1. ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2016 - ENHANCING REGIONAL TIES Rintaro Tamaki Deputy Secretary General, OECD 20 November 2015, Malaysia, ASEAN Business and Investment Summit LAUNCH

2. Growth prospects 4 Regional integration challenges Structural policy challenges – the case of Malaysia 2 Outline

3. 3 Growth shows mild moderation but will remain robust Country201420152016 2016-20 (average) 2011-13 (average) Brunei Darussalam-2.3-1.40.51.80.9 Cambodia7.0 7.17.3 Indonesia5.04.75.25.56.2 Lao PDR7.46.97.07.38.1 Malaysia6.04.6 5.05.2 Myanmar7.78.2 8.36.9 Philippines6.15.96.05.75.9 Singapore2.92.12.42.64.1 Thailand0.92.73.13.63.2 Viet Nam6.06.45.96.05.6 China7.36.86.56.08.2 India7.37.27.3 5.5 Average of ASEAN 10 countries4.6 4.95.25.4 Average of Emerging Asia6.76.56.46.27.0 Real GDP growth of ASEAN, China and India (Annual percentage change) Source: OECD Development Centre.

4. Overall, the pace of progress of integration is slow. Progress has been varied (through the ASEAN, ASEAN+3 and ASEAN+6 frameworks) in key policy areas. Deeper integration can be facilitated through: –Better harmonization of regional, sub-regional and national planning –Improved monitoring of progress –Co-operatively addressing a broader set of policy areas, in particular, issues related to green/energy and private sector development. 4 Integration in key policy areas is progressing slowly

5. 5 Key challenge 1: Improved co-ordination Alignment of national and regional targets in ASEAN (Number of policy areas) Little overlap between AEC targets and national plans. The technical and country-specific expertise of national officials could be used to a greater extent. Source: OECD Development Centre.

6. 6 Key challenge 2: Improved monitoring Examples of ASEAN regional integration indicators More detailed, transparent and regularly updated monitoring indicators will be needed in the region Existing indicators are a start, but of limited use

7. 7 Key challenge 3: Greater attention to green growth Renewable electricity generation in ASEAN-6 countries (TWh) in 2013 For example, hydropower and geothermal resources are relatively well exploited but other sources are almost untouched in the region Type of renewableIndonesiaMalaysiaPhilippinesSingaporeThailandViet Nam Hydropower16.910.610.0-5.757.1 Geothermal9.4-9.6-0.0- Solar0.00.10.0 1.1- Wind0.0-0.1-0.30.1 Biogas/biomass/waste0.31.10.21.47.00.1 Total generation from renewables 26.611.919.91.414.157.3 Source: IEA.

8. 8 Key challenge 4: Expanding private sector cross-border opportunities Firms are engaging with the rest of the region, though these activities will need to be diversified beyond a limited range of countries and sectors Greater regionalisation and internationalisation will be needed to develop ASEAN enterprises Year Home country Host country IndustryAcquirerTarget 1 2012ThailandSingaporeFood and beverageThai Beverage PCLFraser & Neave Ltd 2 2007SingaporeMalaysiaFood and beverageWilmar International LtdPPB Oil Palms Bhd 3 2013SingaporeIndonesia Automobiles and components Gallant Venture LtdIndomobil Sukses Internasional 4 2012ThailandSingaporeMetals and miningPTT Mining LtdSakari Resources Ltd 5 2013SingaporeIndonesia Automobiles and components Gallant Venture LtdIndomobil Sukses Internasional 6 2007SingaporeIndonesia Paper and forest products Investor GroupLonSum 7 2011ThailandIndonesiaChemicalsSCG Chemicals Co LtdChandra Asri Petrochemical 8 2007SingaporeMalaysiaFood and beverageWilmar International LtdPGEO Group Sdn Bhd 9 2012SingaporeMalaysiaChemicals Reliance Global Holdings Pte BP Chemicals(Malaysia)Sdn Bhd 10 2010ThailandMalaysia Containers and packaging Investor Group Malaya Glass Products Sdn Bhd Largest intra-ASEAN M&A investments in manufacturing, 2004-13

9. Malaysian teachers are relatively well-paid and recent reforms to hire more educators have lowered the student-teacher ratio to 13:1, below the 16:1 OECD average. But teachers are often less experienced and spend less classroom time teaching than in other countries. 9 Malaysia’s challenge: Teachers and curricula are key to improving education quality Use of classroom time in Malaysia and OECD average Source: OECD.