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Closing ASEAN’S Development Gap

The Gap







 ASEAN's extremes: The rich and the poor


Below are the excerpts from ASEANAFFAIRS’ recent interview with Mr. Kim Hak Su, United Nations Under-Secretary-General and the Executive Secretary of the Economic and Social Commission for Asia and the Pacific, UNESCAP, at the UNESCAP headquarters in Bangkok.

Q: What are the main issues facing ASEAN as a region?

On economic and social issues

The first challenge is the promotion of economic integration, with the commitment to achieve an ASEAN Economic Community by 2015: Given the disparities between the more developed ASEAN members and those that are least developed countries, there is a need to address the development gaps among the member States to achieve the broader goal of a single integrated market.

Some progress in the ASEAN Free Trade Agreement has been made in bringing down tariffs to the 0-5% level for between 65% and 99.8% of products in the inclusion list. However, with China and India offering greater economic competition, regional free trade alone is not sufficient to confront the challenges of globalisation. Deeper economic integration including improving ASEAN as an investment destination is vital to developing a viable competitive edge, and there is a continuous need to address the balance between domestic and regional interests. This requires a lot of alignment and harmonization of policies, rules and regulations.

While ASEAN as a whole has been assessed by ESCAP to be on track with respect to poverty reduction and many other Millennium Development Goals (MDGs), there is a huge gap across and within member States in terms of poverty incidence and other human development indicators. These disparities need to be addressed both at the national and regional levels, to ensure that prosperity is shared among the 565+ million people of ASEAN. 

I am happy to note that ASEAN members have adopted an ASEAN Millennium Development Compact to assist countries to achieve the MDGs. The development of human resources is a key strategy for employment generation, reducing poverty and socio-economic disparities, as well as ensuring economic growth with equity.

On Environment

Another issue is the persistent transnational haze pollution emanating from burning of forests in the region. There is a need to develop greater cooperation in implementing effective strategies to address the problem to avoid economic and social dislocations and ensure environmental sustainability. This is an issue that no single country can address on its own.

On Labour

Q: What is the impact of labour migration in ASEAN in particular and to what extent should this be regulated?

Labour migration has both positive and negative impact on sending and receiving countries. Migrant workers fill labour gaps in host countries, allowing their economies to expand rather than be constrained by labour shortages. Migrant labour, especially in the domestic service sector, has increased the labour force participation of women in host economies. As a result of growing economies and labour shortages in some of the more developed countries in the region, the demand for migrant labour is likely to continue.

Migration has continued to provide better employment opportunities for migrant workers. Remittances have improved the livelihoods of millions of households in sending countries. Remittances play an essential role in sustaining local and national economies and have become a structural element of the Asian and Pacific economy.

Other diasporic transfers, including skills, technology and trade networks, have contributed to development in the region. Several ASEAN countries now actively promote labour migration as part of their poverty reduction and development agenda.

While remittances and other diasporic transfers promote development, the emigration of highly skilled persons (brain-drain) from origin countries threatens it.

Family separation and problems with child-rearing are also some of the negative social effects of migration.

Migrant labour recruitment is mainly handled by commercially-motivated private agencies. This arrangement has given rise to irregularities, abuses such as excessive fees and frauds.

Another risk faced by labour migrants occurs when employment contracts fail for any number of reasons, including bankruptcy of employer, poor skills matching, maltreatment, accidents and injuries of migrant workers.

In countries of destination, migrants are often regarded negatively and feared as a cause of social problems (e.g., rise in crime, spread of diseases, taking away jobs from locals or driving down local wages). Difficulties with social integration and assimilation, exploitation and abuse of trafficking victims all contribute to public perceptions leading to sub-optimal policy development.

International migration is a multinational process involving sending, transit and receiving countries. As a result, the management of migration can no longer solely be on a unilateral or bilateral basis. Policy coherence both at the national and regional levels is needed to manage the challenges of international migration, including irregular migration, human trafficking, reducing costs of remittances, and reducing the risks and costs of international labour recruitment.

Regional dialogue and cooperation are crucial in addressing the challenges of international migration, including the ratification and implementation of international instruments such as anti-trafficking and anti-smuggling conventions and protocols that seek to protect migrant workers.

Effective management of international migration requires an understanding of the important relationship between migration, poverty and development which is essential to maximizing the benefits from international migration for both sending and receiving countries.

On Human Trafficking

Women are at great risk of being coerced into the trafficking trade. Most victims are duped by traffickers with promises of legitimate jobs or marriage proposals, yet end up trapped in sexual exploitation.

Thailand (as also India, Japan and the United States) is considered to be significantly affected by trafficking. Thailand – both as a main origin and destination country (and India, Japan and the US – as major destination countries).

ASEAN’s Response to Trafficking
Efforts to combat human trafficking in the ASEAN sub-region are being pursued through the UN and on a bilateral basis:

Normative framework: derived from the Beijing Platform for Action, the Jakarta Declaration, and the Bangkok Declaration Initiatives include: a publication entitled “Combating Human Trafficking in Asia: A Resource Guide to International and Regional Legal Instruments, Political Commitments and Recommended Practices”.

This drew from an ESCAP regional seminar that raised awareness of legal instruments available to Governments to combat trafficking in women and children (Bangkok, 2001), organized in collaboration with IOM.

The UN Inter-agency Project on Human Trafficking, which acts as a Secretariat to the Coordinated Mekong Ministerial Initiative against Trafficking (COMMIT).

The Bali Ministerial Conference on People Smuggling, Trafficking in Persons and Related Transnational Crime (2002).

