DEVELOPMENT COMMITTEE (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries) NINETY-SIXTH MEETING WASHINGTON, D.C. – OCTOBER 14, 2017 DC/S/2017-0049 October 14, 2017 Statement by H.E. Apisak Tantivorawong Minister of Finance Thailand Representing the Constituency of Brunei Darussalam, Fiji, Indonesia, Lao PDR, Malaysia, Myanmar, Nepal, Singapore, Thailand, Tonga and Vietnam Statement by H.E. Apisak Tantivorawong Minister of Finance Thailand Representing the Constituency of Brunei Darussalam, Fiji, Indonesia, Lao PDR, Malaysia, Myanmar, Nepal, Singapore, Thailand, Tonga and Vietnam 96th Meeting of the Development Committee October 14, 2017 Washington, D.C. Despite strong economic growth, the Southeast Asia and Pacific region still faces challenges in sustainable development as large disparities and inequalities can still be found within and across the region. To move towards the Sustainable Development Goals (SDGs), our governments will need to strike the right balance between providing basic infrastructures and social protection while maintaining economic stability and fiscal sustainability. In this light, we acknowledge the World Bank Group (WBG)’s efforts in helping member countries face their development challenges in FY17. We also welcome the selected four topics for the 96th Development Committee meeting and are pleased to share our views as follow; World Development Report 2018 – Learning to Realize Education’s Promise Having the necessary education, skills and competencies to obtain productive employment can help people in developing countries secure a better future. The persistence of poverty and inequality, together with deficiencies in educational infrastructure and the lack of quality of educational standard across countries and regions, have proven to be major barriers in achieving the SDGs. We commend the WBG in committing to find ways to ensure inclusive and equitable quality education and to promote life-long learning opportunities for all as stated in the SDGs. As reported in the WDR 2018, countries in the Southeast Asia and Pacific region have been coping with 3 dimensions of learning challenges: the learning crisis itself, the direct causes of low learning, and the deeper educational system-level causes. Despite differences in country-specific issues, geography, and level of economic development, our governments strive to improve the quality of education and learning opportunities for all, as evident in the significant amount of the annual budget allocated to support the education system and by setting up policies to promote learning initiatives. In addition, we believe that today’s learners should be proficient with technology and acquire skills such as critical thinking, problem solving, innovation and collaboration. This further requires our governments to develop new standards for our education system and prepare learners with sufficient skills demanded in the current working environment. Applying the learning metrics suggested in this WDR will confidently help us better assess the learning efficiency and develop effective learning approaches. It is undeniable that a better learning and education system will enhance social stability and support economic development. It is important for each government to ensure the priority, transparency and effectiveness of the budgeting system in order to provide sufficient financial support towards learning and education. Tax incentives can be used as tools to crowd-in and encourage the private sectors and other stakeholders to invest in education. To achieve the objectives of educational development efficiently and effectively, each government must synchronize policies and measures on education across ministries and local governments to optimize the use of domestic resources. There are many areas related to education and learning that still requires improvement around the world. We commend the WBG for its great efforts in tackling these challenges and supporting the learning agenda, especially for developing countries and fragile and conflict-affected countries. We urge the WBG to explore innovative efforts in mobilizing funds to empower the educational system with the objective of improving the learning process for all clients and to engage with the governments to effectively manage the national budget for education. In addition, the WBG needs to coordinate with other development partners to build a comprehensive learning assessment system/methodology which is fundamental for further improvement and can be applied through pilot programs or other mechanisms. With a strong commitment from the WBG, we believe that it is possible for all to realize education’s full promise. Maximizing Finance for Development: Leveraging the Private Sector for Growth and Sustainable Development We welcome the WBG’s initiative in the Maximizing Finance for Development (MFD), enhancing the traditional finance for global development by bringing in private solutions. We believe that this approach will help crowding in private sector finance and