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The World Bank Group In the Greater Mekong Sub-region. By Ian Porter World Bank Country Director, SEA November 13, 2007. What is the World Bank Group?. Operates like a cooperative, with 185 developing and developed country members Mission : fight poverty

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The World Bank Group In the Greater Mekong Sub-region

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The World Bank GroupIn the Greater Mekong Sub-region

By Ian Porter

World Bank Country Director, SEA

November 13, 2007


What is the World Bank Group?

  • Operates like a cooperative, with 185 developing and developed country members

  • Mission: fight poverty

    • Promote economic opportunities through growth

    • Help poor people reach opportunities

      5 organizations

    • IBRD: International Bank for Reconstruction and Development - provide loans to Middle-Income Countries

    • IDA: International Development Association - provide interest-free loans and grants to the poorest countries

    • IFC: International Finance Corporation - provide private investment financing

    • MIGA: Multilateral Investment Guarantee Agency - provide political risk insurance

    • ICSID: International Centre for Investment Dispute Settlement


How Do We Fight Poverty?

  • In FY07, we provided $34.3 billion in loans, grants, equity investments and guarantees to Middle- and Low-Income Countries - up $2.7 billion, or 7.8%, from FY06

  • In FY07, Bank funding supported 531 analytical studies/research, 430 technical assistance activities, and 700 learning activities by World Bank Institute (WBI) as well as broader policy advice and knowledge sharing

  • We also use our “convening power” for leveraging support from and coordinating with other donors, and encouraging debate or dialogue on key development issues with a wide range of other stakeholders, including from private sector and civil society


The World Bank Annual Report 2007

IBRD/IDA Lending by Sector

FY07

Law & Justice

Transportation

Water, Sanitation, &

&Public

20%

Flood Protection

Administration

12%

22%

Information &

Agriculture, Fishing,

& Forestry

7%

Communication

1%

Industry & Trade

Education

5%

Finance

Energy & mining

8%

Health & Social

7%

7%

Services

11%

Total Lending: $24.7 billion


IFC Lending by Industry


Our Financial Support is Increasing …


… But Our Financial Support is Declining as a Proportion of Total Financial Flows

In FY06, Bank lending of $31.6 billion was small compared to net private and official flows of $571 billion that year


Agenda of New WB President

  • Fight poverty

    • How to continue reducing poverty and spurring sustainable growth?

  • Help states coming out of conflict

    • Sudan, Liberia, Sierra Leone, Timor Leste, Pacific Islands, etc

  • Different business models for MICs

    • Countries getting richer, looking for more “competitive menu” of development solutions


Agenda of New WB President (Cont.)

  • More active role in fostering regional & global “public goods”

    • HIV/AIDS, malaria, avian flu, climate change, etc

  • Support development in Arab world

    • Several countries made progress in business reform (Egypt, for example), but more development work still needed

  • Strengthen WB role as “Brain Trust” of the world

    • Apply vast experience & knowledge to help countries address five preceding themes


World Bank Support in East Asia and Pacific

  • Overall WB support increased from less than $2 billion in FY02 to $4 billion in FY07

  • China was largest WB borrower at $1.6 billion (41% of total lending in region)

  • IFC invested $944 million in 38 projects in 8 countries

  • WBG shared knowledge through analytical work, training, institutional capacity building, technical assistance, and other advisory activities

  • In general, governments are relying less on WB financing and more on private financing and other donors


Strong growth & overall poverty reduction

Strong export performance

Uneven development

Enhanced cooperation could maximize development benefit

The Greater Mekong Sub-Region (GMS)Regional Context


GMS Regional Context


Cooperation in the GMS

  • GMS regional cooperation program launched with support of ADB in 1992

    • Promote high priority projects (transport, telecom, HR development, tourism, etc)

  • Mekong River Commission - created in 1995

    • Secretariat of inter-governmental cooperation; supports integrated water resource management (IWRM)

    • Members: CLTV; China, Myanmar dialogue partners

  • ACMECS - initiated by Thailand in 2003

    • Provide technical assistance to CLMV; increase country competitiveness

    • Promote investment & cooperation among private sectors (ACMECS Business Council)

  • Fora / Organizations with broader mandates

    • ASEAN, UN Organizations (UNDP, UNESCAP), MDBs (ADB, WB)

  • Bilaterals - Japan, China, Thailand, and many others


Opportunities

  • Rich natural resources

    • Minerals, forests, hydro

    • Mekong is one of least developed major rivers in the world

  • Economic structures in transition

    • More diversified & open to trade

    • Fast integrating into regional & global economies

    • Increased intra-sub-regional trade, investment, migration flows

  • Large economies in EAP drive sub-regional growth

    • Thailand & China

  • Governments favor increased sub-regional cooperation

  • Expanding regional trade

    • Benefiting from ASEAN Free Trade Agreement


Challenges

  • Integrated system for power production and trade – high growth in demand, but variation in ability to supply, e.g.:

    • Thailand: would need to increase generating capacity by almost 20,000 MW to meet demand; would require $3 billion investment annually

    • Lao PDR: could produce up to 25,000 MW (mostly hydro), but low national demand growth

    • Cambodia: could produce up to 10,000 MW, but absence of national grid and low access/demand makes it difficult to exploit economies of scale

    • South China: need to increase capacity by 164 GW (currently 64 GW). Rapid demand growth led to peak power shortfall of 9.4 MW in ’05.

