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ADBI News
2012 Volume 6 Number 2

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Myanmar: Challenges and Opportunities

SEMINAR

ADBI Dean Kawai (far right) joins a panel of distinguished speakers at ADBI on 5 June to discuss Myanmars economic development and the role Japan can play to support the countrys transition to becoming an open and dynamic economy.

Myanmar

President Thein Seins administration, established in April 2011, has ushered in an era of rapid political and economic reforms, putting the country on a new path of normalization and re-engagement with the regional and global economies. The European Union and the United States have suspended their long list of sanctions that they had imposed on the country since the late 1980s. Japan recently waived a large part of Myanmars debt arrears and started a policy aimed at strengthening economic and political relations via renewed financial and technical assistance. The impact Myanmars changes will have on Asia and the world was the focus of the seminar, Changing Myanmar: Challenges and Opportunities, which was organized by ADBI and the Japan Chamber of Commerce and Industry (JCCI). The event, held at ADBI on 5 June 2012, attracted more than 170 participants and generated an intense debate among the attendees. Dean Kawai chaired the event and Kunio Senga, director general of ADBs Southeast Asia Department, gave the closing remarks. Two distinguished speakers from Myanmar, who are advisers to President Thein Sein, presented the countrys plan for economic growth. Tin Htut

Oo, chairman of the National Economic and Social Advisory Council, spoke on the countrys new approach to inclusive economic development. U Win Aung, president of the Federation of Myanmar Union of Chambers of Commerce and Industry, highlighted business opportunities for foreign companies in the new Myanmar. A panel of three distinguished Japanese speakers, Daikichi Momma, Deputy

In this issue
Changing Myanmar Narrowing the Development Gap Asian Development in the Decades Ahead Asia-Pacific Forum on Financial Inclusion Promoting Fair Market Competition Media Coverage Distinguished Speaker Recent Books Upcoming Events Recent Working Papers What Next for the WTO and Doha? 12 2 3 3 4 4 5 6 7 7 8

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Director-General, International Bureau, Ministry of Finance; Yoshio Wada, Deputy Director-General, Southeast Asia and Pacific Department, JICA; and

Akifumi Nakanishi, Director, Asian Business Development Department, Daiwa Institute of Research, spoke on Japans role in supporting Myanmars transformation. The seminar revealed that Myanmars challenges are difficult but not insurmountable. While the country lags its Asian neighbors in almost every economic indicator, the country is rich in natural resources and is strategically located between East and South Asia, particularly the Peoples Republic of China and India, offering a great opportunity for local businesses to serve expanding markets. Japanese experts at the seminar said that Japan, through its public and private-sector operations, is keen to assist Myanmar undertake the process of transition, normalization, and re-engagement. ADB, which has recently opened an office in Yangon and is about to open another in the capital of Nay Pyi Taw, is also committed to help in the effort. The seminar emphasized that Myanmars most urgent needs are human resource development, job creation, restoration of livelihoods, institutional strengthening, and infrastructure development. Dean Kawai stressed that in planning and implementing transformation, a crucial prerequisite to sustainable and inclusive development is the attention paid by the authorities to ensuring that both Myanmar and its people benefit and are a part of the process. I
For more information on this conference please visit: www.adbi.org/event/5068.changing.myanmar.challenges. opportunities/.

Myanmar is undergoing swift political and economic reforms that are putting the country on track to re-engage with the world.

Narrowing the Development Gap

ADBI has launched a special project combining research and capacity building activities focused on Cambodia, Lao PDR, Myanmar, and Viet Nam (CLMV countries). The CLMV project stems from the ASEAN 2030 study that revealed a large gap in economic development between the CLMV countries and other ASEAN members. The CLMV projects pilot phase will be conducted from September 2012 to March 2013. To prepare for the pilot phase, Supporting Equitable Economic Development in ASEAN: Experts Meeting of the thematic area on Agricultural Productivity and Natural

EXPERTS MEETING

Resources Management, was held at ADBI on 56 June. Meeting participants discussed the need to identify local partner institutions, scholars, and country coordinators to implement the pilot phase in the CLMV countries. Participants explored four themes under Agricultural Productivity and Natural Resources Management: policies and institutions; market development; investment and finance; and technology and extension. I
For more information on this event please visit: www.adbi.org/event/5067.supporting.equitable.economic. dev.asean/.

