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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
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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
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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
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The World Bank Annual Report 2007 IBRD/IDA Lending by Sector FY07 Total Lending: $24.7 billion Transportation 20% Education 8% Energy & mining 7% Finance 7% Law & Justice &Public Administration 22% Water, Sanitation, & Flood Protection 12% Agriculture, Fishing, & Forestry 7% Health & Social Services 11% Information & Communication 1% Industry & Trade 5%
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IFC Lending by Industry
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Our Financial Support is Increasing …
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… 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
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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
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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
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World Bank Support in East Asia and Pacific o Overall WB support increased from less than $2 billion in FY02 to $4 billion in FY07 o China was largest WB borrower at $1.6 billion (41% of total lending in region) o IFC invested $944 million in 38 projects in 8 countries o WBG shared knowledge through analytical work, training, institutional capacity building, technical assistance, and other advisory activities o In general, governments are relying less on WB financing and more on private financing and other donors
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The Greater Mekong Sub-Region (GMS) Regional Context Strong growth & overall poverty reduction Strong export performance Uneven development Enhanced cooperation could maximize development benefit
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GMS Regional Context
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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
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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
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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
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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
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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
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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
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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
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Instruments and Resources 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
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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
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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
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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
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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
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Thank you! For more information on the World Bank, please visit www.worldbank.org www.worldbank.org
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