Speech | Remarks by Peter Batchelor at the Aid and Development Summit - Setting the Scene: Aid Trends in Myanmar and Southeast AsiaJun 14, 2017
Good Morning. My name is Peter Batchelor and I am the Country Director of the United Nations Development Programme (UNDP) in Myanmar. I am also one of the co-facilitators of the Cooperation Partners Group (CPG), the coordination body for international development partners, which aims to promote development effectiveness in this country.
I am delighted to be in Nay Pyi Taw for this Aid and Development Summit with such a broad range of experts. I thank the organisers for holding this important event, and for doing so in Myanmar – a country undergoing such a significant transition.
I will speak on “Aid Trends in Myanmar and Southeast Asia”. I hope this will help to set the scene for our discussions over the next two days.
Context - Southeast Asia
Southeast Asian countries differ greatly in the size of their economies and socio-economic development indicators. In general, poverty levels have decreased, while GDP-per-capita has increased significantly. Domestic consumption is strong, and low unemployment, growth in disposable income, and lower commodity prices have contributed to resilient growth. Cambodia, Laos and Myanmar have shown strong GDP growth projections for 2017 of over 7% - amongst the highest in all Asia.
Southeast Asia is a rapidly changing region. Aid recipients have achieved higher levels of income and traditional donors have reconfigured their aid programmes. In almost all Southeast Asian countries except Myanmar, aid flows are stagnating or decreasing. Interestingly, countries which benefited from foreign assistance before, such as Thailand and Indonesia, are now supporting other countries in return. In addition, the region has seen the emergence of important new international players such as China and India, who have an increasing role in the development sector. By 2025, non-traditional donor contributions could account for at least $50 billion in aid.
So, how much aid do Southeast Asian countries receive? According to OECD, Viet Nam was the largest recipient of aid in 2015, receiving 50% out of the $6 billion going to the ASEAN region. ASEAN countries are now reimbursing loans they have received; Indonesia paid back $1 billion in 2015. Most aid is in the form of grants, except in the Vietnam case, where the country received $2.4 billion of loans. Myanmar is the second largest recipient of grants after Indonesia.
We see a familiar pattern of sectoral spending among aid recipients with larger shares devoted to Economic Infrastructure including Energy, and Transport & Communications, followed by Social Infrastructure, which includes Education and Health.
The largest recipients of humanitarian aid to Southeast Asia are Philippines and Myanmar –together accounting for 78% of the USD 622 million in 2015 of such aid. This is due to the frequency of natural disasters and continuing conflict in these countries.
Aid and Development in Myanmar
There are few countries experiencing such remarkable growth as quickly as Myanmar. The November 2010 elections triggered the opening of the country, after decades of isolation and economic stagnation. This led to the influx of embassies, development agencies, international NGOs and private companies. Civil Society Organizations are now able to operate more freely across all sectors, including in the field of peace.
As more agencies came, so did aid projects. In 2017, Myanmar will receive approximately USD 2 billion, and is the fastest growing aid recipient in the region, with a 451% increase in the 5 years since 2012. There have also been exponential increases in Foreign Direct Investment (FDI) and Trade. The result is a GDP that has risen from USD 50 million in 2010 to an estimated USD 81 billion in 2017. In 2014 it had the highest growth in all Asia – at 8.7%. Aid, Trade and FDI are having profound effects on the country.
There was therefore a strong need for aid coordination and government ownership. A Development Partners Group (DPG) was formed. It began to coordinate with government. The government hosted the Myanmar Development Cooperation Forum three times in January 2013, 2014 and 2015, which allowed a range of stakeholders to discuss the development framework. The inaugural forum led to the endorsement of the Nay Pyi Taw Accord for Effective Development Cooperation, the first such agreement between government and partners. In addition, 17 Sector Working Groups (SWG) were created.
With the change to the NLD administration in April 2016, there have been further changes. The draft of the 12-point Economic Policy was shared in August 2016, which is a first step to guide development partners. In addition, a new Development Assistance Coordination Unit (DACU) was established in November last year, chaired by the State Counsellor. Now, the 17 Sector Working Groups (SWG) will soon be reformed to 10 Sector Coordination Groups (SCG) and the government is currently developing a Development Assistance Policy, which will provide further guidance on the expected best practices.
Aid efficiency: CPG, Agenda 2030 and GPEDC
While aid to Myanmar is increasing, it is key to ensure that it is spent effectively and achieves results. This is so we leave no-one behind. Aid volumes only tell part of the story. Aid also must act as a lever that brings in different actors and utilizes other revenue sources that can finance development.
An Aid Management Information System (AIMS) has been developed under the Ministry of Planning and Finance to track aid projects and programmes, and a variety of open data sources have emerged, such as the Myanmar Information Management Unit (MIMU). This has improved aid transparency and predictability.
A new Cooperation Partners Group (CPG) was launched in July 2016, as the main coordination mechanism for international development partners. The CPG, whose secretariat is hosted by UNDP, engages with a range of actors, including government, civil society and NGOs. It is also increasingly engaging with the private sector on inclusive business, and on the development-humanitarian-peace nexus. It has provided trainings and seminars to the government and parliamentarians to raise awareness about aid effectiveness.
In 2016, Myanmar participated for the first time in the Monitoring Round of the Global Partnership for Effective Development Cooperation (GPEDC), with 80 other countries. GPEDC sets the global aid and development agenda and places great emphasis on the multi-stakeholder partnership needed to achieve the SDGs. UNDP and OECD together form its global Joint Support Team. This helped generate evidence about progress achieved in development co-operation and effectiveness for the first time.
In September 2015, the international community, including Southeast Asian member states, agreed on “Transforming our world: the 2030 Agenda for Sustainable Development”, otherwise known as Agenda 2030. The SDGs represent an excellent opportunity to ensure that all development actors work together toward the same goals. Myanmar has officially endorsed them and the economic policy provides insights on which SDGs may be prioritized.
Looking beyond Aid
Aid is not a long-term solution. Ultimately, aid to Myanmar, like in other Southeast Asia countries, will stagnate or decrease. We hope to see countries sustainably finance their needs. But what other financing sources are available?
The role of the private sector cannot be overstated. It drives economic growth through trade and investments. Foreign Direct Investment (FDI) varies hugely across Southeast Asia. The UN Conference on Trade and Development (UNCTAD) lists Singapore as having USD 65 billion a year, while Myanmar attracts 2.8 billion now. But it is not just financing; the private sector can also contribute through sustainable investments and inclusive business models, as well as knowledge and innovative solutions. With greater uncertainties in the future of aid, the key question is: how we can get businesses to drive forward socially, environmentally and economically sustainable development, in collaboration with government, development partners, NGOs, and civil society?
Taxation revenues are essential for developing economies. In 2015, the level of tax revenues as a proportion of GDP across Southeast Asia ranged from 11% in Indonesia to around 19% in Vietnam. In Myanmar, taxation started from a very low base of 3% and is likely to increase in the future.
Remittances and philanthropy both deserve mention. According to the World Bank, the Philippines has the highest flows of remittances, with USD 30 billion in 2015, with Vietnam next on USD 13 billion. The endowments of some top global foundations amounts to billions of dollars of philanthropy. This is an interesting area of work for Myanmar, as this country has a strong tradition of charitable giving, and a private sector that has long had CSR activities. The potential for philanthropy or remittances to fund development is clear.
The great challenge—and opportunity—for Myanmar, is how to combine this extraordinary democratic transition, the rapid increase in international engagement, and an expanding private sector, to catalyse and sustain momentum for change and sustainable development.
Thank you very much for your attention. I wish you all a successful Aid and Development Summit.