reassure our governments to be able to optimize public spending and sustain fiscal space for future development. We are pleased that three countries in our region; Indonesia, Nepal, and Vietnam, have been selected as pilot countries for the MFD approach, and wish the WBG for its successful implementation and a further scale-up of this approach. We laud the WBG for preparing comprehensive measures to strengthen their internal processes such as incentives, training and monitoring systems to operationalize MFD effectively. It is well-noted that this MFD approach will provide opportunities to deploy the Private Sector Window created under IDA 18 in helping the countries mobilize private investment and create markets. Nonetheless, this engagement should be implemented alongside the efforts to strengthen the financial sector. Without a strong and prudent financial services sector with adequate resources, appropriate instruments, and an effective intermediary function, it would be difficult to expect proper private sector solutions for development. In this regard, we urge the WBG to support clients not only by bringing in private sector finance, but also improving financial services sector and investment environments, sharing knowledge and lessons learned, and ensuring good practices and good governance in our economies. To assure the ownership of the MFD approach, we encourage the WBG to help countries to prioritize infrastructure and other sectors development using the Cascade approach and to be more proactive when introducing the approach to the private sector. In addition to the coordination among development partners, to maximize the leverage, the WBG need to intensify its coordination with regional initiatives, such as ASEAN, which has regional program including on infrastructure fund, capital and bond market development, and tax cooperation, Forward Look Implementation Update Serving All Clients: We are pleased to see the progress of the WBG in serving all client segments. We take note that the scale- up of IDA18, IDA18 IFC-MIGA Private Sector Window and platforms for the new IFC 3.0 strategy were successfully launched this year. These processes are on track to create a meaningful development impact in the Low-Income countries (LICs) and countries with Fragility, Conflict and Violence (FCV). Particularly, we praise the WBG for tripling the minimum base allocations in the IDA18 implementation for Small States, which are very vulnerable to climate change and economic shocks. We are grateful for the significant increase of the WBG’s financial support to Small States. In addition, the institutional support by creating a Small States Advisory Group and Secretariat to facilitate coordination 2 across Small States is crucial to implement the Small States’ Road Map. We look forward to receiving updates based on the concreate actions and successful implementation of the roadmap. We also appreciate the WBG’s strong commitment in engaging with the Middle-Income Countries (MICs) given the fact that MICs are the main drivers for global economic development. Investing in MICs can create a significant development impact and positive spillovers through the region, especially the ones with strong connectivity with their neighboring countries. Therefore, we strongly encourage the WBG to coordinate with other development partners and restore its momentum in engagement with the MICs, including maximizing the value of proposition of the knowledge bank Mobilization and Creating Markets: We congratulate the WBG on the progress of implementation of its “Billions-to-Trillions” agenda. Building on the Cascade approach and G20’s principles on Crowding-in Private Financing endorsed at the G20 Hamburg Summit, the MFD mentioned earlier will help leverage the private sector and optimize the use of scarce public resources to create the development impact around the world. We fully support the new strategies, instruments and tools, e.g. the IFC 3.0, MIGA2020, the IFC-MIGA Private Sector Window, to help achieve the WBG’s ambitious agenda through private capital mobilization and market creation. That said, we reiterate our strong support for the Bank, IFC and MIGA in continuing to working closely together as a One WBG to be able to deliver the Twin Goals of ending extreme poverty and boosting shared prosperity. In other specific areas, we urge the WBG to continuously support the improvement of governance and competitiveness of State Owned Enterprises in our region due to their significant role as an agent of development, improving business climate particularly to attract FDI inflow at the national and regional levels, and leveraging the WBG’s successful implementation by supporting public private partnership, especially by IFC and MIGA, in other parts of the world to our region. Leading on Global Issues: We praise the WBG for its initiatives and commitments to support all members dealing with global challenges such as Climate Change, Crisis Risk Management, Regional Cooperation and Connectivity, Gender Inequality and