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Rising to the Challenge to Make Asia Free of Poverty

Notwithstanding Asias success in poverty reduction, poverty exists. Growing inequalities are threatening social cohesion, said Ganeshan Wignaraja, ADBIs Director for Research, in his presentation, Asian Development in the Decades Ahead: Perspective and Challenges, at the 5th ADB-JSP Scholars Research Forum at ADBI on 22 June. In spite of prosperity, the region faces many development challenges and how Asia responds to key development challenges will determine if it will prosper in the long term. The future is promising if Asia implements appropriate policies. A lively discussion followed on expediting

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poverty reduction through emphasis on gender development, effective environmental management, combating corruption, and better education especially for women. Participants noted that if Asia pursues inclusive growth, effective use of resources, good governance, and regional cooperation, it is expected to become an affluent region by 2050. Wignaraja encouraged ADB-JSP to apply their considerable skills in making Asia free of poverty. He encouraged these future leaders to rise to the challenges and translate these to opportunities. Much work is to be done to ensure Asia takes the right road to inclusive growth in a constantly evolving global and regional environment. I

Reducing Poverty through Financial Inclusion

Promoting sustainable and inclusive growth in Asia is an important mission of ADBI. Financial inclusion is an effective way to achieve inclusive growth and is a crucial tool to reduce poverty. Some 80% of households in the world are excluded from formal financial services, but in the last decade microfinance institutions have had remarkable success in helping the poor. More than 80 participants from 25 countries attended the Asia-Pacific Forum on Financial Inclusion: Approaches, Regulations and Cross-Borders Issues, in Shanghai, the Peoples

FORUM

Republic of China, on 2527 June, to discuss how financial inclusion can reduce poverty and improve the lives of the poor. Participants explored micro-finance regulations, consumer protection, and innovative ways to promote financial literacy. The forum was jointly organized by ADBI, Asia-Pacific Finance and Development Center, and APEC Business Advisory Council. I
For more information on this event please visit: www.adbi.org/event/5042.asia.pacific.forum.financial. inclusion/.

More than 80 participants from 25 countries attended the Asia-Pacific Forum on Financial Inclusion: Approaches, Regulations and Cross-Borders Issues to explore ways to reduce poverty through micro-finance regulations, consumer protection, and financial literacy.

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Promoting Fair Market Competition

CONFERENCE

Senior officials from East Asian economies discussed competition policy and fair market competition at two conferences organized by ADBI, Japan Fair Trade Commission, and Malaysia Competition Commission.

Fair market competition is crucial to economic growth. Maintaining a level playing field nurtures and promotes the private sector, particularly small and medium-sized enterprises, in East Asia. Senior officials from East Asian economies met to discuss challenges in competition policy at The 7th East Asia Conference on Competition Law and Policy and The 8th East Asia Top Level Officials Meeting on Competition Policy, which were held in Malaysia on 23 May. The events were jointly organized by ADBI, Japan Fair Trade Commission, and Malaysia Competition Commission. The 7th East Asia Conference on Competition Law and Policy focused on combatting cartels in

East Asia. And the 8th East Asia Top Levels Officials Meeting on Competition Law examined competition policy in East Asia and ways to augment technical cooperation on competition policy among economies of the region. Attending the meetings were senior officials from Brunei Darussalam; Cambodia; Peoples Republic of China; Indonesia; Japan; Lao PDR; Malaysia; Mongolia; Myanmar; the Philippines; Republic of Korea; Singapore; Taipei,China; and Viet Nam. I
For more information please visit: www.adbi.org/event/5041.east.asia.meeting.competition. policy.law/.

Media Coverage
Dean Kawai was interviewed by The Nikkei Weekly, the Nikkei Newspaper, and Newsweek Japan. He was also interviewed by The Phnom Penh Post for the feature article, China in the world economy. The ADB-ADBI draft highlights book, Asean, the PRC and India: The Great Transformation?, was reviewed by the Asian Sentinel website, and the review was picked up by The Jakarta Globe.
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A South China Morning Post article cited the ADBI working paper, How the iPhone Widens the United States Trade Deficit with the Peoples Republic of China, by Yuqing Xing and Neal Deter, which was published in 2010. Kyodo News, The Japan Times, and The Business Times (Singapore), ran stories on the seminar, ADBI SeminarChanging Myanmar: Challenges and Opportunities, at ADBI on 5 June.

