Managing the Development Process and Aid-- Key Factors Affecting the Effectiveness ofDevelopment Administration and Aid Managementin East Asian Countries --GRIPS Development Forum
Masumi Shimamura
November 8, 2006

Outline of Presentation
Dynamisms of development
administration including the use of aid
2. Diverse mechanisms for development
planning, investment programming andaid management
3. Eastern Seaboard Development inThailand
4. Synthesis
1.

<Countries and periods of focus>
 Thailand and Malaysia: from the late 50s to the 80s
 The Philippines: before and after the 1986 “turning point”

11. Dynamisms of development
administration including the use of aid
Thailand

Malaysia

The Philippines

Formulationofdevelopment
administration

Late 50s-earlyLate 50s-early 60s:

70s: centralized

Enhancementofdevelopment
administration

80s: national-level70s: new90s: inter-agency

60s: with donor
with donor advice
advice (WB, US etc), (WB, US, UK etc),
basic foundations
basic foundations forfor coordination
planning andmechanisms
coordination
established among
mechanisms
central economic
established and theagencies
PM’s Department
strengthenedcommittees andsub-committees
established tofacilitate
coordination ofpriority policy
agenda and publicprivate coordination
strengthened

administrative
machinery (esp.ICU)
added to implement
New Economic Policy
80s: coordination
system between
public and private
sector strengthened

development
administrative body
(NEDA) createdAfter 86: NEDA
reorganized, andinter-agency
committees began tofacilitate coordinationcommittee functions
institutionalized, andODA management
strengthened, butlegislativeintervention
marginalizing suchexecutive efforts

Thailand: Major characteristics ofthe development administration<Thailand>

Delegate authority

esp. in 1980s

Leader“Bureaucratic polity”
Centralized systemmanaged by elitetechnocrats who weredelegated authority
from political leaders

Centralized
systemTechnocrats(CentralEconomic
Agencies)

Ministries,
departments, otherstate organs andlocal governments

2

Malaysia: Major characteristics ofthe development administration<Malaysia>

Support to realize
leader’s vision

“Top-down” development
Centralizedadministration
systemLeaderTechnocrats(CentralEconomic
Agencies)

Centralized system led bypolitical leaders andsupported by elitetechnocrats to realize
leaders’ vision

Ministries,
departments, otherstate organs andlocal governments

The Philippines: Major characteristics ofthe development administration<The Philippines>

Legislatureesp. after 1986
Leader“Dual track” development
administration
Dual system administeredby executive branch but
challenged by legislativeintervention

Intervention

Technocrats(CentralEconomic
Agencies)

Executive
branchMinistries,
departments, otherstate organs andlocal governments

3

Key factors affecting the formulation andenhancement of the development administration
 Quality of leadership-- long-term visions and political will

 Alliance between leadership and technocrats-- role of technocrats to realize leaders’ visions

 Fear of external and domestic crises-- a sense of political, social and economic urgency

 Degree of political intervention to the“executive branch”
 Utilization of aid as integral part ofdevelopment management

Key factors affecting the formulation andenhancement of the development administration<Basic assumption>
 Synergetic effects of each “factor” affected thecountries’ overall development administration
 (Uncontrollable) external factors (both positive
and negative) gave major impacts on thedevelopment administration
 Effect of the 1985 Plaza Accord in Thailand Aftermath of the 1969 ethnic riot in Malaysia

 Leadership mattered especially at the criticalstages of developmentÎ Thailand and Malaysia were blessed with wellbalanced, visionary and dedicated leaders at timesof turning points

4Thailand: Key factors affecting the formulation andenhancement of the development administration
PM Sarit (Late 50s-early 60s) -- showeddevelopment vision and exercised strong
leadership
PM Prem (80s) -- played a leading role
especially in priority policy agenda, anddelegated authority to technocrats
Alliance between
Competent technocrats functioned as
leadership and technocrats strong support arms to administer policy

Quality of leadership

Fear of external anddomestic crises

Thai gov’t strived for structuraltransformation (late 70s-80s)

Degree of politicalintervention to the“executive branch”
Utilization of aid as
integral part ofdevelopment management

