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Regional Economic Integration of Laos into ASEAN, Trade and
Entrepreneurship Development
Aid for Trade Seminar Singapore, April 22nd 2016
Shameer Khanal RELATED Project
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• Owned by the Federal Republic of Germany •A company under private law •Supports the objectives of the German Government
Our profile A German federal enterprise
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Facts and figures: business
• Operations in Germany and over 130 countries around the world
• Business volume of over EUR 2.03 billion in 2014
• Main commissioning party: the German Federal Ministry for Economic
Cooperation and Development (BMZ), whose share of the total income from
public-benefit business exceeded EUR 1.6 billion in 2014
• Income from BMZ commissions included EUR 181 million of cofinancing from
third-party donors
• Commissioned by well over 300 public and private-sector bodies in Germany
and abroad
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Facts and figures: human resources
• 16,410 employees worldwide
• Over 3,000 staff in Germany
• 11,260 national personnel
• 785 development advisors
• 527 integrated experts and 473 returning experts
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Facts and figures: human resources
• Percentage of women in the workforce as a whole: 55.1 %
• Percentage of management posts held by women: 36.7 %
• More than 190 different flexible working time and
organisation models
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GIZ around the globe
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Today, development takes place in a
globalised world.
Economic activity
transcends national borders.
Regions are ideal gateways for
connecting to the world market.
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Regional economic integration: Potentials and challenges
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Potentials Challenges
• Tightness of domestic market is overcome
• Loss of tariff revenues
• Trade with perishable goods enabled
• Decrease of wages because of immigration
• Integration into regional value chains improved
• Emigration of skilled workers
• Access to sea ports (to inter-national markets) improved
• Domestic firms are pushed out of the market by more competitive foreign enterprises
• Attractiveness (of the whole region) for foreign investments improved
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Elements for economic integration processes to be effective
Three essential elements of regional economic integration processes in order to be effective
(1) Regional agreements • Harmonization of regulations • Reduction of barriers • Planning of cross-border infrastructure projects
(2) Implementation of regional agreements on the national level • Adoption of national laws and regulations • Application of procedures in amended laws and regulations • Realisation of infrastructure projects
(3) Actors (mainly of the private sector) make use of the improved framework for more trade, investments and employment
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Different Elements of the Implementation of Regional Economic Integration
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Regional Agreement
Identification of necessary
amendments in national regulations
and procedures
„Translation“ of regional agreements
into national regulations
(amendments of laws)
Implementing Decree
Application of amended regulations
by national administration
Use of (harmonisied, simplified)
regulations and procedures by
entrepreneurs and consumers
Effects on Trade and Investment
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24.05.2016 RELATED
Elements for economic integration processes to be effective All three elements have to come together for regional economic integration processes to be effective:
Existing Element (s) Missing Element (s) Impact
There are regional agreements (1)
These agreements are not implemented on the national level (2)
No intended welfare effects for the population of the Member State in question
In individual Member States unilateral or bilateral reforms are implemented (2)
Since regional agreements are missing (1), there are no or incoherent reforms in other Member States
The welfare effects are limited; in addition, there is a risk of distortions in competition between Member States
Regional agreements (1) are implemented on the national level (2)
The private sector is not informed about them, is not capable to apply the new procedures or does not produce competitive goods and services (3)
The positive welfare effects among the population of the Member State in question are limited; rather economic risks of economic integration
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Different Stakeholders interact in regional economic integration processes : Regional Economic
Communities (ASEAN Sec.) National Governments Private Sector (and Civil Society)
• Promote and facilitate the process to elaborate and approve regional agreements (technical support, moderation of complex negotiation processes)
• Coordinate the regional economic integration process on the national level
• Should also contribute to the elaboration (content) of regional agreements
• Can increase the probability to implement regional agreements on the national level (in time involvement of relevant stake-holders, elaboration of model laws)
• Contribute decisively to the elaboration of regional agreements
• Can to some extent play a role in the implementation of measures on the national level (e.g. infrastructure projects)
• Are responsible for the “translation” of regional agreements into national laws and regulations as well as their application
• Have in particular the role to make use of the improved framework created by the regional economic integration process for more trade and inv.
