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The World Bank Group In the Greater Mekong Sub

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The World Bank Group In the Greater Mekong Sub
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


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
&Public
Administration
22%
Transportation
20%
Water, Sanitation, &
Flood Protection
12%
Information &
Communication
1%
Agriculture,
Fishing,
& Forestry
Industry & Trade
5%
7%
Education
Health & Social
Services
11%
Finance
7%
Energy & mining
7%
Total Lending: $24.7 billion
8%
IFC Lending by Industry
IFC Investments in FY07
7.60%
1%
Oil, gas, mining and chemicals
Infrastructure
12%
3%
Global manufacturing and services
4.90%
11.40%
Health and education
Global financial markets
Global ICT
16.70%
Private equity and investment funds
Agribusiness
41%
2.40%
Subnational finance
Our Financial Support is Increasing …
Amount ($ billions )
W o r ld B a n k c o m m itm e n ts
40
35
30
25
20
15
10
5
0
W o r ld B a n k c o m m itm e n ts
2002
2003
2004
2005
Year
2006
2007
… But Our Financial Support is Declining as a
Proportion of Total Financial Flows
Amount (in US D billions )
Global Development Finance
600
n e t p r iva te a n d o ffic ia l
flo w s
500
400
o ffic ia l d e ve lo p m e n t
a s s is ta n c e
300
200
W o r ld B a n k
c o m m itm e n ts
100
0
2002
2003
2004
2005
2006
Year
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


Help states coming out of conflict


How to continue reducing poverty and spurring
sustainable growth?
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”


Support development in Arab world


HIV/AIDS, malaria, avian flu, climate change, etc
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
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
The Greater Mekong Sub-Region (GMS)
Regional Context



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Strong growth & overall
poverty reduction
Strong export
performance
Uneven development
Enhanced cooperation
could maximize
development benefit
GMS Regional Context
Cooperation in the GMS

GMS regional cooperation program launched with
support of ADB in 1992


Mekong River Commission - created in 1995



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Provide technical assistance to CLMV; increase country
competitiveness
Promote investment & cooperation among private sectors
(ACMECS Business Council)
Fora / Organizations with broader mandates


Secretariat of inter-governmental cooperation; supports
integrated water resource management (IWRM)
Members: CLTV; China, Myanmar dialogue partners
ACMECS - initiated by Thailand in 2003


Promote high priority projects (transport, telecom, HR
development, tourism, etc)
ASEAN, UN Organizations (UNDP, UNESCAP), MDBs (ADB, WB)
Bilaterals - Japan, China, Thailand, and many others
Opportunities

Rich natural resources



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


Minerals, forests, hydro
Mekong is one of least developed major rivers in the world
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


Mekong Water Resource Management


Enhance regional cooperation by strengthening MRC’s
capacity
Trade and Transport Facilitation


Build on 2002 Intergovernmental Agreement supported by
ADB; support power sector in individual countries & regional
integrated planning
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 socioeconomic impact of migration in sending & receiving countries
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
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


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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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