Industrial Action Plans
East Asian Experience in Modality,
Content and Organization

Kenichi Ohno
National Graduate Institute for
Policy Studies (GRIPS), Tokyo
December 2008

Topics
General points- Vision  Strategy  Action plan
- Issues in strategy and action plan making
 Case studies- Thailand, Malaysia, Vietnam, Japan, Zambia- Evaluating Ethiopia
Goal Orientation
In East Asia, industrial policy is often
characterized by goal orientation and policy
hierarchy: Vision - Strategy - Action plan(other terms may be used).
 Dynamic Capacity Development—domestic
capability is built up for the purpose ofachieving concrete real-sector objectives
rather than improving “governance” orremoving “binding constraints” generally.
Description

ExamplesVision-Slogan-Short and Vague-Vision 2020 (Malaysia)-Detroit of Asia (Thailand)-Industrialization & Modernization(Vietnam)Strategy-Document specifying
goals, roadmaps, policy
measures-Scope & detail dependon each case-Industrial Master Plan (Malaysia)-Automotive Master Plan Main Text
(Thailand)-e-Japan Strategy-Industrial Cluster Plan (Japan)

Actionplan-Document, action
matrix, formal/informal
mechanism, or ongoingprocess-Automotive Master Plan Action
Tables (Thailand)-Vietnam-Japan Joint Initiative-Triangle of Hope Project (Zambia)

Review &Adjustme
nt-Numerical monitoring,
document report,organizational review,or no formal review-Interim & final review by jointcommittee (VJJI, ToH Zambia)-Industry specific committees(Thailand)Additional Remarks
We consider both overall industrial policy andsector-specific policies.
 Strategies and action plans may be revised as
situations change, but the long-term vision
should remain intact.
 Some countries produce plan documents (5-year
Plan etc—China, Malaysia, Thailand, Vietnam)
but these alone are usually not concrete enoughfor industrial policy purposes.
 Annual budget process sometimes replaces
action plan making process (Malaysia, Japan).
Issues in Industrial Strategy
and Action Plan Making
Country ownership Stakeholder involvement
 Inter-ministerial coordination
 Quantitative targets
 Methodology of policy formulation
 Action Plan format and details
 Review and adjustment
Country Ownership
Some countries (Vietnam, Thailand, Ethiopia) havestrong policy ownership while others are largely
donor-driven (Cambodia, Tanzania, Mozambique).
 Policy ownership depends on leadership quality,
existence of clear national goals, and degree of aid
dependency.
 Strong ownership does not necessarily guarantee
good policy. Donor management and policy quality
are two separate issues (cf. Vietnam).
Stakeholder Involvement
Key stakeholders in industrial policy are business
community (primary, both local & FDI) and donor
community (secondary).
 Stakeholders should be engaged throughout: policy
design, implementation, review & adjustment.
 Policy improves as stakeholder engagement isbroadened:
Top-down orders  Multiple interactive channels 
Private-sector led policy making
But this shift requires strong private sector capability
in parallel.
Inter-ministerial Coordination
Different ways to ensure policy consistency: Powerful technocrat team under PM/President(Korea’s Economic Planning Board, 1960s-70s)
 Super-ministry approach (Japan’s MITI, 1960s)
 Central coordination approach (Thailand underThaksin) Multi-layer approach (Malaysia)
 Choose the style that fits your country Strong leader alone is not sufficient Role of donors as enforcer of coordination (VietnamJapan Joint Initiative)

Critical Relationships inDevelopment Policy Formulation
The configuration of these five relations
largely determines policy effectivenessSource: GRIPS Course on Policy
Design & Implementation in
Developing Countries

Quantitative Targets
Most popular industrial targets are production,
export, investment and localization.
 Quantitative targets should be decided by private
sector or by private-public consultation, not bygovernment alone.
 Trust between government and business community
must be secured. If trust is low, numerical targets
are counter-productive.
 Hardness, aggregation and time scope must be
chosen carefully (next slide). The choice should
depend on policy capability and level of private
sector development.
Three Dimensions of
Numerical Real-sector Targets
Hard vs. soft

Aggregation

Time scope

Legal order

Macro level(GDP, total export)

5 to 10 years or
longerIndicative targets

Sectoral(manuf./agri./FDI
Priv./SOEs)

2 to 3 years

Business plans byfirms or industries

Forecasts

Industrial level(garment, leather)

