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APEC Connectivity Blueprint: The 2020 Mid-Term Review APEC Policy Support Unit November 2020 i Prepared by: Akhmad Bayhaqi, Satvinderjit Kaur Singh, Divya Sangaraju, Emmanuel A. San Andres and Choo Qian Ke Asia-Pacific Economic Cooperation Policy Support Unit Asia-Pacific Economic Cooperation Secretariat 35 Heng Mui Keng Terrace Singapore 119616 Tel: (65) 6891-9600 Fax: (65) 6891-9690 Email: [email protected] Website: www.apec.org Produced for: Asia-Pacific Economic Cooperation Senior Officials APEC#220-SE-01.17 This work is licensed under the Creative Commons Attribution-NonCommercial- ShareAlike 3.0 Singapore License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/sg/. The authors would like to thank Tammy Hredzak for the valuable comments provided to this publication. The views expressed in this paper are those of the authors and do not necessarily represent those of APEC Member Economies. ii TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................................... 0 KEY HIGHLIGHTS FROM THE YEARLY REVIEW REPORTS ............................. 0 KEY HIGHLIGHTS FROM THE CASE STUDIES .................................................... 2 KEY HIGHLIGHTS FROM ASSESSMENT OF SURVEY RESPONSES AND EXTERNAL INDICATORS ......................................................................................... 3 KEY HIGHLIGHTS FROM THE CONNECTIVITY INDEX ..................................... 6 1. INTRODUCTION ........................................................................................ 7 FRAMEWORK FOR THE MID-TERM REVIEW ...................................................... 9 2. QUALITATIVE ASSESSMENT .............................................................. 11 A. TRENDS AND OUTLOOK IN REGIONAL INTEGRATION AND CONNECTIVITY ........................................................................................................ 11 B. STOCKTAKING OF THE INITIATIVES OR ACTIVITIES RELEVANT TO CONNECTIVITY ........................................................................................................ 17 C. CASE STUDIES AND IDENTIFICATION OF GOOD PRACTICES ............ 38 3. QUANTITATIVE ASSESSMENT OF CONNECTIVITY TARGETS 43 4. CONNECTIVITY INDEX ......................................................................... 94 5. CONCLUSION AND WAY FORWARD .............................................. 100 PHYSICAL CONNECTIVITY ................................................................................. 100 INSTITUTIONAL CONNECTIVITY ...................................................................... 101 PEOPLE-TO-PEOPLE CONNECTIVITY ............................................................... 102 WAY FORWARD ..................................................................................................... 103 REFERENCES ................................................................................................ 106 APPENDIX ...................................................................................................... 113 APPENDIX A: USING PRINCIPAL COMPONENT ANALYSIS (PCA) TO MEASURE CONNECTIVITY .................................................................................. 113 APPENDIX B: DEFINITION OF INDICATORS FOR THE CONNECTIVITY INDEX ....................................................................................................................... 115 APPENDIX C: OVERVIEW OF SURVEY METHODOLOGY ............................. 120 APPENDIX D: TIME SERIES DATA USED FROM SURVEY RESPONSES ..... 125 ABBREVIATIONS Abbreviations for APEC fora and other groups Abbreviation Name ABAC APEC Business Advisory Council ACT Anti-Corruption and Transparency Working Group AD Automotive Dialogue ASCC APEC Study Centers Consortium ATCWG Agricultural Technical Cooperation Working Group BMC Budget and Management Committee BMG Business Mobility Group CD Chemical Dialogue CPLG Competition Policy and Law Group CTI Committee on Trade and Investment CTWG Counter-Terrorism Working Group DESG Digital Economy Steering Group EC Economic Committee ECSG Electronic Commerce Steering Group EGILAT Experts Group on Illegal Logging and Associated Trade EPWG Emergency Preparedness Working Group EWG Energy Working Group FMP Finance Ministers’ Process GOS Group on Services HLPDAB High Level Policy Dialogue on Agricultural Biotechnology HRDWG Human Resources Development Working Group HWG Health Working Group IEG Investment Experts’ Group IPEG Intellectual Property Rights Experts’ Group LSIF Life Sciences Innovation Forum MAG Market Access Group OFWG Ocean and Fisheries Working Group PPFS Policy Partnership on Food Security PPSTI Policy Partnership on Science, Technology and Innovation PPWE Policy Partnership on Women and the Economy SCCP Sub-Committee on