Bilateral memorandums of understanding between ASEAN states (e.g., Thailand-Cambodia; Thailand-Myanmar; Thailand-Lao PDR).

On Senior Citizens

Q: What will be the implications of the greying of the populations of the region? Are pensions and social security systems sufficient? Should retirement ages be pushed back?

Declining fertility and improvement in mortality have generated remarkable shifts in the age structure of the region’s population. While the transition from a young-age population to an ageing population occurred over a long period in the West, the speed is much faster in Asia, including in the ASEAN subregion. Improvement in old-age mortality has contributed to the greying of older person themselves.

The implications of the greying of the population are profound as they lead to labour shortage, increase in the elderly dependency ratio and the feminization of the aged population.

Owing to the differences in the age of spouses at the time of marriage (women tend to marry younger) and a higher life expectancy at birth for women, a higher proportion of older women are likely to be widowed. Widowed elderly women tend to live in poverty as they are less likely to be employed in the formal sector and tend to receive smaller earnings. Coping with the requirement of old age poses mounting economic and social pressure on countries of the region. Social security needs, living arrangements and health problems associated with the rising proportion of older persons are serious concerns facing Governments in the region.

In Asian countries, the rates of social security coverage are anywhere from 9% to 30% of the total older population.  The rest have to continue working or depend on others for the rest of their lives. This situation calls for a new social protection system to be put in place.  However, there is no consensus on what to do.

Some argue that increasing public support to older persons will swamp governments' social expenditures (World Bank) while others (such as the ILO) believe that universal non-contributory social security coverage is not only affordable but can also reduce poverty rates in the region by 35% to 40%.  According to ILO, this can be achieved by spending 1% to 2% of GDP. 

Because of the lower anticipated levels of skilled job entrants and deficit of productivity per the increasing share of the elderly population, especially in the developed economies of Asia, the current retirement age needs to be pushed back.  If the economic life cycle of the individual is increased, existing old-age support systems can perhaps become slightly more efficient.

On Youth

Q: How well are ASEAN nations training and preparing their young people for the kind of work they are likely to be doing in the future? What improvements could be made?

Declining fertility in ASEAN countries has led to a “youth bulge” or a demographic bonus. The ASEAN youth population currently stands at about 107 million, representing almost 20% of the population. ASEAN countries are well placed to reap the “demographic bonus”. This demographic window will not automatically translate into economic growth.  It merely creates the potential for growth. 

Whether countries capture this “demographic bonus” will depend on the social and economic policies and institutions they adopt to absorb a rapidly growing labour force. Policy makers therefore need to be aware of the relevance of the demographic bonus and its potential benefits and costs so that they can put the right policies in place.

Unemployment and poverty among youth is a serious developmental challenge in the region. There is a strong need to scale up investment in youth through education, skill training and access to opportunities. Globalization contributes to increasing youth mobility. Young adults dominate in accelerated international migration.

ASEAN countries have achieved a number of successes in developing the capacity of their young people to respond to evolving economic conditions such as changing labour market demands.

Nevertheless, high levels of unemployment and underemployment, even among educated and skilled youth, persist in certain settings and create social and economic problems. As a consequence, greater efforts have to be made to both expand and improve employment opportunities and reduce mismatches between education and training and the demands of labour markets.

To this effect all young people – including those at risk, out-of-school or with special needs – should have access to programmes by governments and other stakeholders that promote sustainable employment. Furthermore, there is scope for greater development and capacity building with regard to matters such as entrepreneurship, volunteer work and prudent use of information and communication technologies, so that the productive contribution that young people can make to ASEAN and its members can increase.

On Income Gap

Q: In most ASEAN countries, income inequalities are increasing. What are the implications of this and how can States create policies which are pro-growth but also pro-equality?

Income inequality will always be there as there will always be relative poverty. However Governments should ensure that policies adopted by them do not exacerbate the situation.  The growth process should be inclusive, with all sections of the population participating and benefiting.

Continuation of non-inclusive economic growth policies will not only increase income inequality but also social inequality and could give rise to sharp divides within countries. This could lead to less access by low-income groups to development priorities such as higher education and skill formation and thus lessen the opportunities for them to participate in the growth process itself. As a consequence, sustaining future growth could be difficult. In addition, a widening social divide could lead to tension, law and order problems, possibly even foment terrorist activities.

Pro-equality policies will only complement pro-growth policies. Fiscal, monetary and institutional policies can be used by Governments. A balanced but progressive tax policy, increased public expenditures on areas such as education, health, infrastructure and improving governance, will go a long way towards creating an enabling environment in which economic growth accompanied with increased equality can flourish.

Increased provision of financial resources (bank credit) to SMEs and micro -enterprises will contribute positively to the process. Decentralization of certain areas of decision making as well as Government fiscal operations could also be attempted to create a balanced distribution of the benefits of economic growth.

On Democracy

Q: How can democracy be strengthened in the ASEAN region?

In the Millennium Declaration of 2000, world leaders including ASEAN leaders, committed to promoting democracy and strengthening the rule of law, as well as respect for all internationally recognized human rights and fundamental freedoms, including the right to development.

The challenges of democracy and governance have to be embraced and managed at the national level as there are varying levels of economic and political development among the ASEAN members, as well as different socio-cultural reference points.

Nevertheless, I am pleased to note that, as a move towards more effective governance in the ASEAN Community, ASEAN members are preparing an ASEAN Charter to facilitate its transformation into a rule-based organization with a legal personality.  The values and principles to be enshrined in the Charter can help foster democratic institution-building by ASEAN member States.

About Mr. Kim Hak Su



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