GRIPS Development Forum Managingnaging the DevelopmentDevelopm Process and Aid ─ East Asian experiences in building central economic agencies ─ March 2007 © GRIPS Development Forum Cover photo © Debbie Warrener and Kenichi Ohno Contact: GRIPS Development Forum National Graduate Institute for Policy Studies 7-22-1 Roppongi, Minato-ku, Tokyo, Japan 106-8677 Phone: +81-3-6439-6337 Fax: +81-3-6439-6010 URL: http://www.grips.ac.jp/forum/ (Japanese) http://www.grips.ac.jp/fourm-e/ (English) Managing the Development Process and Aid —East Asian experience in building central economic agencies— March 2007 Izumi Ohno and Masumi Shimamura GRIPS Development Forum [email protected] [email protected] Acronyms and Abbreviations ACO Agency Central Office ADB Asian Development Bank BAAC Bank for Agriculture and Agricultural Cooperatives BESF Budget Expenditures and Sources of Financing BNM Bank Negara Malaysia BOB Bureau of Budget BOT Bank of Thailand BOT Built-Operate-Transfer BSP Bangko Sentral ng Pilipinas CEA Central Economic Agency CGD Comptroller-General’s Department CIPO Center for Integrated Planning and Operations DAC Development Assistance Committee DBCC Development Budget Coordination Committee DBM Department of Budget Management DOF Department of Finance DP Development Plan DPEC Development Projects Examination Committees DPWH Department of Public Works and Housing DSR Debt Service Ratio DTEC Department of Technical and Economic Cooperation EO Executive Order EPF Employees’ Provident Fund EPU Economic Planning Unit ESDC Eastern Seaboard Development Committee ESDP Eastern Seaboard Development Program FAPForeign Assistance Plan FELDA Federal Land Development Authority FPO Fiscal Policy Office GDP Gross Domestic Product GNP Gross National Product GOCC Government Owned and Controlled Corporation IAPG Inter-Agency Planning Group ICC Investment Coordination Committee ICT Information and Communication Technology ICU Implementation Coordination Unit IMF International Monetary Fund InfraCom Infrastructure Committee INTAN National Institute of Public Administration JBIC Japan Bank for International Cooperation JPPCC Joint Public-Private Consultative Committee LDP Local Development Plans LEDAC Legislative Executive Development Advisory Council LGC Local Government Code LGU Local Government Unit MBS Modified Budget System MIDA Malaysian Industrial Development Authorities MOF Ministry of Finance MTCP Malaysian Technical Cooperation Program MTEF Medium-Term Expenditure Framework MTPDP Medium-Term Philippine Development Plan MTPIP Medium-Term Public Investment Program MTRIP Medium-Term Regional Investment Plan MYR Malaysian Ringgit NDP National Development Policy NDPC National Debt Policy Committee NDPC National Development Planning Committee NDWC National Development Working Committee NEB National Economic Board NEC National Economic Council NEDA National Economic Development Agency NEDB National Economic Development Board NEDP National Economic Development Plan NEP National Economic Policy NEP New Economic Policy NESDB National Economic and Social Development Board NESDP National Economic and Social Development Plan NIDA National Institute of Development Administration NPC National Planning Council NVP National Vision Policy ODA Official Development Assistance OECD Organization for Economic Cooperation and Development OECF Overseas Economic Cooperation Fund OESD Office of the Eastern Seaboard Development Committee OPIF Operational Performance Indicators Framework OPP Outline Perspective Plan PDAF Priority Development Assistance Fund PDMO Public Debt Management Office PES Presidential Economic Staff PIA Program Implementation Agency PIP Public Investment Plans PM Prime Minister PPBS Program Performance Budgeting System PPBS Planning Programming Budget System PSD Public Service Department RDC Regional Development Committee RDC Regional Development Council RDIP Regional Development Investment Program RDP Regional Development Plan RED Rural Economic Development RPIP Regional Public Investment Plan SDC Social Development Committee SEER Sectoral Effectiveness and Efficiency Review SEPU State Economic Planning Unit SIDA Swedish International Development Cooperation Agency SOE State-Owned Enterprise SPM Strategy Planning Matrix SPPBS Synchronized Planning, Programming and Budgeting System SPS Strategic Performance System TA Technical Assistance TICA Thailand International Cooperation Agency TTEC Thai Technical and Economic Committee UN United Nations UNESCAP United Nations Economic and Social Commission for Asia and the Pacific USAID United States Agency for International Development Managing the Development Process and Aid —East Asian experience in building central economic agencies— Table of Contents Acronyms and Abbreviations Acknowledgements Chapter 1 Introduction and Overview . 