Customs Procedures SOM Steering Committee on ECOTECH (Economic and SCE Technical Cooperation) SCSC Sub-Committee on Standards and Conformance SMEWG Small and Medium Enterprises Working Group TELWG Telecommunications and Information Working Group TPTWG Transportation Working Group TWG Tourism Working Group 0 EXECUTIVE SUMMARY This report provides the mid-term review of the APEC Connectivity Blueprint that covers three pillars: physical, institutional and people-to-people. The approach of the review is to conduct both a qualitative assessment and a quantitative assessment by utilising data and information gathered directly from member economies as well as from secondary sources. The following are the key highlights of the review. KEY HIGHLIGHTS FROM THE YEARLY REVIEW REPORTS Physical Connectivity The yearly review analysis shows the importance of both physical and digital infrastructure. Despite the rise of the digital economy and e-commerce, it is important to acknowledge that most supply chains still rely on physical infrastructure. This further highlights the importance of quality infrastructure in the development of ports, roads and other public infrastructure. Transportation infrastructure with strong quality elements will ensure that the services being delivered are efficient, resilient and sustainable. The issue of resilience is also highlighted by several initiatives. Better emergency preparedness through public-private partnerships will support quick recovery during times of natural calamities. Stronger resilience can also be developed by adopting new technologies that are becoming more accessible and widespread. Improving resilience is also being considered as a regional initiative, particularly in the context of global supply chains and sustainability. In terms of infrastructure financing, PPPs are mentioned as one of the key policies being adopted to encourage the development of connectivity and energy infrastructure. PPPs allow economies to share the risks across private and public entities more efficiently in addition to supporting the facilitation of more ‘bankable projects’ that will be able to attract funding from global investors. Economies have also actively developed their ICT infrastructure to support the development of the digital economy and ‘smart’ infrastructure. Logistics facilities will need to be modernised in order to facilitate growing demand from e-commerce as well as to ensure secure trade. With sophisticated facilities, ports and customs will be able to perform risk management more effectively by having a more targeted inspection of goods and passengers. Businesses will benefit from the application of digital technology that allows for more visibility and traceability in the supply chain. A smart and intelligent transport infrastructure system will also help to reduce congestion and logistics costs as well as promote seamless connectivity. Last but not least, the submitted initiatives show that high priority is also given to rural and remote areas. With the development of digital technologies and innovations, broader access of connectivity can be provided to remote and rural areas; this will help to bridge the digital divide and allow communities to be more resilient and sustainable. Efforts have also been made to build the necessary infrastructure to generate and distribute sustainable energy efficiently. 1 Institutional Connectivity Initiatives submitted under this pillar focused on trade facilitation, regulatory reform, data flows, and inclusiveness. In terms of trade facilitation through cooperation, Single Window development in many economies has been geared towards interoperability and paperless or digital methods. Initiatives to integrate SMEs into AEO certification schemes aim to support stronger integration of SMEs into GVCs, while at the same time maintaining safe and secure trade. Regulatory and structural reforms have been instrumental in facilitating trade, investment and services. Trade in goods such as medical and food products has benefited from harmonisation of standards and safe regulatory procedures. Facilitation of GVCs is being conducted through GVC-friendly provisions in RTAs/FTAs as well as by providing broader access for SMEs and women to participate in global production networks. In the financial sector, an enabling environment for greater financial integration can be achieved by adopting a mutual recognition framework that envisions the harmonisation of investment rules and regulatory requirements. Multilateral mutual recognition arrangements provide opportunities to further waive or diminish key regulatory impediments to cross-border trade in managed funds. The role of data has been growing in importance in supporting

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