Innovative Government - Innovation on the Road To Economic Recovery

Distinguished guests,
Ladies and gentlemen,

It is a joy for me to be here with you at the Lee Kuan Yew School of Public Policy. This year’s theme of “Innovation on the Road to Economic Recovery” is timely indeed. As the world struggles to rebound from the worst economic crisis in living memory, the challenge we now face is how to ensure future growth is both sustainable and inclusive. We must learn from the mistakes of the past if we are to avoid repeating them. We must innovate approaches to governance if we are to respond to new challenges.

The crisis has taught us a number of important lessons:

i. The crisis has shown that exporting to primarily western markets comes with inherent risks. In the future, our region will need to diversify its sources of growth; including an increased focus on intra-regional trade and promoting domestic consumption.

ii. The crisis has exposed vulnerabilities in the foundations of our region’s social protection systems. These will need to be addressed if we are to make better use of the potential purchasing power of our region’s consumers to revitalize growth.

iii. The crisis has also shown that we need to re-examine the roles of governments and business in promoting economic growth and development. Markets cannot go unchecked. They require a degree of government regulation and oversight. At the same time, business can play an important role in the delivery of essential services and technological innovation.

Beyond the current economic crisis, our region faces a number of longer term development challenges. Food, fuel and water security, in addition to climate change challenge us all on many fronts. Confronted by multiple crises, our regions’ leaders are calling for a new development paradigm. New partnerships between governments and business will also be required if these challenges are to be met.

Several weeks ago I had the honour of addressing 16 leaders at the 4th East Asia Summit in Huan Hin, Thailand. I was asked to share my views on the impacts of the present crisis and the importance of regional connectivity in promoting long term economic recovery. Since then, ESCAP’s five principles for promoting regional connectivity have received strong support from Member States. An emerging consensus is that enhanced regional connectivity can help foster recovery and long term inclusive and sustainable growth for our region.

I see from the agenda for the next few days, that discussions will focus on the delivery of a range of government services through the use of ICTs. E-governance can, and should, play a vital role in enabling the regional connectivity agenda. However ICT capacities are not equitably distributed among countries in our region. Disparities in internet access are even more striking. Differences in affordability, access, speed, quality and bandwidth threaten to widen the digital divide – within and between countries. This has significant implications for the economic and social integration, essential to propel development forward in an increasingly interdependent world.

I would like to spend the next few minutes presenting the five principles of regional connectivity and provide some examples of how ICTs and e-governance can provide support.

Principle 1: Developing Regional Transportation Networks
The first principle of regional connectivity requires the development of regional transportation networks. ESCAP has been actively promoting regional connectivity through transportation infrastructure since the 1960s. Historically much of our region’s economic development has taken place in coastal areas clustered around sea ports that have acted as magnets for development. The Asian Highway and Trans-Asian Railway networks are now linking inland areas and landlocked countries in a regional web of increasing trade and prosperity. Together, with the creation of dry ports as consolidation and distribution centres, this intermodal transport system will support development opportunities across our region. Focused traffic flows and economies of scale created by dry ports will promote the creation of jobs and a shift of traffic toward more environmentally friendly rail transport. ESCAP has worked with Member States to identify US $43 billion in priority investments for missing rail links and road upgrades that will transform these transportation routes into economic corridors.

As more vehicles travel across our region, we will have to manage increased traffic flows. Korea, Japan, India and Malaysia are putting in place plans for SMART highways that provide drivers with information about optimal routes, road conditions and even places to park. These advances in technology can reduce commuting times, increase productivity and reduce greenhouse gas emissions.

Principle 2. Facilitating Trade and Investment
The development of physical infrastructure is not enough on its own to ensure regional connectivity. The second principle of regional connectivity requires facilitating trade and investment to ensure the flow of goods and services across borders. Despite the fact that many economies in our region have chosen to reduce or eliminate tariffs and other direct barriers to trade, significant obstacles remain.

ESCAP’s research shows that there were 151 regional trade agreements involving an ESCAP Member State in force, signed or under negotiation at the end of July 2009. Out of these, 75 were bilateral agreements. We need to undo the noodle bowl of existing trade agreements through their consolidation.

The cost of red tape can add as much as 15 percent of the value of goods being exported to their final price . Fulfilling export or import procedures in most developing countries of the region still takes at least 50 per cent more time than it does in developed economies. Added to this, are the additional costs of moving goods across borders. For instance, different road standards can require shippers to transfer goods between different types of trucks at border crossings. Additional red tape at these transfer points add to the cost and time it takes to ship goods between countries in our region.

ICT technologies can also be used to reduce the time spent crossing borders for goods being shipped to neighbouring countries. The adoption of “paperless trading systems” will help increase the efficiency and transparency of trade procedures by eliminating cumbersome procedures and excessive paperwork. ICTs can help to streamline, computerize and automate these procedures through one stop facilities for information exchange between traders and governments. Technologies such as the internet and mobile phones can also be used to promote continuous sharing and access to trade information. ESCAP is supporting the creation of national Single Window (SW) environments in the region and, together with the Economic Commission for Europe, launched the United Nations Network of Experts for Paperless Trade in Asia and the Pacific in March of 2009.