Annual

Product level

Monthly/quarterly

Methodology of
Policy Formulation
Drafters—officials, experts, sectoral institutes, or
joint task forces (including private sector).
 Concise (targets-action plans--Thailand) or
explanatory (background, int’l & domestic reviews,
SWOT, orientation etc--Vietnam).
 Sharply focused & analytical (eg. value chain
analysis) or bottom-up collection of many issues.
 Government domain vs. market domain--how muchshould gov’t dictate (location, projects, markets)?
This should be country, sector and time specific.
Action Plan Format and Details
Different ways to create action plans: Detailed action plan matrices—what, who, when,and monitoring criteria (Thai Automotive M/P,
Zambia’s TOH).
 Multiple targets, with one or a few actions for eachtarget (Vietnam-Japan Joint Initiative).
 Broad targets only without action plan matrix-policy measures are left to the ministry in charge(Malaysia IMP).

Review and Adjustment
Different ways to monitor and revise: A special team or consultant is appointed to review
progress explicitly at agreed times.
 Ministry in charge reviews (implementer=reviewer).
 Monthly or quarterly review committee, withparticipation of PM or relevant minister.
 No or little review.
(Excuses--broad targets are easy to monitor; spend
more time on future strategy than past review)Summary
There are different ways to make strategies
and action plans—no one method dominates.
 Institutionalization and documentation(stability) vs. implementation by appointed
committee or ministry (flexibility).
 Proper method depends crucially on gov’t
capability and the level of private sector
development.
Policies for Reference
Automotive Master Plan of Thailand Industrial Master Plan of Malaysia
 Vietnam-Japan Joint Initiative
 Triangle of Hope Project of Zambia
 Vietnam’s master plan drafting (negative)
 Industrial Development Strategy of Ethiopia
 Leather & Leather Product Industry M/P ofEthiopiaAutomotive Master Plan ofThailand 2002-2006
Content Structure: Global situation
 Thai situation
 SWOT analysis
 Strategy and targets for next five years
 Action plan (60% of total pages)
Over 300 pages, with 180 pages devoted to action
plan tables.
 Original (Thai), executive summary (Thai & English) Drafting time was 1 year.
Central Coordination Model:
Thailand under Thaksin 2001-06

StrongPrime Minister

DirectaccessPrivateSectorVisions to be
concretizedThailand should become:-“Detroit of Asia”-“Hub of Tropical Fashion”-“Kitchen of the World”

Order

Relevant
Ministry

Industry-specificCommittees
High level

Industry-specific
Institute
Operational level

Experts

The Role of TAI as Coordinator
Thai Auto M/P was drafted by Thailand Automotive
Institute (headed by Mr. Vallop Tiasiri) with inputs
from industry and MOI.
 TAI was established in 1999, an NPO with bothprivate & gov’t funding. It has 70 staff, of which 30
are engineers. It cooperates with related ministries &10 universities.
 TAI’s missions: (1) policy study & advice, (2) support
the “clustering” of auto parts, (3) export promotion.
It also runs a training center.
 TAI has daily contacts with private firms and gov’t
officials both formally and informally.
Thai Auto M/P Targets for 2006
The long-term vision was given by PM Thaksin:“To become the Detroit of Asia”
Numerical targets were decided by private firms:
 Produce 1 million cars per year Export 40% of cars produced
 Produce 2 million motorcycles per year Export 20% of motorcycles produced
 Export 200 billion bahts of high quality parts
 Achieve localization of 60%
These were achieved one year in advance, in 2005.

Sample Format of Thai Automotive Master Plan
Strategy

Action Plan

1.2 Automotive
Human
Resource
Development

3. Automotive training
center project
3.1 Provide
Systematic training
to the industry fromworkers tomanagement level
3.2 Skill training

3.3 Provide training
to engineers in thefield of advanced
engineering andspecialized
technology

Key success
Main
Cooperati
indicator
resp. org. ve org.
Standardized 1. Number of
OIB/TAIA/
TAI
automotive
TAPMA/F
trained persons
training center 2. Number of
TI
companies
sending
employees fortraining
3. Increased
income oftrained persons
4. Costreduction andprofitability
OutputSource: Executive Summary (English), Master Plan for Thai Automotive Industry
2002-2006, page 10.

