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Regional

Update

2018

East Asia and Pacific

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Poverty continues to decline, but over a quarter of population remains economically insecure. Inequality remains a concern.

Inequality has risen and perceptions of inequality have worsened in several large countries (Riding the Wave, World Bank 2017)

Aging populations present new challenges

...as prospects for job growth in manufacturing-led labor-intensive industries are declining

Note: The absolute number of economically insecure people in EAP, estimated at 575 million in 2018, includes the extreme poor, moderately poor, and vulnerable population. The total population in developing EAP is estimated around 2,048 million in 2018.

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Evolution of poverty and prosperity in the EAP Region since 2002

Middle Class Economically Secure Vulnerable Moderate Poor Extreme Poor

Extreme poor (less than PPP $1.90-a day)

Moderate poor (PPP $1.90-$3.10 - a day)

Vulnerable (PPP $3.10-$5.50 - a day)

Economically secure (PPP $5.50-$15.00 - a day)

Middle class (PPP $15 and higher - a day)

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WBG strategic directions advance twin goals and SDGs in EAP

A. PRIVATE SECTOR-LED GROWTH

Economic Stability, Jobs, Trade & Integration, Infrastructure (physical, digital, financial)

Promoting Shared ProsperityEnding Extreme Poverty

B. HUMAN CAPITAL & INCLUSION

Nutrition, Education, Skills, Health Security, Social Protection

C. RESILIENCE & SUSTAINABILITY

Climate, Fragility & Conflict, Disaster Risk Management

Implementing the Forward Look Priorities

TRANSPARENT & ACCOUNTABLE GOVERNANCE

PFM, Domestic Resource Mobilization, Citizen Engagement

ADVANCING & SHARING

KNOWLEDGE

LEADING GLOBAL AGENDA

MAXIMIZING FINANCE FOR

DEVELOPMENT

SERVING

ALL CLIENTS

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A) Private sector-led growth

Strategic focus on job creation in the private sector, which accounts for 90% of jobs in EAP, is key to reducingpoverty in the region and fostering social cohesion in fragile and conflict areas.

▪ Promoting macroeconomic stability and strong public finance: green growth DPO (Lao PDR); country economic-financial monitors throughout Southeast Asia; support to Philippines on tax reform.

▪ Establishing right regulatory and policy frameworks especially for SMEs as the engine of job creation (Doing Business RAS in Brunei, Malaysia, Thailand); enabling a more competitive business environment.

▪ Promoting competition and facilitating trade: National Logistics Action Plan in Vietnam, IDA IPF for Competitiveness and Trade in Lao PDR, Support for Philippines Competition Commission. Timor-Leste, IFC PPP Advisory is enabling construction of Tibar Bay Port which will be a gateway to new markets.

▪ Taking clients to new markets: IFC, MIGA are driving cross-border activities especially in Africa; IFC and CITIC Construction platform is building 30,000 affordable new homes over 5 years, mainly in Kenya, Rwanda and Nigeria.

▪ Strengthening skills and supporting effective labor markets: EAP Regional Labor Mobility flagship; Indonesia Global Workers: Juggling Opportunities and Risks; Cambodia, Myanmar, Vietnam Jobs Diagnostics; Tonga: Skills and migration facilitation lending; designed to increase labor productivity.

▪ Promoting innovation and technology policy: Malaysia - Digital Economy Policy Dialogue RAS. China - IFC is supporting online affordable lending to customers via smart phones; credit risk profiling occurs within 24 hours by customers downloading an app to enable credit rating analysis.

▪ Delivering reliable productivity-enabling infrastructure services: in Vietnam, Bank P4R, ASAs and MIGA support a shift from basic transport construction to private sector-driven asset management systems; in the Philippines IFC has provided more than 1m water connections, serving 1.4m households.

