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Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General Organization for Economic Cooperation and Development

Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

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Page 1: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

   

Southeast Asia: a SWOT analysis by the OECD

ECMI Symposium on Marketing and Innovation

Rotterdam, 28 May 2014

Yves Leterme

Deputy Secretary-General Organization for Economic Cooperation

and Development

Page 2: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

The OECD…

•  …is the global organisation that drives better policies for better lives

•  …analyses, measures and compares experiences and policies to give advice that helps raise living standards globally

•  …aims for a stronger, cleaner, fairer world through efforts such as..

–  Restoring confidence and financial stability –  Tackling climate change –  Fighting international tax evasion and corruption

Page 3: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Fast facts

•  Established: 1961 •  Headquarters: Paris •  OECD Centres: Berlin, Mexico City,

Tokyo, Washington •  Members: 34 •  Secretary-General: Angel Gurría (Mexico) •  Secretariat staff: 2 500 •  Annual budget: 347 € million (2012)

•  Nearly 300 expert committees and working groups with participation of +100 countries

Page 4: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

OECD’s global reach

Key Partners: Brazil China India Indonesia South Africa

34 member countries

Newest members: Chile Estonia Israel Slovenia

Ongoing membership talks with Russia

Page 5: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

1   Economic  Outlook  and  Near-­‐term  (Macro)  Policy                      Challenges      

2    

Medium-­‐term  (Structural  )  Policy  Challenges      

3    

Special  Focus:  Beyond  the  middle-­‐income  trap    

4    

Main  messages      

Outline  of  the  talk      

Page 6: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Growth prospects in emerging economies"

Page 7: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Outlook:  Emerging  Asia  remain  resilient,  while  China  and  India  will  moderate  gradually  

Notes:  The  cut-­‐off  date  for  data  is  6  September  2013.  Emerging  Asia  includes  ASEAN  10  countries  plus  China  and  India.  (*)  Excludes  Myanmar  (**)  Excludes  Brunei  Darussalam  and  Myanmar.  Source:  OECD  Development  Centre,  MPF-­‐2014.    

                   Real  GDP  Growth  of  Southeast  Asia,  China  and  India  (annual  percentage  changes)           2012   2018   2014-­‐2018   2000-­‐2007  ASEAN-­‐6  countries                    Brunei   1.0   2.4   2.3   -­‐  Indonesia   6.2   6.1   6.0   5.1  Malaysia   5.6   5.3   5.1   5.5  Philippines   6.8   5.9   5.8   4.9  Singapore   1.3   3.1   3.3   6.4  Thailand   6.5   5.3   4.9   5.1  CLMV  countries                  Cambodia   7.2   7.1   6.8   9.6  Lao  PDR   7.9   7.5   7.7   6.8  Myanmar   -­‐   7.0   6.8   -­‐  Viet  Nam   5.2   6   5.4   7.6  Average  of  ASEAN  10   5.5(*)   5.6   5.4   5.5(**)  2  large  economies  in  Emerging  Asia                  China   7.7   7.5   7.7   10.5  India     3.7   6.1   5.9   7.1  Average  of  Emerging  Asia   6.4   6.9   6.9   8.6  

Page 8: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

 Domes[c  demand  and  emerging  middle      class  in  Asia    

 Popula[on  share  of  middle  class    PopulaNon  with  consumpNon  expenditure  of  $2-­‐$20  person  per  day    and  

$5-­‐$20  person  per  day    in  2005  PPP$  

Source: Southeast Asian Economic Outlook 2013:With Perspectives on China and India, CEIC

Page 9: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

0

5

10

15

20

25

30

35

40

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Indonesia Malaysia PhilippinesSingapore Thailand VietnamChina India OECD average

FORECAST

Rapid  ageing  of  the  popula[on  in  Asia  

Percentage  of  popula[on  aged  65  or  over  (%  of  total  popula[on)  

Source: UN; Southeast Asian Economic Outlook 2011/12, OECD Development Centre

Page 10: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Emerging  Asia  con[nues  to  remain  an  a]rac[ve      des[na[on  for  investment  

       Foreign  direct  investment  inflows  (in  billions  USD)    

Notes:  China  includes  Mainland,  Taiwan  province  ,  Macao  and  Hong  Kong.  Southeast  Asia  does  not  include  Timor-­‐Leste.  Source:  UNCTAD  World  Investment  Report  2013.  