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Energy Key to 21st Century Eurasian Geopolitics

Dr. Kent Calder, the director of the Edwin O. Reischauer Center for East Asia Studies, School of Advanced International Studies, The Johns Hopkins University, spoke on the New Continentalism: Energy and Twenty-First Century Eurasian Geopolitics at ADBI, on 31 May. The pattern of world energy trade has changed significantly in recent decades and this is having profound implications for global geopolitics, Calder said. Several Asian economies, particularly the Peoples Republic of China (PRC) and India, have emerged as the regions most conspicuous energy consumers because of their phenomenal economic growth. On the supply side, the worlds largest energy producers are located in the geographically proximate regions of Central Asia, the Middle East, and Russia. A complementary relationship between these energy exporters and suppliers is evident and is being strengthened, connecting together Central and East Asia, parts of India, the Persian Gulf, and Russia. He calls this the new continentalism. This new continentalism is based on the emergence of an integrated Central, East, and South Asia. This process began soon after the Cold War ended. Political barriers have largely been eroded as geopolitical conflicts in this part of Asia have decreased; there has been no major state-to-state war since the war between the PRC and Viet Nam in 1979. On the contrary, increasing interdependence through transcontinental trade, especially in energy, has intensified to a remarkable leveldriven mostly by economic forces. The new continentalism is likely to intensify. Geopolitics Revival Despite the popularity of geopolitics as an interpretative discipline until the middle of the 20th century, it was largely overlooked during the Cold War. However, it is undergoing a revival and its relevance is particularly vivid in energy; unlike other resources such as finance, energy resources cannot be transported easily. Geopolitics can explain how economic imperatives can surmount political constraints to connect East and South Asia to the Middle East and Central Asia. Trans-national forces are important, and integration is indeed occurring. But the region also is potentially unstable. Destabilizing factors include large populations with a high share of young people (20% of the population in Iran and 24% in Saudi Arabia is under the age of 20), and the risk of rising

DISTINGUISHED SPEAKER

unemployment. Energy prices are likely to be volatile and to rise in the long term. As interdependence increases it will involve not only the regional economies, but, to some extent, outside economies such as the United States. A new continentalism has Security concerns emerged based on an are another potentially integrated Central, East, and South Asia, said Calder. destabilizing factor. Several countries in the region possess chemical, biological, and nuclear weapons with relatively weak controls and fail-safe systems. Nonetheless, despite the uncertainty and the existence of possible destabilizing issues, a much more interdependent Eurasia is being born in the post-Soviet era. Multilateral institutions have an important role to play in this growing interdependence. The Asian Development Bank (ADB) is the most important one. In a Eurasia not constrained by the geopolitical barriers of the Cold War, infrastructure has emerged as key to strengthening connectivity and ADB and ADBI have been doing very interesting and useful work on Asian infrastructure. The growth of many Asian economies is altering energy demand patterns with great stress being laid on infrastructure pipelines, long-distance electric power transmission, superconductivity, and superhighway networks, among others. As these infrastructure facilities are built and brought on-stream they will intensify the trend toward energy interdependence in continental Asia. Post-Fukushima, Japan may also tap into this energy network. Interdependence in continental Asia is rising and the role of multilateral institutions in stabilizing that process will be crucial. A more integrated and interdependent Asia will be significant in geopolitical terms and will mean a greater role for Asia in the world. Given the various destabilizing elements and natural tensions among the countries in the region, the robust engagement of multilateral institutions is needed to drive the integration process. I
For more information on this seminar please visit: www.adbi.org/event/5063.calder.distinguished.speaker/.

