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Subregional Development Strategy in ASEAN After COVID-19: Inclusiveness and Sustainability in the Mekong Subregion (Mekong 2030)

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Subregional Development Strategy in ASEAN After COVID-19: Inclusiveness and Sustainability in the Mekong Subregion (Mekong 2030) Subregional Development Strategy in ASEAN after COVID-19: Inclusiveness and Sustainability in the Mekong Subregion (Mekong 2030) Economic Research Institute for ASEAN and East Asia Subregional Development Strategy in ASEAN after COVID-19: Inclusiveness and Sustainability in the Mekong Subregion (Mekong 2030) Published by Economic Research Institute for ASEAN and East Asia Sentral Senayan II, 5th and 6th floor Jalan Asia Afrika No.8, Gelora Bung Karno Central Jakarta 10270 Indonesia ©Economic Research Institute for ASEAN and East Asia, 2020 Cover design by Ranti Amelia Published in November 2020 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means electronic or mechanical without prior written notice to and permission from ERIA. The findings, interpretations, conclusions, and views expressed in their respective chapters are entirely those of the author/s and do not reflect the views and policies of the Economic Research Institute for ASEAN and East Asia, its Governing Board, Academic Advisory Council, or the institutions and governments they represent. Any error in content or citation in the respective chapters is the sole responsibility of the authors. Material in this publication may be freely quoted or reprinted with proper acknowledgement. ISBN: 978-602-5460-30-2 The report was presented at a briefing by ERIA’s Chief Economist, Professor Fukunari Kimura, at the ‘ASEAN Forum on Subregional Development – Converging Mekong subregional cooperation with ASEAN goals’ held on 14 July 2020. The policy recommendations were highlighted by ERIA President Professor Hidetoshi Nishimura for ASEAN Foreign Ministers at the Special Session of the ASEAN Coordinating Council on Subregional Development held on 9 September 2020. Foreword ASEAN’s process of economic integration is geographically multi-layered and, therefore, sub-regional initiatives are particularly effective to address development gaps, enhance connectivity, and promote international coordination. The Mekong subregion (MSR), with its strategic location, economic dynamism, and abundant water resources, is the centre of many mega-connectivity initiatives compared with the Indonesia–Malaysia–Thailand Growth Triangle and the Brunei Darussalam–Indonesia–Malaysia–Philippines East ASEAN Growth Area. Successful advocacy of Mekong issues will strengthen ASEAN unity and ASEAN’s adaptive capability in a changing global and regional environment. For the past decade, MSR countries have achieved significant socio-economic progress, enjoying high economic growth and remarkable reductions in poverty. Yet, the development gap between the MSR and other ASEAN countries remains sizable. In addition, the MSR is starting to face a series of serious immediate backlashes particularly in energy, water resources management, and the environment. Without robust and effective policy dialogues and coordinated measures, the MSR as a whole may not induce sustainable and harmonious development, which may in turn impede ASEAN’s efforts for deeper economic integration and inclusive growth. The MSR therefore needs to search for a new development strategy to ensure that regional and individual economic and social transformations contribute more to inclusive and sustainable development. This report highlights the importance of MSR development for ASEAN integration and prosperity. It diagnoses the current status of development and cooperation in MSR and proposes a framework for inclusive and sustainable growth. The policy recommendations are structured around four key areas: (i) connectivity, including both digital connectivity and physical connectivity; (ii) industrialisation, which covers industrial upgrading and micro, small, and medium-sized enterprises; (iii) human welfare, including health services and human resource development; and (iv) sustainability – energy, water resources management and the environment. The successful implementation of these four pillars requires strong commitment at the national, subregional, and regional levels. iii The report is written at a critical time when the world is facing unprecedented challenges – rising trade conflicts and the return to protectionism, technological advances and job displacement, disruption in the global value chain, and the threat of poverty and increasing inequality due to the COVID-19 pandemic and climate change, amongst others. The new development strategy, therefore, must be able to address these challenges. I believe that this report will provide valuable insights into the obstacles the MSR countries are experiencing and how to overcome them