0  50  

100  150  200  250  300  350  400  

2006   2007   2008   2009   2010   2011   2012  

Southeast  Asia   China  and  India  

Page 11: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Key  macroeconomic  policy  challenges  to  sustaining  healthy  growth    

•  Managing  the  spill  over  effects  of  capital  flows  o  Focus  on  implemen[ng  structural  policies  to  reap  

the  benefits  of  capital  inflows    o  Greater  regional  co-­‐ordina[on  to  deal  with  capital  

flows  •  Fostering  closer  economic  co-­‐opera[on  and  integra[on  in  the  region      o  ASEAN  needs  to  step  up  efforts  to  ensure  that  

economic  integra[on  remains  on  track  o  Narrow  development  gaps  and  enhance  regional  

integra[on  

Page 12: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Downside  risk  to  growth  in  the  near-­‐term,  from  financial  vola[lity  and  “capital  ouflow”"

Current  account  balances  and  changes  in  nominal  exchange  rates    

Source:  OECD  development  Centre’s  calcula[on  based  on  na[onal  sources.  

China  

Indonesia  India  

Malaysia  Philippines  

Singapore  

Thailand  

-­‐10  

-­‐5  

0  

5  

10  

15  

20  

25  

-­‐  22   -­‐  20   -­‐  18   -­‐  16   -­‐  14   -­‐  12   -­‐  10   -­‐  8   -­‐  6   -­‐  4   -­‐  2    0    2   Curren

t  accou

nt  balance  as  %

 of  G

DP,  

3Q2013  

 Change  in  exchange  rate  against  USD,  June-­‐December  2013  

Page 13: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Interna[onal  reserves  posi[ons  have  improved  

       Interna[onal  Reserves  

Note:  UNCTAD  es[mate  for  Lao  PDR  2012.  Source:  Interna[onal  Financial  Sta[s[cs  (IFS)  

0  

100000  

200000  

300000  

2000  2002  2004  2006  2008  2010  2012  

USD

 Millions  

Southeast  Asia  and  India  

Brunei  Darussalam   Cambodia  India   Indonesia  Lao  PDR   Malaysia  Myanmar   Philippines  Singapore   Thailand  

0  

500  

1.000  

1.500  

2.000  

2.500  

3.000  

3.500  

2000  2002  2004  2006  2008  2010  2012  

USD

 Billions   China  

Page 14: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

While  development  gaps  have  narrowed,  they  remain  significant  

ASEAN-­‐OECD  Narrowing  Development  Gap  Indicators  (NDGIs):    Dispari[es  between  CLMV  and  ASEAN-­‐6,  2012  

3,3  3,8  

3,1  3,1  

1,6  

4,2  0  1  2  3  4  5  6  7  8  9  

10  

Infrastructure  Gap  Sub-­‐Index  

Human  Resource  Development  Gap  

Sub-­‐Index  

ICT  Gap  Sub-­‐Index  

Trade  and  Investment  Gap  Sub-­‐Index  

Tourism  Gap  Sub-­‐Index  

Poverty  Gap  Sub-­‐Index  

Note:  Each  sub-­‐index  of  the  NDGI,  whose  value  ranges  from  0  to  10  base  points  –  where  0  denotes  no  gap  and  10  the  widest  gap  –  is  built  from  mul[ple  variables  within  six  key  policy  areas  shown  above.    Source:  ASEAN  Secretariat  and  OECD  Development  Centre.  

Page 15: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Searching  for  a  new  growth  model  and  development  strategy  Medium-­‐term  development  plans  of  Southeast  Asia,  China  and  India    

Source:  OECD  Development  Centre  based  on  na[onal  sources.  

Page 16: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Key  structural  policies  in  the  region    

•  Human  capital  /  educa[on  development  •  SME  /  private  sector  development  •  Infrastructure  development  •  Tax,  fiscal  reforms  •   Financial  sector  development  •  Green  growth  strategy  /  disaster  risk  management  

•  Informal  economy    

Page 17: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Challenges  to  sustain  growth  beyond  the  middle-­‐income  trap  over  the  long-­‐term  Best  scenario  simula[on  of  es[mated  [me  required  to  become  high  income  countries  for  selected  Asian  middle  income  countries  (years)  

Note:  Based  on  World  Bank’s  criterion  for  classifying  economies,  high  income  countries  are  defined  as  having  GNI  per  capita  above  USD  12  000  in  2013.  Growth  prospects  in  this  simula[on  are  in  line  with  MPF-­‐2014.  Popula[on  projec[ons  are  based  on  UN  data.  Source:    OECD  Development  Centre.  

0   10   20   30   40   50   60  

India  

Viet  Nam  

Philippines  

Indonesia  

Thailand  

China  

Malaysia  

in 2058

in 2020 in 2026

in 2031 in 2042

in 2051

in 2059

Page 18: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Structural  policies  are  needed  to  enhance  produc[vity  

Historical  decomposi[on  of  output  gap  (%,  2009-­‐11)  a)  Indonesia   b)  Philippines  

Source: MPF-SAEO 2011/12, Southeast Asian Economic Outlook 2011/12, OECD Development Centre

Page 19: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Ins[tu[onal  capaci[es  must  be  enhanced,  together  with  closer  regional  integra[on  

OECD  PISA  score  in  Southeast  Asia  and  OECD  countries,  by  area,  2012  

World  Bank  Doing  Business  indicators  in  Asia  (rankings  out  of  185  countries)  

Source:  World  Bank  (2012b),  Doing  Business  2013  -­‐  Smarter  Regula[ons  for  Small  and  Medium  Sized  Enterprises,  World  Bank,  Washington  D.C.  