Technocrats were effectively insulated
from political pressuresThai gov’t strategically and selectively
utilized donor assistance for “graduation”

Malaysia: Key factors affecting the formulation andenhancement of the development administration
Quality ofleadership

PM Rahman (Late 50s-70s) -- exercised strong
leadership to carry out effective rural development
PM Razak (70s) -- played a leading role inenhancing administrative machinery to implement
New Economic Policy
PM Mahathir (80s-) -- exercised strong leadership instrengthening public private partnership
Alliance between Technocrats made efforts to enhance administrative
leadership andcapacity and human resource development to realize
technocrats
PM’s vision and policy objectives
Fear of domestic Malaysia gov’t utilized development machinery as atool to realize the country’s overriding objective:crisespromoting national unity through “poverty
eradication” and “restructuring of society”
Utilization of aid Malaysia gov’t strategically and selectively utilized
as integral part
donor assistance for “graduation”
of development
management

5

The Philippines: Key factors affecting the formulationand enhancement of the development administration
Quality ofleadership

President Marcos (prior to 86) -- created central
development administration system to maintain his
dictatorship
President Aquino (after 86) -- reorganizeddevelopment administration system with theresumption of democracy
President Ramos (90s) -- strengthened andinstitutionalized development administration system
Alliance between
Technocrats streamlined administrative structures
leadership andand functions to efficiently carry out development
technocrats
policyDegree of political “Legislative intervention” over the “executive
intervention tobranch”, especially during the budget process,the “executive
undermining the role and efforts by the technocrats
branch”
Utilization of aid
The Philippine gov’t has been utilizing foreign
as integral part of assistance actively -- strategic and selective use ofdevelopment
aid???
management

2. Diverse mechanisms for development planning,
investment programming and aid management
ThailandDevelopment
Plans

PublicInvestment
Plans

Project
approval

Indicative planutilized as strategic
core documents(dev’t priorities
clearly indicated)
Do not specify
budget allocationÎsecuring room forflexibility
Public investment
selected in thesubsequent annual
budget and debt
approval process(except for the 70s 3rd and 4th
Development Plans)Project approval

integrated into
annual budget/debt
approval process

Malaysia

The Philippines

Directive plan

Still insufficient asutilized as strategic
core documents(dev’t priorities
clearly indicated)
Specify budget
allocationÎadjusted at midterm review
Public investment
selected as part ofdevelopment
planning processÎDevelopment
Plans play the roleof de facto PIPProject approval

conducted as partof development
planning process

strategic core
documents (in spite ofongoing efforts)
Do not specify budget
allocationÎlacking alignment
with budget implication
Public Investment

Plans prepared inparallel with
Development Plans,
but their linkages
remain weakÎstill remain as “wishlist” of projects
Project approval
conducted after PIP
process and before
annual budget process

6Coherence between development plans and investment plans<Thailand>Annual budget anddebt approval

National Economic and Social Development
Plan (NESDP) Î 5year-plan*

Projectapproval
approval ProjectDevelopment Plan

(as part of annual
budget/debt approval
process)* 1st NESDP was the only 6-year plan

<Malaysia>
Malaysia Plan Î 5-year planDevelopment PlanAnnual budget anddebt approvalPublic Investment Plan
 Project
Project approval
approval<Philippines>
Medium-Term Philippine Development
Plan (MTPDP) Î 6-year plan*Development Plan
* coincides with the presidential term

Medium-Term Public Investment
Program (MTPIP) Î companion
document of the MTPDP
Public Investment

Projectapproval

Annual budget anddebt approval

Plan
Source: Author

Thailand: Overview of development planning and investment programming<National Economic and Social
Development Plan (NESDP)>
Development planning<Focal point>NESDB (National EconomicandSocialDevelopment
Board)<Coordination>
Coordination mainly among central
economic agencies):
NESDB
BOB (Bureau of the Budget)
FPO (Fiscal Policy Office) + PDMO (Public
Debt Management Office, 1999-)
Central Bank
*macro-sector coordination relatively weakAnnual budget and debt
approval Project approval
conducted as a part of the annual
budget/debt approval process<Focal point>