Unemployment. It is well-noted that many facilities and platforms, e.g. the Global Concessional Finance Facility (GCFF), the Pandemic Emergency Financing Facility, the Women Entrepreneurs Finance Initiative (We-Fi), have been established and effectively implemented to help promote job creation and economic opportunities, investing in basic infrastructures and providing services in health and social protection for clients in need in all regions. Having said that, we would like to reemphasize the importance of having each facility well-funded in a sustainable way from donors to ensure that recipient countries would not have to experience interruption of assistance or fiscal burden in the long run. Improving the Business Model: We very much welcome the WBG’s continuing efforts to improve transparency, efficiency and effectiveness of operational processes. The new Procurement Framework and Environmental and Social Framework will certainly contribute towards improving global regulatory environments in member countries. Furthermore, we are delighted that the new Knowledge Management Action Plan and the Agile initiative will help speed internal operations and streamline the Bank’s procedures to efficiently meet the clients’ needs. Accordingly, we encourage all institutions of the WBG to carry out their processes in budget efficiency and operational effectiveness, and emphasize Value for Money in their operations and policies on the best use of each dollar in generating development impact following the 2030 development agenda. In this regards, the WBG needs to ensure the effective implementation of the WBG’s People Strategy to support the improvement of the business model, among others through training, changing culture/mindset, and can-do spirit of the overall WBG staff. 3 Strengthening Financial Capacity We congratulate the successful scale-up of IDA18 and the increase in MIGA’s capacity, and take note of the independent external review of IBRD and IFC’s respective capital adequacy framework, which was conducted by an external consultant and a panel of eminent experts. Hereafter, we look forward to updates on the roadmap and work program regarding IBRD and IFC’s financial capacity at the 2018 Spring Meetings. Shareholding Review: Progress Report to Governors at the Annual Meeting 2017 The Shareholding Review principles endorsed at the Lima Annual Meetings in 2015 clearly provided guidance for the WBG to realign its shareholding to achieve an equitable balance of voting power and to strengthen the capital positions for both IBRD and IFC through possible selective and general capital increases. We take note of the three endorsed pillars: the 2015 mandated principles, the 2016 formula guidance, and the agreed Dynamic Formula for IBRD, and welcome the progress on discussions of the accompanying package of commitments built on the mentioned pillars in this shareholding review. We acknowledge the continuing efforts by Management and Executive Directors on both IBRD and IFC shareholding discussions with a view to reaching an agreement within the timeframe on a balanced set of proposals including the size of the potential Selective Capital Increase and the allocation rules, and understand that more work remains to be done in order to find an optimum solution for all WBG members. With respect to the IBRD Shareholding discussion, we are in favor of an allocation largely in line with the dynamic formula. We are also supportive to other conditions for allocation to achieve an equitable balance of voting power, especially in enhancing the voice and participation of developing and transition countries (DTS), as agreed in 2010 by the Governors. We also stress the need of protecting voting powers of the smallest poor countries. With regards to the current IFC Shareholding discussion, we are willing to consider all possible options in supporting the IFC potential Selective Capital Increase, both the consultative approach as in 2010 and the rule-based allocation approach. We understand that the original intention is that the IFC shareholding should be broadly aligned with IBRD. Nonetheless, the changes in global dynamism, of the increase of Finance for Development (FfD) interests from the member countries and IFC’s ambitious mandate to create markets in challenging locations requires IFC to be well-capitalized at the earliest possible. Accordingly, we are open to flexibility on the pace of any convergence between the institutions’ shareholding. Conclusion In conclusion, we strongly support the Forward Look agenda in making a significant transformation in global development; i.e. maximizing development finance, mobilizing private solutions, taking a lead on global issues, increasing operational efficiency and strengthening financial capacity. We look forward to the successful and balanced outcomes of the Executive Directors’ discussions on both IBRD and IFC shareholding within the timeframe. With this, we wish the WBG success in becoming a stronger and better institution for all its members in achieving the Twin Goals. 4