Pacific High-level Policy Dialogue on The Role of Macroeconomic Policy and Energy Security in supporting Sustainable Development in the Pacific

Transcription

1 Pacific High-level Policy Dialogue on The Role of Macroeconomic Policy and Energy Security in supporting Sustainable Development in the Pacific 8-9 October 2012, Nadi, Fiji Jointly organized by UN ESCAP and Sustainable Development Working Group of the Council of Regional Organizations in the Pacific (CROP) Session 4 Opportunities in Asia for the Pacific Presentation Regional Solutions in support of Resilience and Security : Adapting Lessons from the Malaysian Experience by Latifah Mercian Cheong Advisor, Office of the Chairman, Securities Commission Malaysia Consultant, World Bank/IMF October 2012 The views expressed in the paper are those of the author(s) and should not necessarily be considered as reflecting the views or carrying the endorsement of the United Nations. This paper has been issued without formal editing.

2 THE ROLE OF MACROECONOMIC POLICY AND ENERGY SECURITY IN SUPPORTING SUSTAINABLE DEVELOPMENT IN THE PACIFIC Session 4 Regional Solutions in support of Resilience and Security : Adapting Lessons from the Malaysian Experience Latifah Merican Cheong, October 8-9, 2012 Nadi, Fiji PIC GDP growth has been relatively slow even before the GFC ( average) 6.0% 5.0% Other small states average 5.5% 4.8% 5.2% 4.0% Southeast Asia average 5.4% 3.4% 3.0% 2.0% 1.9% 1.6% 2.2% 1.7% 2.6% 1.3% 2.6% 2.8% 1.0% 0.0% 0.1% 2

3 The gap vis-à-vis regional economies further widened after the GFC due to effect on tourism and remittances ( average) 8.0% 7.3% 7.0% 6.0% Southeast Asia average 4.4% 5.5% 5.0% 4.0% 3.0% Other small states average 3.8% 4.2% 3.9% 2.0% 1.7% 1.0% 0.0% 0.4% 0.5% 0.7% 0.2% -0.4% 0.8% 0.5% -1.0% 3 Robust rate of increase in GNI per capita has been supported by inward remittances of PIC citizens residing abroad Fiji 2001 FSM 2010 Kiribati Marshall Isl. Palau PNG Samoa Solomon Isl. Tonga Tuvalu Vanuatu $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Year Country CAGR Vanuatu $1,370 $2, % Tuvalu $2,910 $4, % Tonga $1,910 $3, % Solomon Isl. $940 $1, % Samoa $1,450 $3, % PNG $550 $1, % Palau $6,470 $6, % Marshall Isl. $2,970 $3, % Kiribati $1,350 $2, % FSM $2,250 $2, % Fiji $2,140 $3, % Malaysia $3,510 $7, % 4

4 Current economic profile of Pacific Island countries (PICs) broadly similar to Malaysia in late 1980s - early 1990s PICs $3, % 44% 63% 64% GNI per capita Trade as % of GDP Exports as % of GDP Imports as % of GDP % of rural population Malaysia $4, % 71% 65% 51% Value-added by sector Countries included in World Bank s definition of Pacific Island small states : Fiji, Kiribati, Marshall Islands, Federated States of Micronesia (FSM), Palau, Samoa, Solomon Islands, Tonga, Tuvalu & Vanuatu 5 Malaysia diversified its sources of growth through institutional reforms, enabling it to emerge as an upper-middle income economy PICs $3, % 44% 63% 64% GNI per capita Trade as % of GDP Exports as % of GDP Imports as % of GDP % of rural population Malaysia $13, % 105% 84% 30% Value-added by sector Countries included in World Bank s definition of Pacific Island small states : Fiji, Kiribati, Marshall Islands, Federated States of Micronesia (FSM), Palau, Samoa, Solomon Islands, Tonga, Tuvalu & Vanuatu 6

5 Sources of growth are increasingly diversified, with higher contributions to GDP from exports as well as the manufacturing and services sectors Malaysian GDP components (demand-side) Malaysian GDP components (supply-side) 7 Growth rates in PICs showed some volatility before and after the GFC 7.0% 6.0% 5.0% Other small states average standard deviation 2% 4.0% 3.0% 2.0% 1.0% 0.0% Pre-GFC standard deviation Other small states average Post-GFC standard deviation 8

6 Trade between Malaysia and PICs has grown rapidly but still accounts for a very small share of Malaysian imports and exports RM million % 2, % 2, ,500.0 Compounded annual growth rate (CAGR) Total exports 2.78% Total imports 3.10% Exports to PICs 27.43% Imports from PICs 29.24% 0.30% 0.25% 0.20% 1, % % 0.05% % Exports to PICs Exports to PICs as % of total Imports from PICs Imports from PICs as % of total 9 More significant ties in capacity building and joint positions at global forums Low level trade and investment links Trade facilitation to support ease of trade with region Leverage on skills in region to raise productivity; Skills training support by Malaysian foreign affairs Ministry Evaluate benefits from MTA Stronger ties in financial sector issues; Fiji, PNG, are part of SEA Voting Group in Executive Boards of IMF and World Bank; Fiji, PNG are members of SEACEN, Samoa has observer status, Tonga invited to SEACEN events; Members and observers attend SEACEN courses on macroeconomic management, bank supervision, undertake joint research In period 2006-April 2012, 49 participants from Fiji and 82 from PNG benefited from SEACEN s training programs 10

7 Options for Stronger Links Between PICs and East Asia Explore the trade channel ASEAN-PIC bilateral trade agreement to cover: From Malaysia: MOU for Skills support beyond current initiatives Liberalisation in tourism, education and healthcare Education in Malaysian institutions, internships in Malaysia under foreign affairs technical assistance From PICs: Long-term sales agreement for sugar and selected commodities; Joint-Ventures: Joint ventures in tourism products Joint ventures in investments forestry, fishing, downstream seafood sector 11 Thank You Discussions 12