BOB (budget) andFPO+PDMO(1999-) (loans)<Coordination>
Budget hearings and dialogues:
BOB “mobile units”
State enterprises
Consultation with other central
economic agencies:NESDB
FPO, PDMOCentral Bank

<Coordination mechanisms>
Î Centralized system, with strong coordination among central
economic agencies (CEAs) -- subtle check and balance functions
built-in, leading to shared responsibilities among CEAs
Source: Author – drawn from information provided by NESDB, BOB, FPO and PDMO to the GRIPS team7

Malaysia: Overview of development planning and investment programming<Malaysia Plan>Development planningPublic investment planning
Project approval
approval Project<Focal point>

MOF (Ministry of Finance)<Focal point>

EPU (Economic
Unit)Annual budget and debt
approval

Planning<Coordination>
Coordination for planning:
National Planning Council (Cabinet level)
National
Development Planning Council(Officials level)
Inter-Agency
Planning Groups (Working
level)
Coordination for project approval:
Development
Projects
Examination
Committees (ministries, agencies, state gov’t)<Coordination>
Budget hearings and dialogues:
“Planning cells” in the relevant
ministries and agencies
State governments
Private sector
NGOs
Consultation:
EPU
ICU (Implementation Coordination
Unit)
PSD (Public Service Department)<Coordination mechanisms>
Î Rule-based operations duly installed in the coordination machinery
Source: Author -- drawn from “Development Planning in Malaysia” issued by the EPU in 2004 and information provided by
EPU to the GRIPS team

The Philippines: Overview of development planning and investment programming<Medium-Term Philippine
Development Plan (MTPDP)>Development planning
Weak linkage<Medium-Term Public
Investment Program (MTPIP)>
Public investment planning Project approvalP<Focal point>
NEDA<Coordination>
Coordination for project approval:
NEDA Board Investment Coordination
Committees (ICC)ICC-Cabinet Committee
ICC-Technical BoardICC-Secretariat<Focal point>

NEDA (National Economic
and Development Authority)<Coordination>
Coordination for MTPDP:
Planning Committees
Technical Working Groups
Legislative Executive Development
Advisory Council (LEDAC)
Coordination for MTPIP:NEDA Board Committees
Planning Committees
Regional
Development
CouncilCommittees

Annual budget and debt
approval<Focal point>

DBM (Department of Budget
and Management)<Coordination>
Coordination for budget process:Development
Budget Coordination
Committee (DBCC)

Source: Author -- drawn from information provided by NEDA to the GRIPS team8

Coherence between development plans andinvestment plans<Thailand>

 NESDPs used to be quantitative, strategic guidance withresource allocations Înow descriptive, qualitative analysis<Malaysia>

 Malaysia Plans maintaining the roles as the quantitativeand strategic guidance for development objectives andresource allocations<The Philippines>

 Executive efforts on-going to strengthen the MTPDPs andthe MTPIPs to become strategic guidance for development
objectives and resource allocation
 …but “legislative interventions” undermining these efforts

Thailand: Approval process for public investment projects
Project Approval Process prior to 1992 -- all public investment projects
in theory (based on the NESDB Act in 1978)
Annual budget approval process

Inclusionin Annual
BudgetPlan

BOB(Gov’tbudget)Lineagenciesor Stateenterprises(SOE)

Reporting
Ministriesof Gov’tunits or
SOE

NESDB

CabinetCabinetParliament

by line agencies
or SOEFPO(Domestic
and foreignloans)

Inclusion in
AnnualBorrowing Plan
(both domestic
and foreignloans)

CabinetNESDB: National Economic and Social Development Board
BOB: Bureau of the Budget
FPO: Fiscal Policy Office

Annual debt approval process

Source: Author -- drawn upon provisions from the National Economic and Social Development Board Act of 1978
and information provided by BOB, FPO and PDMO to the GRIPS team9

Thailand: Approval process for public investment projects
Project Approval Process (recent normal procedures) -- public
investment projects (including SOE projects) over one billion baht
If shortcut route istaken, Cabinet will
ask comments fromtheconcerned
agencies
includingthe NESDB, the MOF
and the BOB prior toapproval.

