Narrowing the Development Gaps in ASEAN

As ASEAN is working towards the realization of its 2025 vision, it must holistically address the development disparity and capacity gap between and within the member states. Realizing an inclusive and people-centered ASEAN requires a mutually supporting ecosystem with ASEAN
 
 
Development gaps refer to an unequal level of socio-economic development between countries or regions within a country. Development is not only measured by GDP per capita but also by the provision of basic needs such as healthcare and education.
Institutional capacity and leadership of the less developed economies of ASEAN are not at the same pace as the other members. Some countries have not effectively implemented a national single window or integrated a regional agenda with a regional development strategy.
 
 
Cambodia, Lao PDR, Myanmar, and Vietnam (CLMV) are the less developed economies in the region. Institutional capacity, human resources, and physical infrastructure are some of the constraints and challenges in their regional projects.
 
 
Moreover, the private sector, particularly small and medium-sized enterprises (SMEs) in these countries, face difficulties in joining the regional production network due to the lack of market information, sources of financing, production capacity, and non-tariff trade barriers such as standard-related measures.
 
 
The poverty rate in CLMV countries is relatively high. According to the Asian Development Bank, the poverty rate in Cambodia is 14 percent, Lao PDR 23.2 per cent, Myanmar 25.6 per cent, and Vietnam 7 per cent.
 
 
According to the World Bank, the adult literacy rate in Cambodia is 73.9 per cent, Lao PDR is 94.1 per cent, Myanmar is 95 per cent, and Vietnam 93.4 per cent. Life expectancy at birth (in years) in Cambodia is 68, Lao PDR 66, Myanmar 66, and Vietnam 76. Cambodia, Lao PDR, and Myanmar have low levels of healthcare provision, while Vietnam has only a basic healthcare provision.
The level of Internet penetration in ASEAN has increased from 81 million in 2009 to 339 million by January 2017. This means that 53 per cent of ASEAN population has access to the Internet. However, the number of Internet users in Cambodia is only 45 per cent (7.16 million users), Lao PDR 26 per cent (1.8 million users), and Myanmar 26 per cent (14 million users).
 
 
In terms of governance gap, the corruption perception in CLMV countries is relatively high. According to Transparency International’s index in 2016, out of 176 countries, Cambodia was ranked 156, Lao PDR 123, Myanmar 136, and Vietnam 113.
 
Development disparities in Southeast Asia threaten long-term peace and stability, sustainable development in the region. The development gap at the national level and within ASEAN potentially creates a two-tiered ASEAN, which is the potential root cause of future politico-social ills and conflicts.  
 
Development and security are intertwined. To realize a secure, prosperous and caring community, ASEAN needs to implement an inclusive regionalism in which an “integrated and comprehensive approach towards regional integration” is required.
 
Acknowledging the repercussions of a multi-tiered-ASEAN, the leaders have adopted several regional initiatives and created regional and sub-regional institutions and mechanisms to assist the less developed economies to catch up with other members.
 
At the 6th ASEAN Summit in Hanoi in 1998, the ASEAN Leaders expressed their political will and commitment to “narrow the development gap among member states to reduce poverty and socio-economic disparity in the region.
 
The Initiative for ASEAN Integration (IAI) was launched in 2000 with the objectives of narrowing the development gap and accelerating economic integration of the newer members of ASEAN. The first phase of the IAI Work Plan was implemented from 2002 to 2008, whilst the IAI Work Plan phase II was from 2009-2015.
 
The IAI Work Plan phase III is from 2016 to 2022.  Three mechanisms were created to coordinate and implement the IAI Work Plan: IAI Development Cooperation Forum, IAI Task Force, and ASEAN Secretariat- IAI division.
 
The criteria for projects in the IAI Work Plan include identifying the precise needs of CLMV in terms of external assistance, the importance of a project’s role in national development plans, its effectiveness in building CLMV capacity for participation in ASEAN programs, long-term continuity and sustainability, and absorptive capacity of CLMV countries.
 
The challenges in implementing IAI are the lack of coordination among key stakeholders in needs assessment and project implementation. Institutional capacity, transparency and accountability are the main structural obstacles that need to be overcome.
How to narrow the development gaps?
 
ASEAN needs to have strong political will and robust strategy to allocate more resources to narrow development disparity, implement more effectively the IAI.
 
It is suggested that regional institutional building and the promotion of social protection, particularly the establishment of mechanisms to take care of the most vulnerable. are crucial to narrow the gaps.
 
ASEAN and its development partners must target where the gap lies, through identifying development gaps and suggesting policy recommendations. Multi-stakeholders partnership is critical to harness resources to reduce the gaps.
 
Institutional capacity, resource limitations, and governance and accountability need to be holistically addressed. Development needs to be comprehensively understood.
 
CLMV countries must reform their fiscal policy by allocating more of the budget to education and skill development, health-related issues, food security, and social protection.
 
They need to deepen the speed and breadth of policy reforms with a focus on inclusive land reform, free and fair trade policy, foreign investment and labor migration policy.
 
With regards to institutional capacity building, ASEAN and its dialogue partners should provide more financial and technical support for the capacity building of public servants and innovating public sector.
 
More support is needed to assist SMEs in CLM countries (Cambodia, Lao PDR, and Myanmar) countries to be part of the regional production network. The main challenges facing SMEs are access to credit, market information, business networking opportunities, and language barrier.  
 
The export capacity of CLM countries is relatively low. Non-tariff barriers such as standard requirement are the main constraint for these countries to export their products, especially agricultural products and processed food, to the region.
 
ASEAN and dialogue partners need to assist these countries to enhance the quality and standard of their products.
 
To bridge the digital divide, ASEAN and its dialogue partners must intensify capacity building projects on digital economy for the CLM countries.
 
As Singapore is planning to focus on the digital economy next year when it chairs ASEAN, more action plans need to be geared towards an inclusive and resilient digital ASEAN, which refers to the capacity and readiness of ASEAN community in adapting to and grasping the opportunities in a digital age.
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