Kensuke Tanaka

Head of Asia Desk

OECD Development Centre

Southeast Asian Economic Outlook:With Perspectives on China and India

Thematic focus: Narrowing development gaps

November 2012, Bangkok, Thailand

2013 edition

Outlook‐ recent development 

• Regional partner: the ASEAN Secretariat 

• Summit: ASEAN Business and Investment Summit in Phnom Penh on 18 November  

• December 13‐ seminar in Paris  

• 3 regional consultations (i.e. Jakarta, Seoul andSingapore) and country basis consultation 

Outlook – structure and thematic focus 

Part 1: Regional economic 

monitor

Part 2: Structural policy country notes

Part 3: Special thematic 

focus

Special thematic focus

•2010: Infrastructure and regional integration

•2011/12: Green growth

• 2013: Narrowing development gaps 

• 2014: Middle income traps (TBD)  

• 2015 : Governance (TBD) 

Main findings of the forthcoming Southeast Asian Economic Outlook: with Perspectives on China and India

Outlook‐ Key questions  

• What growth prospects for Asia in 2012-2017?• What does ‘narrowing the development gaps in

ASEAN countries’ mean?• Structural policy challenges of Thailand as an

example (from Structural policy country notes)• What is the main message of the Outlook 2013?

Southeast Asia shows resilience, though Emerging Asia, in particular China will begin to slow gradually…

Notes:The cut‐off date of data is 1 November 2012. a) The average number does not include Brunei and Myanmar. b) The average number does not include Myanmar.

Source: OECD Development Centre, MPF‐2013

2011 2017 2000‐2007 2013‐2017ASEAN‐6 countries 

Brunei 2.2 2.9 ‐ 2.4Indonesia 6.5 6.6 5.1 6.4Malaysia  5.1 5.5 5.5 5.1Philippines  3.9 5.3 4.9 5.5Singapore  4.9 3.8 6.4 3.1Thailand  0.1 5.3 5.1 5.1

CLMV countries Cambodia 7.1 7.3 9.6 6.9Lao PDR 8.0 7.5 6.8 7.4Myanmar 5.5 6.7 ‐ 6.3Viet Nam 5.9 6.3 7.6 5.6

ASEAN‐10 average 4.6 5.8 5.5(a)

5.5CLMV average 6.0 6.5 7.8

(b) 5.9

Emerging Asia average 7.8 7.4 8.6(a) 

7.4China and India

China 9.2 8.0 10.5 8.3India 6.8 7.0 7.1 6.4

Real GDP Growth of Southeast Asia, China and India (annual percentage changes)

The impact of global uncertainty, has become apparent but remains limited overall

Source: OECD Development Centres estimates

Southeast Asia’s direct and indirect exposure to G3 (% of exports)    

Private consumption and investment will be the important drivers of growth 

Note: *Data for Viet Nam and China refer to contribution to growth in 2011.

Sources: CEIC and national sources.

Contributions to growth in Southeast Asia, China and India in the first half of 2012 (percentage of GDP)   

Further development of middle class will require a shift in policies  

Notes: Latest year available: Cambodia, 2008; Indonesia, 2011; Lao PDR, 2008; Malaysia, 2009; the Philippines, 2009; Thailand, 2009; Viet Nam, 2008; China, 2008; India, 2009.In the case of Indonesia, China and India the latest figures of the size of the middle class are estimates combining the separate urban and rural distributions, weighted by share of urban/rural to total population.

Source: OECD Development Centre`s calculation based on World Bank data.

Middle class size versus school enrollment and public healthcare spending  

Fiscal capacity needs to be strengthen through better revenue mobilization

Sources: OECD Development Centre’s estimates based on IMF (2011c); Budina and Tuladhar (2010).