Lineagenciesor Stateenterprises(SOE)

Reporting
Ministriesof Gov’tunits or
SOE(i) Ministries must submit
project proposals to the
NESDB if they were SOE
projects but (ii) they can
submit project proposals
either directly to the
Cabinet, bypassing theNESDB for shortcut, or
through the NESDB, if
they
were
not
SOE
projects.

Annual budget approval process

Inclusionin Annual
BudgetPlan

BOB(Gov’tbudget)Parliament

CabinetShortcutCabinetby line agencies
or SOE

Inclusion in
AnnualBorrowing Plan
(both domestic
and foreignloans)PDMO(Domestic
and foreignloans)

Required if SOE

NESDB

PDMO: Public Debt Management Office* PDMO was formed after 1999 throughtransfer of divisions and units from the
FPO and the Comptroller General’s
Department to ensure coherent public
debt management under one agency

CabinetAnnual debt approval process

Source: Modification of the figure in “Policy Coordination, Planning and Infrastructure Provision: A Case Study of Thailand”, abackground paper commissioned for the ADB-JBIC-World Bank East Asia and Pacific Infrastructure Flagship Study in 2004

Malaysia: Approval process for public investment projects
Project Approval Process for the Malaysia Plans (Five-year Dev’t Plans)by ministries/agencies
and state government(for both development
and recurrent budget)

Ministries
Agencies
State gov’ts

EPU

Development
Projects
Examination
Committees
Chair: EPU

Consultation(If Federal Ministries,
consultation
throughtheir state branches)State EPUs

EPU

CabinetReallocation ofdevelopment
budget among
sectors,
if
necessary

As a part of Five-year Development Planning process

EPU: Economic Planning Unit

Parliament

Parliament

MOF

Consultation

EPU
ICU
PSD

Budgethearings
andbudgetdialogues“Planning cells” in therelevant ministries
and agencies,
State governments,
Private sector,
NGOs

MOF: Ministry of Finance
ICU: Implementation Coordination Unit
PSD: Public Service Department

Annual budget and debt
approval process

Source: Author -- drawn from “Development Planning in Malaysia” issued by the EPU in 2004 and information
provided by EPU to the GRIPS team

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The Philippines: Approval process for public investment projects
Project Approval Process -- public investment projects (namely ODA andBOT projects) subject to ICC approval
Three levels of ICC

Line
agencies

NEDA
Technical
Staff

ICC
Secretariat

ICCTechnical
Board

Locally-funded
projects
aresubmitted to the DBM and/or the
NEDA depending on the size of the
project. The ICC has yet to evaluate
and approve a locally-funded project,as projects submitted to the DBM for
local funding are below the ICC
threshold of 500 million pesos.
Hence, inclusion of the project in thenational budget by the DBM becomesthe crucial selection decision for
locally-funded projects.

ICCCabinet
Committee

NEDA
Board

by line agencies

DBM

DBCC

NEDA: National Economic and Development Agency

CabinetProject approval

Inclusion of the
project in thenational budget
constitutes final
project approval

President

Congress

Annual budget approval process

ICC: Investment Coordination Committee
DBM: Department of Budget and Management
DBCC: Development Budget Coordination Committee
Source: Author -- drawn from information provided by NEDA to the GRIPS teamProject preparation and investment decision process
for locally funded projects and ODA projects
Thailand”Integrated

system”ÎSameprocedures andcriteria applied aspart of annual
budget/debt
approval process

Malaysia
”Integrated

system”ÎRegardless of thesources of funds,
any candidate
projects must be
scrutinized as partof the planning
process of the
Malaysia Plans

The Philippines
”Dual system”

Î Procedures
and criteria
applied for
locally-funded
projects are lessintensive and lesswell defined thanthose applied to
ODA projects