    • Vietnam: need to increase capacity by 15,000 MW to meet 15% annual demand; would require annual $2 billion investment over next decade


Challenges in GMS (cont.)

  • Better management of national and shared natural resources needed

    • Forests in Cambodia

    • Hydropower in Lao PDR

    • Mekong river basin development not well coordinated, etc

  • Better physical linkages to underpin strong growth, cooperation, and connectivity

    • Landlocked Lao

    • More efficient flows of goods & services b/w countries, main ports of region


Challenges in GMS (cont.)

  • Better framework for flow of human resources

    • Cross-border migration supports growth, but need stronger framework, policies to reduce harmful illegal migration, human trafficking, etc

  • Environmental, social, economic and political risks …if each country pursues development without cooperation


World Bank Support for GMS

  • Regional work program to complement country assistance strategies

  • Support for GMS economic cooperation program

  • Support existing donor coordination mechanism led by ADB

  • Build on WB experience in other regions


Our GMS Work Program

  • Regional Power Trade

    • Build on 2002 Intergovernmental Agreement supported by ADB; support power sector in individual countries & regional integrated planning

  • Mekong Water Resource Management

    • Enhance regional cooperation by strengthening MRC’s capacity

  • Trade and Transport Facilitation

    • Complement ADB’s cross-border trade program; build on completion of sub-regional transport corridors

  • Labor Migration

    • Analytical work to improve knowledge of & info on socio-economic impact of migration in sending & receiving countries


  • Our resources for GMS are small compared to ongoing development assistance in region:

    3 proposed regional projects over next 3 years totaling about $100 million compared with proposed $1.5 billion for ADB’s 29 projects

    Complement our overall longer country-level commitments

    We will use:

    Regional and country grants, credits (e.g. $33.5 million grants for transmission lines in Lao PDR, Cambodia)

    Analytical work and policy advice

    Previous experience of successful regional work, including in Africa and Europe

    Instruments and Resources


    Nam Theun 2 Hydropower Project: Example of Country-Level Project with Major Regional Impacts

    • 1,070 megawatt project costs $1.45 billion

    • 6,200 people in Nakai Plateau relocated

    • WB supports project through $20 million IDA grants, $42 million IDA partial risk guarantee, and $92 million MIGA risk guarantee

    • Complements support by ADB, EIB, NIB, and AfD

    • Project to provide Lao PDR $2 billion in revenues over 25 years

    • All 10 WB social & environmental safeguards are triggered for this project

    • WB requires revenues to be used for poverty reduction & environmental protection

    • Project implementation heavily monitored by independent experts


    Other Areas for Potential WB Support in GMS

    • Environment & Forestry Sector

      • Management of forest resources

      • Establish linkages b/w cross-border national protected areas through trans-boundary corridors

      • Improve enforcement & monitoring against poaching & illegal logging

      • Harmonize cross-border custom practices to control timber & wildlife trade

    • Health issues with cross-border implications

      • HIV/AIDS, avian flu, SARS

    • Capacity Building


    WB in Thailand and Malaysia: Focus on Knowledge Sharing Partnerships

    • Bringing international experience and expertise to countries through:

      • Monitoring and diagnostic work e.g. investment climate assessments, and knowledge economy, higher education and urban development studies

      • In depth implementation support e.g. health financing, banking supervision, school based management, river basin development

    • Sharing MIC experience with lower income countries and working with MICs on regional issues and as increasingly important donors to LICs


    WB in Cambodia, Lao PDR and Myanmar

    • Cambodia – major focus on governance issues at macro and project levels; also on investments needed to achieve MDGs; and on strengthened partnerships

    • Lao PDR – focus on drivers of continued growth, improving social outcomes, strengthening capacity and partnerships, and implementing NT2 project as best practice

    • Using a variety of instruments including budget support, sector and technical assistance operations; knowledge activities and policy dialogue; and convening/facilitating role with other stakeholders

    • In Myanmar – in watching brief mode; but with substantial engagement with other donors


    Thank you!

    For more information on the World Bank, please visit www.worldbank.org


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