Principle 3: Developing a Regional Financial Architecture
The third principle of connectivity requires that we develop a regional financial architecture. By pooling our resources together we are able to build up a regional first line of defense that provides resistance to financial crises or other disasters that can hit our region. With close to 5 trillion dollars in foreign exchange reserves, Asia Pacific has substantial opportunities to make these savings work for development. The region has huge infrastructure investment needs, and not only the highways, but also the information superhighways that a knowledge based economy needs.

The problem is that most of Asia's reserves are invested in what are perceived to be risk-free, low yielding securities in the United States. However, the financial crisis showed that no country is immune from risk. In fact, the crisis has provided an opportunity to re-examine how the region's savings are being used. We need to build a regional financial architecture that will bridge the divide between rising infrastructure needs on the one hand and rising availability of foreign exchange reserves on the other.

ICT can expand these opportunities and turn regional cooperation into a reality. ASEAN countries' are linking their stock exchanges through a network that will allow traders to buy and sell stocks across borders in a seamless integrated market. Similarly the coordination of fiscal policies and exchange rates is much more easily achieved through range of communications and information exchange possible through basic ICT services like email, websites, online databases and networks. Credit cards, debit cards and ATM machines seamlessly link banking institutions nationally, regionally and globally. They are now so common place in many countries that it is easy to forget how they have revolutionized the way in which individuals interact with banks, conduct transactions and travel . Their penetration into more remote areas and less developed countries of our region will continue to have significant impacts on local business and finance.

Principle 4. Promoting a Regional Energy Security Framework
Energy security continues to be a concern for this region. If long term economic growth to be ensured we will need the energy resources to power this development. ESCAP is promoting an Asia Pacific Energy Security Cooperation Framework that connects producers and consumers of energy resources and technologies. This initiative is promoting the development of a Trans-Asian energy system that helps to ensure both the near and long term energy security of the region. It will link producers and consumers of energy resources and facilitate new markets for clean and efficient energy technologies. Its goal is to shift development to a low carbon path while ensuring universal access to energy within a predictable time-frame. Key components of this initiative include a technology cost reduction programme, trade and investment facilitation, carbon footprint and energy access norms and a special programme for small island developing states.

ICT is expected to play an increasingly important role in promoting energy efficiency and energy access while addressing climate change issues. ICTs can help energy trade in our region by improving the efficiency of power transmission and distribution grids, reducing waste through smart metering, and by helping rationalize subsidies to the poor and low income people through smart cards. An equally important use of ICT can be to reduce the need for travel and, therefore, fuel consumption for transport, by giving people ready access to remote information and services.

Principle 5. Strengthening the Social Foundations for Inclusive and Resilient Societies
Efforts to improve regional connectivity must include people and communities. Social protection systems not only create the foundations for more inclusive and resilient societies, they also make good economic sense. People without social protection hold on to their savings and are unlikely to spend. Providing minimum wage and unemployment insurance will buffer them from financial uncertainties and help drive economic recovery. ESCAP has placed social protection on the social equity agenda of the region, providing baseline analyses and policy options on a regular basis to address our development gaps and achieve the Millennium Development Goals in Asia Pacific through regional cooperation.

Many countries in our region have implemented “right to information’ acts and policies in order to improve accountability. They have also made available a range of free health and social services for poor and rural communities. E-governance initiatives have applied a range of ICT tools to raise awareness, and in some cases, deliver programmes and services to rural communities and the disadvantaged. For instance, Thailand’s e-Government initiative supports rural e-Commerce services and provides grassroots information to farmers via a government web portal.

The multiple disasters over the past few months are alarming reminders that our region is highly vulnerable to natural disasters. Enhanced cooperation at a regional level will improve our collective capacities for disaster preparedness, response and management. ESCAP has been building the capacity of member countries in the use of space based technologies for disaster risk management. Other ICT initiatives, such as the open source Sahana disaster management system developed by Civil Society, have been instrumental in connecting missing people as well as coordinating efforts of various stakeholders in the aftermath of the Indian Ocean tsunami disaster of 2004.

Ladies and Gentlemen,
We must build upon our collective strengths if we are to not only recover from the present crisis, but build the foundations for more inclusive and sustainable economies. Enhancing our regional connectivity starts with political will. It requires infrastructure that connects remotes areas to our region’s centers of prosperity. It requires market enabling policies and regulatory frameworks that streamline trade and investments while protecting stability. And it requires establishing the foundations of social protection that reduce vulnerable populations to the impacts of disasters and tap into the consuming powers of our people.

ICT’s and e governance services will play an important role, but only if the appropriate infrastructure, policies and investments are made. Twenty three countries in the region - mainly small island developing countries and land-locked developing countries - still have less than 10 internet users per 100 people. Most of these users are concentrated in big cities. In contrast, some developed countries in the region have a ratio of more than 70 Internet users per 100 people.

Most countries want to enhance their capacities to fully capitalize on the opportunities provided by ICTs. ESCAP’s Asian and Pacific Training Center for ICTs was founded four years ago in response to this need. APCICT’s mission is to build the human and institutional capacity of its member countries to use ICTs in promoting sustainable and inclusive development.

Governments can turn the current crisis into an opportunity. But they will need to do so in partnership with other development stakeholders. I encourage you, in your discussions today, to further explore how ICTs can be mobilized to help us champion greater regional connectivity in pursuit of a more inclusive and sustainable future for our region.

I Thank You.