▪ Broadening access to finance: TA, ASAs, IPFs for support of financial inclusion and MSME access to finance, including strengthening financial infrastructure (Lao PDR, Myanmar, Vietnam, Mongolia, Cambodia), payment systems strategy and modernization (Cambodia, Vietnam, Mongolia).

B) Human capital and inclusion

INVESTING IN THE

EARLY YEARSMOVING FROM ATTAINMENT

TO LEARNING FOR ALL

IMPROVING ACCESS TO

QUALITY SERVICES &

FINANCIAL PROTECTION

$2.4B portfolio

investing in UHC

service delivery, aged

care, financing

Over $500m in

delivery for

nutrition in FY18-19

UPGRADING SKILLS AND

ENHANCING PRODUCTIVITY

IEY Flagship in

Indonesia

Performance linked

financing, incl. CCTsInexplicably high

stunting in LMICs

More reliance on and

strengthening of

Government systemsI nvest ing in the Ear ly

Healt h ser vice deliver y f or the young ( I FC PPP

suppor t f or hospit al in

1. INVESTING IN THE EARLY YEARS

2. MOVING FROM ATTAINMENTTO LEARNING FOR ALL

3. UPGRADING SKILLS AND ENHANCING PRODUCTIVITY

4. IMPROVING ACCESS TO QUALITY SERVICES

Universal Health Care Service delivery

(region-wide)

Aged care development

(China)

Health system reform

(China, Cambodia, Lao PDR, Myanmar

and Vietnam)

Expanding CCT and social assistance

(Indonesia, Philippines)

Asia/Pacific Social Protection Flagship

Jobs Diagnostics

(Vietnam, Myanmar & Cambodia)

Skills & employment projects

(China, Mongolia, Tonga)

Private sector solutions in

vocational / tertiary education

(Vietnam, China)

Education quality

(Lao PDR, Cambodia, China,

Myanmar, Mongolia, Indonesia,

Philippines, Vietnam)

Teacher effectiveness &

curriculum reform through

innovative results-based approach

in Vietnam

Investing in ‘Edu-tech’ to deliver

increased access and affordability

for all

EAP regional flagship

on Learning and Equity (FY18)

Focus on fighting malnutrition

and reducing high stunting rates

Investing in the Early Years

Flagship in Indonesia

Health service delivery (IFC PPP

support for hospital in Fiji)

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C) Resilience and sustainability

Enhancing Natural Wealth and Resilience

Countering FragilityPromoting CC Adaptation

and Mitigation, Environmental Health

▪ Finance air pollution control in China

▪ Green finance to scale up sustainable energy: First emerging market Green bond issued by Govt. of Fiji with IFC and WB support

▪ Support carbon pricing, including national scale up of China’s Emissions Trading Scheme. Scale up solar and wind farm power (IFC)

▪ Adopt new instruments (catastrophic risk insurance, CAT-DDOs, asset insurance) to mitigate climate risks in the Pacific

▪ Improve energy efficiency in industrial sector: Vietnam Energy Efficiency Financing

▪ Increase access to energy: solar in rural Myanmar (IFC)

▪ Multi-sector approaches to integrated land and water management and resilience in the Mekong Delta

▪ Combat illegal logging, forest degradation and deforestation in Lao PDR "green growth"

▪ Advance water conservation in Mongolia’s Oyu Tolgoi mine by IFC and MIGA

▪ Enhance the sustainability of oceanic fisheries, coastal fisheries, and critical habitats in the Pacific, especially Solomon Islands (SolTuna, IFC)

▪ Secure land tenure and rural livelihoods in Myanmar, Cambodia, Lao PDR, PNG, Solomon

▪ Promote inclusion and community development in Mindanao, Philippines and Southern Thailand

▪ Regional approaches to DRM: Pacific; Southeast Asia Disaster Risk Insurance Facility (SEADRIF)

Fostering Economic -Financial Resilience

▪ Economic-financial monitoring and policy dialogue focus systematically on managing risks in volatile environment, as global interest rates rise