1 1. Introduction. 1 2. Key Perspectives and the Outline of This Study . 2 3. Approach and Basic Premise of This Study . 3 4. Contexts for Development Management in Thailand, Malaysia, and the Philippines . 9 5. Synthesis and Main Findings of the Study (from Chapters 2-7) . 13 6. Implications for Today’s Developing Countries and Donors . 27 Chapter 2 Institutional Framework for Development Administration and the Role of Central Economic Agencies . 29 1. Thailand. 30 2. Malaysia. 33 3. The Philippines . 37 Chapter 3 The Role and Characteristics of Development Plans in Policy and Resource Alignment and the Evolution of Development Planning . 41 1. Thailand. 41 2. Malaysia. 54 3. The Philippines . 64 Chapter 4 Mechanisms for Macroeconomic Coordination . 69 1. Thailand. 69 2. Malaysia. 77 3. The Philippines . 83 Chapter 5 Public Investment Programming and Project Approval . 91 1. Thailand. 91 2. Malaysia. 100 3. The Philippines . 105 Chapter 6 Case Study: Eastern Seaboard Development Plans in Thailand . 111 1. Overview of the Eastern Seaboard Development Plan (ESDP) . 111 2. Major Driving Forces Pushing the Plan Forward . 115 3. Other Issues to be Considered . 129 4. Conclusion . 131 Chapter 7 Key Factors Affecting the Formulation and Enhancement of Development Administration. 133 1. Key Factors Affecting the Formulation and Enhancement of Development Administration. 133 2. Summary . 149 Appendices . 151 References . 160 Figures 1-1 Coordination Mechanisms of Central Economic Agencies . 4 1-2 Development Process: Systemic Interaction. 6 1-3 Development Management and Aid . 8 1-4 Structure of Production: Distribution of GDP (%) . 10 1-5 Major Characteristics of Development Administration . 14 1-6 Coherence among Development Plans, Macroeconomic Management, and Public Investment Programming . 19 2-1 Policymaking Structure in Thailand. 32 2-2 Administrative Machinery in Malaysia (Federal and State Levels) . 35 3-1 Chronological Outline of the Development Plans and Political Leaders of Thailand, Malaysia and the Philippines . 42 3-2 Overview of Development Planning, Macroeconomic Coordination, and Public Investment Programming in Thailand . 44 3-3 Overview of Development Planning, Macroeconomic Coordination, and Investment Programming in Malaysia . 56 3-4 Overview of Development Planning, Macroeconomic Coordination, and Investment Programming in the Philippines. 67 4-1 Overview of Development Planning, Macroeconomic Coordination, and Public Investment Programming in Thailand . 70 4-2 Macroeconomic Coordination Mechanism in Thailand . 71 4-3 Trend of Expenditures by Five-Year Planning Periods (1972-1991) . 72 4-4 Overview of Development Planning, Macroeconomic Coordination, and Investment Programming in Malaysia . 78 4-5 Macroeconomic Coordination Mechanisms in Malaysia . 79 4-6 Trend of Development Expenditures by Five-Year Planning Periods (1971-1990) . 80 4-7 Overview of Development Planning, Macroeconomic Coordination, and Investment Programming in the Philippines. 84 4-8 Macroeconomic Coordination Mechanisms in the Philippine. 85 5-1 Overview of Development Planning, Macroeconomic Coordination, and Public Investment Programming in Thailand . 92 5-2 Project Approval Process Prior to 1992: All Public Investment Projects in a Theoretical Sense (Based on the National Economic and Social Development Board Act of 1978) . 96 5-3 Project Approval Process (Recent Normal Procedures with Shortcut)—Public Investment Projects Less Than One Billion Bath, Finance Fully from the Government Budget . 97 5-4 Project Approval Process (Recent Normal Procedures)—Public Investment Projects (Including SOE Projects) Over One Billion Baht . 98 5-5 Project Approval Process After 1992: Public and Private Partnership Projects Over On Billion Baht (Based on the Act on Private Participation in State Undertaking in 1992) . 99 5-6 Overview of Development Planning, Macroeconomic Coordination, and Investment Programming in Malaysia . 100 5-7 Project Approval Process for the Malaysia Plans (Five-Year Development Plans) . 104 5-8 Overview of Development Planning, Macroeconomic Coordination, and Investment Programming in the Philippines. 106 5-9 Project Approval Process—Public Investment (Namely ODA and BOT) Projects Subject to ICC Approval . 110 6-1 Overview of the Coordination and Decision-Making Mechanisms . ..