Elements for economic integration processes to be effective
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Implementation Gap and reasons behind it
A large number of regional agreements are not implemented on the national level Why is there an implementation gap?
1. Missing information and awareness about the content of regional agreements
2. Political Economy
• Regional economic integration processes regularly create winners and losers
• National politicians are more interested in their own re-election than in the welfare of the entire region
• If losers are not compensated by the gains of the winners, are well organized and politically well connected, they may slow down the implementation of reforms.
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Implementation Gap and reasons behind it
• Winners and losers among Member States • Member States are heterogeneous – economic structures differ • For the same reform measure, some Member States might win, others might lose
• Winners and losers within one Member State • Producers of the good in question • Producers of complementary or of substitute goods • Consumers • Trade forwarders • Government • Customs officers Different stakeholders are affected differently by regional economic integration processes
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Implementation Gap and reasons behind it
Why is there an implementation gap? (continued)
3. Lack of organizational and technical capacities to implement regional agreements
• Government and National Assembly: to translate regional agreements into national laws and regulations
• Public administration: to apply the amended laws and regulations
• Private sector: to apply the improved framework conditions
4. Lack of ownership of relevant stakeholders on the national level
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Implementation Gap and reasons behind it
Steps towards an improved implementation 1. Improve information of and awareness about regional agreements
2. Improve ownership of stakeholders involved
3. Make regional agreements beneficial for the economy
• Analysis of special characteristics of the economy
• Elaboration / presentation of national positions in regional negotiations
4. Analysis of political economy
• Who gains, who loses from a reform process?
• Who has which influence on political decision making processes?
5. Strengthening capacities of relevant stakeholders to implement regional agreements on the national level
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RELATED – Objective and Activity Areas
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A
ctiv
ity A
reas
Improve the public framework conditions for the AEC
Improve the Steering, Coordination, Communication, Monitoring of AEC Integration
Trade in Goods (mainly via Trade Development Facility II)
Trade in Services
Trade-related investments (Special Economic Zones,
Economic Corridors)
Strengthen Lao Private Sector to make full use of the AEC
ASEAN-related general support
ASEAN-related sector-specific support
(coffee, tourism, transport, logistics)
• Lao PDR is enabled to increasingly make use of the potentials and reduce the economic risks of the ASEAN Economic Community
Obj
ectiv
e
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RELATED – Achievements
Stocktaking on Lao AEC-commitments and their implementation
Training Program on Enhancing Lao Capacities on Trade and Investment Policies and Negotiations (together with UNESCAP)
Training Courses and Handbook on the ASEAN Economic Community (in particular trade in goods, trade in services and investments)
Preparation of Lao Commitments under the 10th AFAS Negotiation Round
Manual and Reader for ASEAN Trade in Services
Alignment of Lao regulations and procedures to ASEAN commitments for example in the Tourism Sector, the Transport and Logistics Sector
Support to Lao Law and Lao Strategy 2030 on Special Economic Zones (as Lao gateways into regional value chains)
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RELATED – Achievements (continued)
Baseline assessment on AEC awareness -> Tailor-made information material
Establishment of ASEAN SME Service Center / ASEAN Helpdesk (ongoing)
ASEAN App
Roadshows about the Preparation of the Lao Business Sector for the AEC in Lao Provinces
Training and seminar on the integration of Laos into regional value chains
Studies and PPD on impact of AEC on the tourism, transport and logistics sector
Trainings on Total Quality Management in coffee and tourism sector
Support to exhibitions, road shows of Lao coffee and tourism sector in ASEAN
Seite 20 RELATED 5/24/2016
RELATED – Summary RELATED is the only AEC-specific project of the Lao-German
Development Cooperation as well as of all Development Partners in Laos
Due to its focus, RELATED is well connected and knowledgeable about the ASEAN economic integration process
RELATED is the only project of GIZ on a worldwide scale to support regional economic integration exclusively from national perspective
National level is where the implementation of regional agreements takes place and where private sector enterprises increase trade and investments
2016 very important year for Lao integration into AEC (establishment of AEC 2015, Lao ASEAN Chairmanship in 2016) -> High international attention
RELATED supports Lao ASEAN Chairmanship in 2016
ASEAN economic integration process not finished in 2015 (ASEAN Economic Blueprint 2025)
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Thank you
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Questions