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Recent Books
Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia
ADBIs new book, Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia, was launched at ADBIs Tokyo office on 26 April. Dean Kawai gave the opening and closing remarks. Cinnamon Dornsife, professor at the Paul H. Nitze School of Advanced Studies, Johns Hopkins University, moderated the panel discussion. In light of the global experience of the global financial crisis, this book develops concrete recommendations for financial sector reform and regulation in Asian economies aimed at preventing the recurrence of systemic financial crises, improving the ability to manage and resolve crises, managing capital flows and promoting the development of Asian bond markets. The focus of the book is on longer-term structural measures. It explores areas such as the scope for regional monitoring and cooperation; deepening integration of Asian bond and money markets; liberalization of capital flows; and issues related to macroprudential oversight, regulatory structure and cooperation as well as the role of state intervention in crisis resolution in the financial sector. The need for and impacts of regulations on innovative financial products and specific investor groups such as hedge funds, ways to reduce systemic risk of pro-cyclicality of regulation and ways to improve the infrastructure and regulatory environment for local currency bond markets are also examined in depth. I
Read or order Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia at: www.adbi.org/book/2012/03/26/5028.gfc.financial.reform. regulation.asia/.

Dean Kawai and David Mayes, professor at the University of Auckland, applaud as Hyouk-Se Kwon, the Governor of the Korean Financial Supervisory Service, cuts the ribbon to launch ADBIs new book, Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia.

Shaping the Future of the Asia and the Pacific-Latin America and the Caribbean Relationship
Economic ties between Asia and Latin America and the Caribbean (LAC) have reached a turning point. In a mere decade, Asia has become LACs second-largest trading partner. This dynamic trade relationship has boosted LACs strategic and economic importance to Asia. To expand these gains, governments must play a more decisive role. Their participation is critical in strengthening and balancing the three key pillars of any successful integration initiative: trade, investment, and cooperation. Shaping the Future of the Asia and the Pacific-Latin America and the Caribbean Relationship identifies the challenges and opportunities in each of these pillars while drawing attention to the benefits of balancing their development. I
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Download Shaping the Future of the Asia and the Pacific-Latin America and the Caribbean Relationship at: www.adbi.org/files/2012.05.05.book.shaping.future.asia.lac. relationship.pdf.

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Selected Upcoming Events

Distinguished Speaker Seminar Patrick LowOld Issues and New Frontiers: Non-tariff Measures in International Trade (Tokyo) In this seminar, Patrick Low, chief economist at the World Trade Organization, will speak on challenges facing international trade and trade policy co-operation.

30 August

Recent Working Papers

What is the Role of Social Pensions in Asia?
Author: Armando Barrientos
Rapid population aging and economic transformation in Asia raise the policy challenge of ensuring income security in old age. The main objective of this paper is to explore the potential role of social pensions and other noncontributory schemes in Asia, informed by insights from theory and international experience. The paper identifies alternative forms of providing income security in old age, including social pensions.
Read Working Paper 351 at www.adbi.org/working-paper/2012/ 04/11/5044.role.social.pensions.asia/.

Rethinking Capital Flows for Emerging East Asia

Author: Stephen Grenville
Since the 1980s, emerging countries have been urged to welcome foreign capital inflows. The result has often been a pattern of surges, where excessive inflows were followed by damaging sudden stops and reversals. What is needed is a strategy that makes use of the potential benefits of capital flowing downhill while at the same time protecting them from the excessive inflows and the reversals.
Read Working Paper 362 at www.adbi.org/working-paper/2012/ 06/22/5098.rethinking.capital.flows.emerging.east.asia/.

Innovative Approaches to Managing Longevity Risk in Asia: Lessons from the West
Author: Amlan Roy
This paper discusses longevity risk, why it is important, and lessons to be learned by Asian countries from the experiences of the West. Increasing and uncertain longevity has emerged as a key risk affecting individuals, pension plans, insurers, and governments in the developed and emerging world. The author discusses progress in the field of longevity modeling and the merits as well as drawbacks of these models.
Read Working Paper 353 at www.adbi.org/working-paper/2012/ 04/13/5046.innovative.longevity.risk.asia/.

Exchange Rate Coordination in Asia: Evidence using the Asian Currency Unit
Author: Abhijit Sen Gupta
This paper evaluates the extent of exchange rate coordination among Asian economies using a hypothetical Asian Currency Unit. Rising interdependence among Asian economies makes it vital for these economies to have a certain degree of exchange rate stability. However, the empirical evidence using an Asian Currency Unit suggests a widening deviation in exchange rate movements of the Asian currencies.
Read Working Paper 356 at www.adbi.org/working-paper/2012/ 04/19/5052.exchange.rate.coordination.asia/.