in the new context. Professor Hidetoshi Nishimura President of ERIA iv Acknowledgements It is my great pleasure to submit the report on the development vision for the Mekong Sub-region requested by the Ministry of Foreign Affairs of Viet Nam as chair of the Association of Southeast Asian Nations (ASEAN) in 2020. On behalf of the Economic Research Institute for ASEAN and East Asia (ERIA), I would like to express my deep appreciation to ERIA’s experts and external consultants for their dedicated work, expertise, and contributions, without which producing this report would not have been possible. The report was prepared under the guidance of ERIA’s Chief Economist, Fukunari Kimura, who provided oversight and leadership throughout the development process. It draws on the research and analysis of several background papers prepared by Masahito Ambashi, Venkatachalam Anbumozhi, Salvador M Buban, Lurong Chen, Thu Hang Dinh, Ellen Putri Edita, Hendro Putra Johannes, Shigeru Kimura, Michikazu Kojima, Dian Lutfiana, Dionisius A. Narjoko, Anh Duong Nguyen, Dinh Chuc Nguyen, Han Phoumin, Alloysius Joko Purwanto, Rashesh Shrestha, Minh Thu To, Thanh Quang Trieu, Tri Thanh Vo, Thi Thu Hang Vu and Fauziah Zen. The project was coordinated by Ayumi Kodama, Yasuhiro Yamada, and Ha Thi Thanh Doan. Nadira Priastianda provided able administrative support. ERIA’s editing team – Stefan Wesiak, Fadriani Trianingsih, and Rachmadea Aisyah – provided thorough copyediting to ensure the report’s readability. The report was prepared in collaboration with the Government of Viet Nam, in particular through the Ministry of Foreign Affairs of Viet Nam. I would like to express my deep gratitude for the continuous support and valuable inputs from H.E. Nguyen Quoc Dzung, Deputy Minister and ASEAN SOM Leader of Viet Nam; H.E. Nguyen Van Thao, Assistant Foreign Minister and Director General of the Department of Economic Affairs; H.E. Ambassador Nguyen Nguyet Nga, Senior Adviser to the ASEAN 2020 National Secretariat and Viet Nam’s representative at the ASEAN Women Peace Registry; H.E. Vu Ho, Director General, ASEAN Department; H.E. Ambassador Tran Duc Binh, Viet Nam’s Permanent Representative of the Socialist Republic of Viet Nam to ASEAN; Ms. Tran Bao Ngoc, Deputy Director General, Department of Economic Affairs; and Mr. Nguyen Dong Trung, Director, ASEAN Department. v The subregional approach has proved to be particularly effective for addressing development gaps, enhancing connectivity, and promoting international coordination. ASEAN, through its collective leadership and centrality, is encouraged to continue to apply a multi-layered approach for deeper economic integration and to activate other subregional initiatives. ERIA hopes that the recommendations in the report will help ASEAN Member States with the successful design and implementation of such initiatives – to achieve regional inclusive and sustainable economic development. Professor Hidetoshi Nishimura President of ERIA vi Table of Contents List of Contributors ix List of Figures xi List of Tables xii MAIN REPORT: Subregional Development Strategy in ASEAN after COVID-19: 1 Inclusiveness and Sustainability in the Mekong Subregion (Mekong 2030) Fukunari Kimura BACKGROUND PAPERS: Mekong Subregion: Development and Cooperation Status. BP-1 Anh Duong Nguyen, Thu Hang Dinh, and Tri Thanh Vo Infrastructure Development, Trade Facilitation, and Industrialisation in BP-24 the Mekong Region Masahito Ambashi, Salvador Buban, Han Phoumin, and Rashesh Shrestha Data Connectivity in the Greater Mekong Subregion BP-42 Lurong Chen Small and Medium-sized enterprises in the Mekong Subregion BP-58 Dionisius Narjoko Human Capital Development in the Greater Mekong Subregion BP-70 Dinh Chuc Nguyen and Thanh Quang Trieu Health Services in the Greater Mekong Subregion BP-93 Dinh Chuc Nguyen and Thi Thu Hang Vu vii Environmental and Sustainability Challenges in the Mekong Subregion BP-117 Venkatachalam Anbumozhi, Michikazu Kojima, Ellen Putri Edita, Hendro Putra Johannes, and Dian Lutfiana Fostering Energy Market Synergies in the Mekong Subregion and ASEAN BP-139 Venkatachalam Anbumozhi, Han Phoumin, Shigeru Kimura, Alloysius Joko Purwanto, and Dian Lutfiana Water Resources Management in the Mekong Basin BP-161 Han Phoumin and To Minh Thu viii List of Contributors Project Leader Fukunari Kimura Chief Economist ERIA Project Coordinators Ha Thi Thanh Doan Ayumi Kodama Economist Deputy Director General for ASEAN and ERIA East Asian Affairs ERIA Yasuhiro Yamada Special Advisor to the President ERIA Team Members Masahito Ambashi Venkatachalam Anbumozhi Economist Senior Energy Economist ERIA ERIA Salvador M Buban Lurong Chen Policy Fellow Senior Economist ERIA ERIA Thu Hang Dinh Ellen Putri Edita Deputy Director Research Associate Department for General Economic Issues ERIA and Integration Studies Central Institute for Economic Management
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