Thai Auto M/P – Cont.
M/P is presented and explained to Prime Minister byprivate firms. There is no official approval process.
 M/P must be included in the National Five-year Plan
to receive budgeting.
 There is no revision of M/P during implementation.
However, budgeting and concrete projects areadjusted constantly.
Industrial Master Plan of
Malaysia


Vision 2020, set by Former PM Dr. Mahathir in

1991, remains the overarching national goal.
Malaysia aims to become a “fully developed country”
by achieving 9 challenges:
National unity, confidence, democracy, moral &ethics, tolerance, science & technology, caring
culture, economic justice, and prosperity
 Vision 2020 is general and vague. It must be
concretized by rolling and overlapping policies.

Malaysia, Cont.
Economic Planning Unit (EPU) under PM drafts
Malaysia Plan (5-yr Plan) & Outline Perspective Plan.
 Ministry of International Trade and Industry (MITI)
drafts Industrial Master Plan.
 Industrial Master Plans:

IMP1 (1986-1995) – acceleration of manufacturing, efficientuse of local resources, local technical capability.
IMP2 (1996-2005) – for 8 industrial clusters, raise andbroaden Malaysia’s position in value chains.
IMP3 (2006-2020) – strengthen many aspects such as SMEs,
HRD, ICT, marketing & branding, logistics etc.

Multilayered
Model

Malaysia
Organization
for drafting
Industrial
Master Plan 3

Total 338
members+ advisors

Malaysia:
Drafting of Industrial Master Plan 2006-2020 (IMP3)
IPC: Industrial Planning Committee (headed by MITI Minister)
SC: Steering Committee (headed by MITI high official)
TRGs: Technical Resource Groups (headed by various experts)

Business opinions reflected through TRGs and brainstorming

Malaysia’s IMP2 (1996-2005)
453 pages (English) with the following chapters:- Overview & analytical framework (first 2 chapters)- Analysis & proposals for 8 indust. clusters (8 chs.)- Directions & institutional framework (last 2 chs.) Malaysian Institute of Economic Research (MIER)
drafted a background paper, which gave IMP2 a lucid
academic style (but not IMP3).
 Possible problems: (1) sectoral coverage is too wide,(2) method is too mechanical and uniform, (3) fullset industrial promotion is against globalization andspecialization.
Malaysia’s Cluster-based Industrial
Development and Manufacturing++
Malaysia’s IMP2 (1996-2005) aimed atraising and broadening the value chain.
Leveling up of eachindustrial cluster-Core production-Supporting industries-Supporting services-Human resources-Logistics-R&D

IMP2 Implementation
Compared with drafting process, implementation isless well organized. There is no clear mechanism formonitoring, review or revision. No action plan is
specified.
 Concrete actions are left to 5-yr Plan, annual budgets,and measures of relevant committees, ministries andagencies.
 MITI Minister was reportedly unhappy with IMP2
results, and many outsiders felt that IMP2 did notachieve cluster-based industrial development or
manufacturing++.
IMP2 Interim Review
The 5th year review of IMP2 was posted in MITI
web which was later removed:- Manufacturing export growth 16.6% (target 16%)
- Manufacturing investment RM27.4b (target RM25b)- Employment share of manuf. 27.6% (target 27.9%)- 2 clusters attained targeted value-added shares- 3 clusters had rising capital investment per worker
BUT- R&D, patents and innovation remained low- Participation in global supply chain was weak
- Little progress in ICT and logistics

Vietnam-Japan Joint Initiative
Purpose: Improve Vietnam’s investment climate to
become an attractive investment destination
 Background: (1) Japan is the largest implementerof FDI and largest donor in Vietnam; (2) Gov’tprivate dialogue; (2) Vietnam joins WTO in Jan.2007.
 Scheme: (1) Action Plan is agreed by VN gov’t,
Japanese gov’t, and Japanese private companies.
(2) Monitor progress and announce final result.
Phase 1, 2003-2005 (44 items, 85% achieved)
Phase 2, 2006-2007 (46 items, 93% achieved)
Phase 3, 2008-2010 (37 items, in preparation)Procedure for Action Plan
Vietnam-Japan
1. Japanese Business Associations in Vietnam identify
problems and study support measures.
2. Bilateral dialogue to agree on problems and solutions(two governments & Japanese FDI)
3. Agree on Action Plan
4. Execute Action Plan
Vietnam—review/adjust laws and regulations
Japan—ODA support
5. Monitor Action Plan
Interim monitoring (one year later)
Final monitoring (two years later)

Organization for Action Plan
Vietnam-Japan (Phase 2)
Vietnamese Side
Ministry of Planningand Investment (MPI)
Coordinate
Gov’t Office