Note:  PISA  scale  was  set  such  that  approximately  two-­‐thirds  of  students  across  OECD  countries  score  between  400  and  600  points.  Gaps  of  72,  62  and  75  points  in  reading,  mathema[cs  and  science  scores,  respec[vely,  are  equivalent  to  one  proficiency  level.    Source:  OECD,  PISA  database.  

Page 20: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Service  sector  development  needs  to  be  reinvigorated    

Traditional Services

Wholesale and retail trade

Modern Services

1990 2010 1990 2010 1990 2010 China 70.2 78.3 26.7 24.4 29.8 21.7 India 80.9 79.5 27.8 30.2 19.1 20.5 Indonesia 84.7 79.3 39.4 36.3 15.3 20.7 Japan 77.3 76.3 21.4 16.9 22.7 23.7 Korea 78.3 72.5 27.6 18.6 21.7 27.5 Malaysia 67.9 68.3 29.2 30.9 32.1 31.7 Philippines 77.4 74.8 28.9 31.6 22.6 25.2 Thailand 77.8 82.1 45.6 41.4 22.2 17.9 Singapore 60.8 58.7 24.5 26.1 39.2 41.3

Composi[on  of  services  sector  in  Asia,  by  type,  1990  and  2010  

Notes: Modern services comprise finance, business, and ICT services; traditional services comprise all other services. Sources: OECD Development Centre`s calculation based on CEIC database; Noland, M., Park, D. and Estrada, G. B. (2012), Developing the Service Sector as Engine of Growth for Asia: An Overview, ADB Economics Working Paper Series, No. 320, November 2012.

Page 21: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

To  develop  services  sector,  especially  modern  services,  regulatory  barriers  must  be  removed  

 OECD  Product  Market  Regula[on  (PMR)  indicators  in  BRIICS,  Japan  and  Korea,  2008  

0  

1  

2  

3  

4  

5  

Brazil   China   India   Indonesia   Russian  Federa[on  

South  Africa   Japan   Korea  

Overall  product  market  regula[on   Administra[ve  regula[on  Domes[c  economic  regula[on  

The  OECD  Indicators  of  Product  Market  Regula[on  (PMR)  are  a  comprehensive  and  interna[onally-­‐comparable  set  of  indicators  that  measure  the  degree  to  which  policies  promote  or  inhibit  compe[[on  in  areas  of  the  product  market  where  compe[[on  is  viable.  The  coded  informa[on  is  normalised  over  a  scale  of  0  (=least  restric[ve)  to  6  (=most  restric[ve),  reflec[ng  increasing  restric[veness  of  regulatory  provisions  for  compe[[on.    The  indicator  of  administra[ve  regula[on  is  a  simple  average  of  the  two  indicators  "Regulatory  and  administra[ve  opacity"  and  "Administra[ve  burdens  on  startups  "  in  the  domain  "Barriers  to  entrepreneurship".  Domes[c  economic  regula[on  is  the  simple    average  of  "Public  ownership",  "Involvement  in  business  opera[on"  and  Barriers  to  compe[[on.  Source:  OECD,  Product  Market  Regula[on  Database.      

Page 22: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Main  messages    Ø  The   medium-­‐term   outlook   for   Southeast   Asia   remain   favourable,  

with  growth  of  5.4%  in  the  next  five  years.  o  To   realise   this   growth   poten[al,   the   region   needs   to  manage  

spillover   effects   of   capital   flows   and   press   on   the   efforts   to  foster  closer  economic  co-­‐opera[on  and  integra[on  

Ø New   growth   and   development   strategies   must   include   structural  policy  reforms  to  ensure  sustained  and  robust  produc[vity  growth.  

Ø Over   the   longer   term,   some   countries   face   difficult   challenges   to  grow  beyond  the  middle-­‐income  trap.  o  Ins[tu[onal  capaci[es  must  be  enhanced,  together  with  closer  

regional  integra[on  o  “Factory   Asia”   needs   to   evolve   and   modern   services   sector  

must  be  further  developed  to  boost  technological  progress  and  produc[vity  growth  

   

Page 23: Southeast Asia: a SWOT analysis by the OECD · Southeast Asia: a SWOT analysis by the OECD ECMI Symposium on Marketing and Innovation Rotterdam, 28 May 2014 Yves Leterme Deputy Secretary-General

Thank you for your attention

www.oecd.org 23