11Project preparation and investment decision process-- comparison among the three countries -<Thailand and Malaysia>
 “Integrated system”
 Strategically and selectively utilized aidÎ Both gov’ts strategically shifted donor composition andthe form of aid in accordance with their development
stagesÎ Both gov’ts have been careful about maintaining
bargaining power against donors<The Philippines> “Dual system”
 Setting up dual and exceptional system for ODA

would increase gov’s administrative burdenÎ create distortion and inefficiency to the economy as awhole

3. Eastern Seaboard Development in Thailand Mega infrastructure investments (developmentof special integrated economic zone) at thetime of structural transformation (mainly in the80s) Regarded as high priority development in the
5th and 6th NESDPs -- growth strategy withstrong country ownership Lots of controversies among stakeholders on
macroeconomic management and projectsustainability
 Intensive and strategic use of aid as integral
part of development management

12Key factors affecting the effectiveness of the development
 Strong and effective leadership toensure the public’s interest
 Competency of technocrats
 Powerful central economic agencies(esp. NESDB) Special institutional settings
 Functioning coordination mechanisms
 External factors

Key factors affecting the effectiveness of the development
Quality ofleadership
Competencyof technocrats

PM Prem (80s) had sound vision, strong sense ofcommitment and strong leadership
Highly motivated, competent technocrats functioned asstrong support arms to the PM

Powerful CEA(esp. NESDB)The NESDB given due authority and functioned as the
Secretariat of the Eastern Seaboard Development
Committee – “influential liaison”

Specialinstitutionalsettings

PM Prem created special coordination and decision
making mechanisms exclusively for the development

Functioning
coordination
mechanisms

Highly centralized mechanism
De facto “fast track” process
Multilayered, check and balance function incorporated
Mechanism to pursue “strategic use of donor assistance”
incorporated
Î pragmatic, independent judgment possible

Externalfactors

The significant impact of the Plaza Accord in 1985

13

Overview of the coordination and decision making mechanisms
Cabinet
ProposeEastern Seaboard Development Committee (ESDC)
Chair: Prime Minister (later, Deputy PM)
Secretary: Secretary General of the National Economic and Social
Development Board (NESDB)
Propose・Approve・Control・Direct
・Supervise

Appoint

Sub-committees
Chair: Minister of government agency in charge

BudgetBureau of the
Budget (BOB)

Secretariat

Technical Assistance
Department of Technicaland Economic Cooperation(DTEC)

Loan

Office of the Eastern Seaboard
Development
Committee(OESD) within the NESDBFiscal Policy
Office (FPO)
・Coordinate
・Oversee・AdviseGovernment agencies (central, regional, local) and State enterprises

Source: Author -- drawn upon provisions from the Regulations of the Office of the Prime Minister Governing the Eastern
Seaboard Development (1985) and information provided by NESDB, TICA, BOB, FPO, PDMO and MOI to the GRIPS team

Key factors affecting the effectiveness of the development
 Synergetic effects of each “factor”

contributed to push forward thedevelopment Thai gov’t was capable of taking fulladvantage of the positive external factors(i.e. 1985 Plaza Accord) by utilizing theexisting coordination mechanisms guided by
the strong and effective leadership with thesupport of competent technocrats
 Thailand was blessed with excellent leaders
at the time of structural transformation

14

4. Synthesis
Diverse institutional framework, coordination

mechanism and approval procedures fordevelopment administration and aid
management
Various quality and competency of key actors
and relationship among them
Different configuration in terms of coherence
between development plans and investment
plans
“Integrated system” vs. “dual system” between
locally-funded projects and ODA projects giving
different implication in the use of aid andefficiency considerations

SynthesisÎNeed to understand the country context
carefully when aiming to enhance aid
effectiveness Quality of leadership Alliance between leadership and technocrats
 Role of central economic agencies and thecoordination mechanisms
 Degree of political intervention to the“executive branch”
 Utilization of aid as integral part ofdevelopment management

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Thank you very much!
Please see our website for this study: "Managing theDevelopment Process and Aid"
<English site>
http://www.grips.ac.jp/forum-e/research2006/aidmgt.htm<Japanese site>
http://www.grips.ac.jp/forum/aidmgt/index.htm
We welcome your comments and feedback.

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