M of Transp

M of Finance

M of Post/Tel

M of Trade

M of Resource

M of Industry

M of Justice

M of Sci/Tech

M of Labor

Japanese Side
4J in Vietnam(EoJ, JICA,
JBIC, JETRO)
Co-work

MoFA
METI
Coordi Keidanren
nateJapanese Bus. Assn. (HN/HCM)
WT1 Investment Promotion
WT2 Banking, tax, accounting
WT3 Labor issues
WT4 Logistics, customs
WT5 Technology transfer
WT6 Industries
WT7 Infrastructure

A/P Drafting & Monitoring
Vietnam-Japan (Phase 2)
Drafting Action Plan

Monitoring Action Plan

Joint Committee

Evaluation Committee

headed by
Japanese ambassador
Keidanren chairman
MPI Ministerheaded by
Japanese ambassador
Keidanren chairman
MPI Minister

Task ForceMonitoring Committee

headed by MPI Minister & GD
attended by Japanese Bus. Assn.

headed by MPI Minister & GD
attended by Japanese Bus. Assn.

Japanese Consultants

Task ForceHearing from companies
Preparing action plan draft

headed by MPI Secretary & DGD
attended by Japanese Bus. Assn.

Action Plan Issues(Examples from Phase 2)
Abolish unanimity rule in corporate board meetings
 Bidding rule in JV with 30% share of national entity
 Clarification of investment incentives
 Simplify customs procedures
 Clarification of prohibited imports and exports
 Regulation and standard of used car import Proper application of environmental regulation
 Clarification of technology transfer law
 Solution of power shortage Privatization of the power sectorAction Plan Format Sample:(Phase I, Item 29) Adoption of international
accounting standard (total 2 pages)(1) Current status—Explanation of current situation and citationof relevant laws & regulations (2 paragraphs)(2) Issues raised by enterprises—Gap between local and global
accounting system adds cost and ambiguity, etc (2 paragraphs)(3) Views expressed by Vietnamese Gov’t—Statement ofproposed law revisions and future direction (2 paragraphs)(4) Concrete solution measures:
1. Clarification of all accounting and auditing standards andintegration into international standards.
2. From 2004, PR & implementation of Accounting Law
Common deadline for Phase I: Action within 2 years

Reasons for SuccessExcellent bilateral relationship between VN & JP
 High level political involvement
 Public Private Partnership Commitments with a deadline on Action Plan andmonitoring Support by ODA for implementing Action Plan Openness and transparency of the result(Cited from the presentation of Mr. Kyoshiro Ichikawa, Senior
Investment Advisor & JICA expert, Hanoi, Dec. 2007)

“Triangle of Hope” Project inZambiaThis project can be considered a mix of Malaysian
IMP and Vietnam-Japan Joint Initiative.
 Request by President H.E. Mwanawasa to JICA
President Mme. Ogata for “Asian Tiger experience.” Project name: “Strategic Action Initiatives for
Economic Development” (Jul.2006-Mar.2009) with
JICA support, in line with TICAD growth agenda.
 Energetic Malaysian consultant J. Jegathesan
galvanized Zambian Cabinet and led this project.
“Triangle of Hope” in Zambia Key Project Components
1. Investment climate improvement
Cabinet Steering Committee 12 Task Forces- Large Action Matrix with expected output, deadline,
ministry in charge, and performance status (by color)- Monitored by Steering Committee headed byPresident Advisor Dr. Musokotwane- Progress regularly reported to Cabinet
2. Multi Facility Economic Zone for receiving FDI- FDI marketing missions sent to Malaysia, India- Malaysian firm (KLIM) to build MFEZ

Vietnam’s Master Plan Drafting –Some Negative Lessons
Vietnam’s high growth is due to good location andgood workers; not because of good policy.
 Main problems are lack of business involvement andlack of inter-ministerial coordination. Policies are notsupported by private sector and usually not
implemented.
 More fundamentally, these problems arise from lackof proper leadership, legacies of planning days, anddistorted incentives within government (brain drain).
Vietnam: Traditional M/P Drafting Process
Prime
Minister
Review for
approval

Order

SubmitDrafting
Team

MinisterInterministerial
review
MPI & other
Ministries

Submit

Data

Internal
review

MPI & other
Ministries

GovernmentAppeal letter toPrime Minister whenproblems arise

Contact
Ministry whennecessary

Interviews,
symposiums(sometimes)

Technical
assistance(sometimes)

International
experts

Business Community
No permanent channel for continuous policy dialogue(case-by-case, temporary, ad hoc)Vietnam – My Suggested Entry
Points for Solution
Installation of strong and wise leadership Creation of technocrat team under PM
 Strategic foreign partnership- The leader’s vision should be concretized by thetechnocrat team (clear strategies and action plans).
Foreign businesses, donors and experts should be
mobilized to achieve this vision.
- For strategic foreign partnership, Japan is currently
working on “Vietnam-Japan Monozukuri Partnershipfor Supporting Industries” (to be officially launchedin 2009).