▪ FSAP (China Indonesia)

▪ RAMP (WB Treasury) operations in several countries

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Serving all clients: IDA18 scale up in EAP

From IDA17 to IDA18: 30% increase with focus on FCV

Myanmar

▪ Deedoke Hydro: Greenfield run-of-river 60MW hydropower plant (HPP) on existing upstream HPP cascade of 790MW – a gateway investment in sustainable private sector hydropower development

▪ Anthem Asia seeking IDA PSW (up to US$10m) subordinated to IFC ($10m) for a dedicated fund of $50m for SMEs

▪ MIGA investigating in a regional ICT project connecting region through fiber-optic cable

Focusing on key drivers of fragility(Country Fragility assessments): Climate resilience and adaptation (road, costal, maritime infrastructure); catastrophic risk insurance; Tackling double-burden of nutrition; youth employment through migration and skills development; institutional strengthening

Implementing smartly: ▪ Develop central fiduciary units to enhance efficiency (RMI)▪ Use more efficient instruments (MPA on Tonga, RMI)▪ Share resources with Partners – harmonized process with ADB; shared staff; co-finance

coordinated reform programs▪ Strengthen South Pacific sub-regional hub ▪ Adopt regional projects/approaches – aviation; cable connectivity; oceanscape management▪ Increase size of operations; replicate successful projects

Scaling Up Small States Engagement (Pacific Island Countries)

Private Sector

Window

Pacific Risk Sharing Facility (RSF)

▪ IFC collaborates with Australia and New Zealand Bank (ANZ) to create a $50m risk sharing facility to make sustainable energy financing commercially viable

▪ Expected impact: reduce energy costs, increase installed capacity and generation of renewable energy, reduce GHG emissions

$0

$1

$2

$3

$4

IDA17 IDA18

Indicative Core Country Allocations (US$b)

FCV FCV (Small States)

Non-FCV Non-FCV (Small States)

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Responding to Rakhine Crisis with broad partnership

▪ Calibrate Bank support by progress on security, humanitarian aid, refugee repatriation, resettlement

▪ Monitor and manage risks – no DPO engagement▪ Explore opportunity for regional interventions with Bangladesh to support refugee/IDP

return▪ Support future Rakhine Relief-Recovery-Development Plan working with UN and others

Fostering inclusion in conflict areas▪ Deepen our understanding of the drivers of fragility (The Contested Areas of Myanmar*,

Social inclusion ASA)▪ Apply “inclusion filter” to all operational engagement in Myanmar ▪ Support national programs on health and education to invest in people and ensure access

to basic social services for all ▪ Finance electrification, water, and community driven development projects▪ Promote private sector and job creation

Myanmar: Supporting peace and inclusive development in the largest IDA/FCV country in EAP

*in partnership with Asia Foundation

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Supporting IBRD countries’ development and contributing to global priorities,

with greater attention to selectivity and WBG additionality

Global Climate GoalsGlobal Poverty Reduction

and Shared Prosperity

Poverty and Economic Security: expansion of the Conditional Cash Transfers program in Indonesia (10m beneficiary households in 2018, from 3.5m in 2016). Access to finance (15m micro & SME loans, accounting for 24% of IFC’s total reach in EAP). Poverty Reduction in China: Guizhou Poverty Alleviation and Agriculture-Based Industry Pilot Demonstration in Poor Areas Project; Rural Development Project.

Shared prosperity: Support for new drivers of growth (China), Thailand 4.0 Transformation, digital economy readiness in Malaysia, financial inclusion in Indonesia: IFC client BTPN reached 2.4m women entrepreneurs.

Knowledge hubs in Korea, Malaysia, Singapore▪ ASEAN draws on WBG expertise in pursuit of

financial inclusion, health security, DRM▪ IFC and MIGA support for outward cross-

border investment by EAP MIC firms [e.g. Alibaba]

▪ China South-South program▪ Major knowledge products:• China’s Drivers of Growth• Indonesia’s Aspiring Indonesia: Expanding

the Middle Class• Vietnam: Food Safety Risks Management

Knowledge

EAP is key to the global climate agenda:▪ Climate contribution of China program:

Climate co-benefits 36% (FY18), includes water-to-waste.

