio to 13:1, below the 16:1 OECD average.

• But teachers are often less experienced and spend less classroom time teaching than in other countries.

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Malaysia’s challenge: Teachers and curricula are key to improving education quality

Administrative tasks such as marking at-tendance

Classroom management

Actual teaching and learning

tasks

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

OECD average Malaysia

Use of classroom time in Malaysia and OECD average

Source: OECD.