My Recommendation for Vietnam- Elite technocrat group
under strong leadership ofPrime Minister- Choose young, welleducated officials & experts- Streamline policy authorityand procedure

Korea – Econ. Planning Board
Malaysia – Econ. Planning Unit
Thailand – NESDB
Taiwan – Kuomintang Elites
Indonesia – “Berkeley Mafia”
Chile – “Chicago Boys”
So why not Vietnam also?

Prime Minister
Direction, fullauthority forpolicy making

Faithful
execution andreportingTechnocrat Group(Policy Maker)
Policy,guidance andmonitoring

Experts
DonorsFaithful
executionand reporting

Ministries (Policy Implementers)Policy Structure of Ethiopia?
At higher level--well documented and broadly shared At lower level--less formal, less complete

ADLI

VisionStrategy
Action
Plan
Review& adjust.

Industrial Development Strategy &Other Strategy Documents
Other key
PASDEP,LLPI M/P industry M/Ps 3-yr budget?
Export Steering
Committee(targets & monitoring)

Note: our preliminary
understanding basedon limited information

Industrial Development Strategyof Ethiopia
IDS is partly vision and partly strategy.
 Roadmap and policy measures are not included(delegated to M/Ps).
 Clear statement of policy principles—private initiative,
ADLI, export-led, labor-intensive, FDI role, strong
state control, whole-society mobilization.
 Additionally, macro, finance, infrastructure services,
HRD, ADM, judiciary are discussed.
 Targeted sectors--textile & garment; meat, leather &leather products; agro-processing; construction, MSEs.
 Widely understood and shared by policy makers anddonors, and used in actual policy formulation.
Leather & Leather Products
Industry (LLPI) M/P of Ethiopia
MOTI-UNIDO (2005)—Vol. I contains analyses andconcepts; Vol. II spells out targets and actions.
 Key concepts: value chain, benchmarking, Top-Down
Approach (TDA) – somewhat different terminology
and orientation from the E. Asian perspective.
 Extensive analyses, but direct link with action process
seems weak and incomplete.
 Numerical targets are too detailed. Concrete products,
markets, investments etc. should be decided bycorporate strategy, global trends & customer needs.
 Downstream pull (TDA) vs. pulling at all stages?
Possible Issues in Ethiopian
Policy Formulation
Vision is well established (ADLI, Ind. Dev. Strategy)
although amendments are needed over time.
 Master Plans for key industries should be completedwith a degree of methodological uniformity (evenwith different donor support). An overall industrial
master plan is one option.
 Linkage between Master Plan and Action Process (eg.
Export Steering Committee) should be enhanced.
 In addition to annual/monthly export reviews, otherAction Plans or Action Processes may be explored(subject to staff and time constraint).
Possible Issues - More Generally
Industrial policy coverage is still limited (several
sectors only, export volume as main performanceindicator), much narrower than other countries.
 Untargeted industries, including potential importsubstitution industries, are not supported adequately.
 However, government’s policy capability is also
limited—risk of expanding policy coverage too muchand becoming too general and unfocused.
 Policy ownership is strong at general policy level but
only partial ownership at daily implementation,
monitoring and adjustment – heavy reliance on
donors and existence of many neglected areas.
Possible Issues - More GenerallyCont.
At present, donors mainly support capacity buildingof enterprises and industries.
 Ethiopia also needs enhancement of policy capacity:- Policy design and implementation capability of thegovernment- Producing a large number of Ethiopian industrial
experts and enterprise advisors (government officials,
institutes, business associations, bankers, etc)
 Production management as an integral process fromprocurement to marketing, not just one processcomponent (GTZ, USAID, Japan…)
 Continuous bottom-up improvement involving
workers such as 5S, kaizen, QCM etc. (Japan) in
addition to manager education and training.