▪ Energy transition and environment: China’s Innovative Financing for Air Pollution Control

▪ Renewable energy investments: Indonesia’s Geothermal Resource Risk Mitigation Project (GREM)

▪ Forestry /water: Indonesia, China, Vietnam

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Maximizing finance for development: WBG approach in EAP

financing

Vietnam Energy: IBRD mitigating private sector offtake risk through supporting EVN to get official credit rating, and crowd in private sector capital; designing and implementing solar auction program. Bank/IFC joint support to unlock private sector financing in LNG. MIGA is following-up on MFD opportunities.

Vietnam Agriculture Cascade: Bank/IFC joint roadmap for rice and coffee sectors to improve business environment and quality of public spending and support private sector financing (VN SAT platform)

Diagnostics to deepen WBG shared knowledge on private sector bottlenecks

and investment needs

Policy reform for both public investment and domestic

resource mobilization

Indonesia country pilot Vietnam country pilot

Geothermal Resource Risk Mitigation Project (GREM): will scale up $300m investment with potential to leverage up to $1.5bn in additional commercial financing in geothermal energy development

Scaling Solar: Bank/IFC working with GOI on solar regulation needed to support large scale ramp-up of competitive photovoltaics (PV)

National Affordable Housing Program: $450m IBRD operation supports access through a mix of interventions including down payment subsidies; IFC Housing Program leverages IBRD program by establishing joint ventures with local and international investors to participate as a lender in IBRD program, targeting bottom of the pyramid clients

▪ Off grid solutions and distributed generation currently being explored in Myanmar, Philippines, and Papua New Guinea

▪ Indonesia Tourism: this WBG integrated multi-component project aims to lift number of foreign and domestic visitors, increase tourism foreign exchange earnings, employment, contribution to GDP and overall competitiveness.

Tapping into more MFD opportunities Operationalizing MFD

▪ Go beyond a single deal or project to a programmatic approach for increased scale and impact.

▪ InfraSAPs in Indonesia and Vietnam include deep sectoral dives on energy; transport – toll roads, airports, ports and urban transport; water supply; and urban development – subnational borrowing and housing finance.

Mobilizing full WBG instrument toolkit to support investments in

public and private sectors

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Advancing & sharing development knowledge: EAP hubs

Malaysia

Korea

Singapore

Hong Kong SAR, China

▪ Center for: sharing knowledge on PPPs and infrastructure development; and mobilizing private finance for infrastructure

▪ South-South exchange on energy transitions, e.g. renewable energy auctions, energy efficiency, variable energy integration

▪ Hosts global initiatives: the Global Platform for Sustainable Cities (GPSC) and the Global Infrastructure Connectivity Alliance (GICA) launched by the G20.

▪ Cross-border activities including for AMC investors

▪ An incubator for MFD coordination/delivery.

▪ Share Korea’s development experience globally in areas such as ICT, Green Growth, Urban development

▪ Provides financial sector technical assistance and capacity building

▪ Facilitates cross-border investment

▪ Shares Malaysia and international good development practices globally, through research and outbound knowledge sharing (e.g. with 40+ countries on PFM and public service delivery, with 30+ countries on financial inclusion, FinTech, and Islamic Finance).

▪ Introduces innovations, such as use of FinTech for remittances, new ASEAN green finance standards, green Islamic Finance.

▪ Supports cross border transactions with HK-based clients, helping them move beyond EAP and into new markets, particularly IDA/FCS in Africa, South Asia, ECA and LAC

▪ Knowledge exchange and capacity building in partnership with International Financing Facilitation Office under HKMA: focus on PPP, infrastructure & connectivity