Audiovisual Services in Korea: Market Development and Policies

Author: Yeongkwan Song
This paper reviews economic development and the regulatory environment of audiovisual services in the Republic of Korea. The paper specifically examines motion pictures and broadcasting, and discusses what drives or hinders the sectors trade potential, which depends on whether Korean audiovisual services providers create high quality content that can be shared locally and universally.
Read Working Paper 354 at www.adbi.org/working-paper/2012/ 04/16/5048.audiovisual.services.korea/.

Prevention and Resolution of Foreign Exchange Crises in East Asia

Author: Chalongphob Sussangkarn
This paper discusses mechanisms to prevent and resolve foreign exchange crises in East Asia. Policies and mechanisms at the country level as well as regional and global levels are discussed. Policies at the level of a particular country to prevent foreign exchange crises include the management of short-term foreign currency liabilities, the adequacy of reserves, and managing episodes of rapid short-term capital inflows.
Read Working Paper 363 at www.adbi.org/working-paper/ 2012/06/25/5099.resolution.foreign.exchange.crises.east.asia/.

The Peoples Republic of Chinas High-Tech Exports: Myth and Reality

Author: Yuqing Xing
Trade statistics portray the Peoples Republic of China (PRC) as the largest exporter of high-tech products. In this paper the author argues that the PRCs leading position in high-tech exports is a myth created by outdated trade statistics, which are inconsistent with trade based on global supply chains. He suggests that a value-added-based approach should be adopted to accurately measure high-tech exports.
Read Working Paper 357 at www.adbi.org/working-paper/2012/ 04/25/5055.prc.high.tech.exports.myth.reality/.

Engaging Small and Medium Enterprises in Production Networks: Firm-level Analysis of Five ASEAN Economies
Author: Ganeshan Wignaraja
The Association of Southeast Asian Nations (ASEAN) small and medium enterprises (SMEs) are under scrutiny for their engagement in production networks following recent emphasis on increasing intraregional trade, rebalancing, and inclusive growth in Asia. Using a data set covering 5,900 companies in five ASEAN economies at different stages of development, this paper analyses the participation of SMEs in production networks, determinants, and policy implications.
Read Working Paper 361 at www.adbi.org/working-paper/ 2012/06/01/5076.engaging.small.medium.enterprises/.

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Overcoming Barriers to Global Trade

SEMINAR

What next for the WTO and Doha? Alejandro Jara, Deputy Director General of the World Trade Organization, acknowledged during a seminar at the ADB Institute on June 6 that the WTO cannot address new rules that befit a significantly changed trading system without first concluding the Doha Development Agenda. Jara said the WTO must address a new agenda on investment rules, competition policy, climate change, government subsidies, export duties, and other regulatory issues. The global trading system needs better rules in many different areas but progress has been stymied by the lack of political will on the part of major governments to draw the

The global trading system needs better rules but progress has been stymied by the lack of political will to conclude the Doha negotiations, said Alejandro Jara, Deputy Director General of the World Trade Organization.

Doha negotiations to a close. Still, he argued that the WTO is a global public good that protects trade. If it did not exist, it would have to be created. The rules of the game may be imperfect, but if it is not there, there will be chaos, he said. While some problems may be addressed bilaterally or regionally through preferential trading arrangements, some issues, such as reform of domestic agriculture support or subsidies, can only be effectively tackled multilaterally. The divide between developed and developing countries in the WTO that prevailed in 2001 is no longer valid as the WTO membership expects more from countries like Brazil, the Peoples Republic of China, and India. But this should not overshadow the fact that many developing countries in the WTO need technical capacity assistance. The WTOs effort toward greater analytical capacity is aimed at helping developing countries assess the impacts of negotiating positions on their trade and economy. When trade partners ask you for such and such concessions, when you do not understand how it will impact your country, the rational reaction is to say no, Jara said. I
For more information on this seminar please visit: www.adbi.org/event/5062.jara.next.doha.round.wto/.

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