Overall tax efforts 

Sources: OECD Development Centre, MPF-2013

Public debt(% of GDP)

Country Period Theme/vision

Cambodia 2009‐13 For growth, employment, equity and efficiency

Indonesia 2010‐14Towards the realisation of an Indonesia that is 

prosperous, democratic and just

Malaysia 2011‐15 Charting development towards a high‐income nation

Philippines 2011‐16 In pursuit of inclusive growth

Singapore 2010‐20High skilled people, innovative economy, distinctive 

global city

Thailand 2012‐16 Philosophy of Sufficiency Economy

Viet Nam 2011‐15Strong and sustainable growth by improving the quality

and competitiveness of the economy

Searching for new growth and development strategies

Medium‐term development plans of ASEAN countries 

Medium‐term structural policy challenges (1): from country notes  

Cambodia

AgricultureBuild agricultural productivity and tap the export potential of milled rice

Human capital development

Increase enrolment rates at all levels of education and strengthen TVET to build a skilled labour force 

Reform of financial sector

Strengthen the banking sector and prudential measures

Indonesia

InfrastructureNarrow the regional divide by enhancing connectivity and the capacity of local government

EducationStrengthen the capacity of local government to provide educationinfrastructure

Social security reformAccelerate healthcare reform, in particular, increase coverage and access to healthcare services

Malaysia

Human capital development

Strengthen TVET and the education system to address skills shortages

Labour market Address weaknesses in labour market functioning

SME development Enhance productivity of SMEs

Philippines

InfrastructureImprove road transport, power and energy infrastructure and strengthen public and private investment

Labour market Focus firmly on job creation strategies

EducationImprove access to quality education and training by strengthening K+12 programme

Sources: OECD Development Centre, forthcoming Outlook

Singapore

Labour marketManage foreign worker dependence by increasing the productivity of local workforce

SME development Sustain SME growth through fostering entrepreneurial environment

Innovation Enhance the innovation capabilities of local enterprises

Thailand

Education Raise the quality of education and reduce disparities

Healthcare system Achieve a more equitable healthcare system

Green economy Foster green growth through investment and fiscal reforms

Viet Nam

Human capital development

Reform training and education to better meet demand for skilled labour

Development of banking sector

Strengthen the banking system by establishing effective supervision

SOEs reform Strengthen market‐based reforms and monitoring of SOEs

Medium‐term structural policy challenges (2): from country notes  

Sources: OECD Development Centre, forthcoming Outlook

Thailand’s medium‐term policy challenges 

EducationRaise the quality of education and reduce disparities

Healthcare system

Achieve a more equitable healthcare system 

Green growthFoster green growth through investment and fiscal reform 

Disparities “among” countries: Greater efforts are required in poverty and human capital development 

Note: Due to data availability the sub-indices for infrastructure, human resource development, ICT and regional economic integration are not fully comparable between 2005 and 2011.

Source: OECD Development Centre and ASEAN Secretariat.

2005  2011

ASEAN‐OECD Narrowing Development Gap Indicators (NDGIs): disparities between ASEAN‐6 and CLMV countries  

Disparity both “among” and “within”countries needs to be addressed 

Note: Change in Gini coefficient between: 2004 and 2008 for Cambodia; 2002 and 2008 for Lao PDR; 2004 and 2008 for Viet Nam.

Sources: OECD Development Centre, ASEAN Secretariat and World Bank World Development Indicators.

Disparity among and within countries: 

Cambodia, Lao PDR and Viet Nam 

CLMV countries have different focuses in different markets

Source: OECD Development Centre’s calculation based on UNSO Comtrade.

CAMBODIA (share of total imports, %)  

MYANMAR (share of total imports, %)  

Main messages 

Growing at 5.5% through 2017, ASEAN economies show resilience, however, they need to narrow development gaps to sustain robust growth.

Disparities need to be examined beyond income level differences; and greater efforts are required in poverty reduction and human capital development.

Southeast Asian countries need to rethink new growth and development strategies, rely more on domestic demand to adapt to changing international market conditions.