Finalized Report
Report of the NEAT Working Group Meeting on“Sharing the Experiences of Inclusive Growth”
Singapore
28 June 2012 (Thursday)
Co-hosted by NEAT Singapore and NEAT Indonesia
IPreamble

1“Economic growth” is commonly defined as increases of a country’s GDP(gross domestic product) over time. “Economic development” carries a broader
meaning. Apart from achieving GDP/GNP growth, successful economic development
will also have to satisfy the basic needs of the people in terms of employment,
income distribution, poverty elimination and balanced regional development.
2Many developing countries have experienced “economic growth” but without“development” as their economic growth process has been accompanied by risingincome inequalities and other acute socio-economic problems.
3Accordingly, policy makers today are focusing on the new development
strategy of “inclusive growth”, which targets the development process, beyond GDP
increases, at meeting broader social objectives, ranging from the satisfaction of thepeople’s basic needs and greater income equality to better environmental protection.
4In East Asia, Japan and South Korea have clearly achieved very impressive
economic development so that they have now reached the high-income economy
and developed society status. But with emerging problems like ageing population,
they too need to make their future economic growth more inclusive.
5For some low-income ASEAN countries, they are still at the stage ofstruggling with their primary objective of maximizing economic growth in order toprovide the material basis for poverty reduction. Other middle-income ASEAN
countries have achieved remarkable economic growth; but they still have to fulfill
their other development needs, including reducing their high income inequalities.
6Suffice it to say that the ASEAN plus Three (APT) countries are at different
stages of development with different development needs and priorities. But theinclusive growth development strategy can be designed to deal with the diversity ofdevelopment objectives.
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In fact, the development process of any country, to be sustainable, has toembrace inclusive growth as its basic strategy. Inclusive growth should also form thebasis for building the future East Asian Community.

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In line with this thrust, the NEAT Working Group (WG) on “Sharing theExperiences of Inclusive Growth” met in Singapore on 28 June 2012 to, first, share
their individual country experiences on their basic development strategies; and thento deliberate on the ways and means of making use of inclusive growth to promote
regional cooperation. A set of recommendations to promote such cooperation can befound in the final section of this report. The WG comprised representatives from theAPT countries plus the ASEAN Secretariat. A list of the representatives is at Annex.
IIAchieving Inclusive Growth9The APT governments generally recognized the importance of embracing
inclusive growth in their national development strategies or plans so as to ensurethat the development process in their countries is sustainable in the long run.
However, as the APT countries are at different stages of development with different
circumstances, priorities and needs, their policies and measures to bring about
inclusive growth would therefore vary.
10Despite the differing conditions in each APT country, it was observed that thepolicies and measures to achieve inclusive growth ought to involve a whole-of-agovernment or comprehensive approach that cuts across the economic, social andpolitical dimensions. The onus is on each APT country to find the right mix of these
dimensions in line with its local conditions.
11On the economic front, the foremost task of APT governments is to ensure
continued economic growth so as to grow the economic pie. This will then generate
the resources to help citizens obtain a fair share of the pie. Sustaining economic
growth would require constant upgrading and restructuring of the economy throughways such as promoting higher skills, encouraging innovation, raising productivity
and improving infrastructure. Greater attention is also needed to ensure that growth
takes place in tandem with more efficient use of natural resources and better
environmental protection. While allowing market forces to work to determine whichbusinesses are viable, the APT governments ought to also introduce various
schemes and incentives to help as many businesses to retain a presence in theirrespective countries. Assistance should also be rendered to assist citizens who may
be displaced find new jobs.
12Inclusive growth also aims at developing a more inclusive society. On thesocial front, social policies and measures need to be stepped up as well. In
education, for instance, there is a need to allow individuals better access to quality
education, to continue education reforms to broaden the pathways to success aswell as to ensure that the education system produces graduates relevant to theneeds of businesses. In addition, with the growing trend of aging population in a
number of countries, there is a need to encourage this group of people to work
longer, stay healthier and have better social security. It is also necessary to provide
better healthcare and affordable housing for not only the elderly but also othervulnerable groups such as children, the youth, women and those with disabilities. Itis also important to keep up social mobility in each generation and to prevent apermanent underclass from forming in each society.

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The expected increases in spending in health, housing and social protection
calls for a right balance to be struck in the public finances of APT governments. It is
important to avoid the path of many developed countries, where successive
governments, across the political spectrum, committed themselves to continually
expand social entitlements – in social security, healthcare and unemployment –without the ability to pay for them. Their massive public debts have now resulted notjust in a financial crisis, but also a social crisis, with their citizens being forced tomake painful adjustments in living standards for many years to come.
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On the political front, there is a need to ensure that the existing politicalsystem in the APT countries provides sufficient avenues for its citizens to give
feedback on policies as well as allow them to express their concerns on any
government related issues. In this way, their views can be taken on board in either
refining existing policies or measures or in introducing new ones. More importantly,
by allowing them a means to participate, the citizens will feel a sense of ownership of
the policies or measures that is being implemented.
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It is also worthwhile to add that achieving inclusive growth is not the sole
responsibility of the APT governments alone. Other interested actors such as theprivate sector, non-governmental organizations, international organizations and evenindividuals can help to complement the government efforts in promoting inclusivegrowth. The private sector (whether they are MNCs, government-linked companiesor SMEs) plays an indispensible role in various economic sectors and it is essential
for them to work hand-in-hand with the government. In addition, the private sector aswell as other interested actors can be encouraged to initiate and participate inactivities to give back to society and strengthen the social compact.
III

Challenges Faced16
It was found that the inclusive growth-related challenges the APT countries
face cover areas of economic priorities, economic structure, governance (including
supervision, implementation and coordination issues), capacity building,infrastructure, financing and technology. In addition, globalization has aggravatedeconomic fluctuation and social instability. Globalization has also brought about
great polarization effects on the economy and society. Effective domestic policies
must be put up to counter the negative impact of globalization.
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In any society, those who do not participate in economic development will also
not benefit from the development process. Efforts must be made to bring in those“marginal groups” into the development process.
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The list of key challenges includes:
Inadequate focus and integration of the strategy of inclusive growth into
mainstream national and local development plans and initiativesOver-reliance on a sector that is highly vulnerable to fluctuations in commodity
prices (e.g. natural resource sector) and which leads to little value-added forthe domestic economy

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Insufficient or inconsistent supervision, inspection and evaluation of programs
and initiatives on inclusive growthMultiplicity of institutions overlooking inclusive growth programs and initiatives,
leading to overlapping functions, unclear responsibilities and poor
coordination



Limited technological capabilities, and inadequate or poorly-trained humanresources

Poor physical infrastructure (e.g. roads, highways, irrigation and electricity
distribution networks)Poor educational and healthcare infrastructures

Lack of financial resources and inadequate budget allocation

IV

Recommendations

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If well conceived and implemented, the strategy of inclusive growth willcontribute to a more harmonious society and ultimately enhance the legitimacy ofAPT governments. In this important endeavor, the APT governments cancomplement their national efforts to achieve inclusive growth by tapping on eachother’s strengths and advantages. And regional cooperation will not only facilitate
exchanges of information, capacities, technology and country experiences, but also
spur actions to lay a stronger foundation for an East Asian Community.
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Below are key recommendations to promote cooperation on inclusive growthamong the APT countries:(a)Strengthen the macro-economic fundamentals in all APT countries so as
to make inclusive growth more sustainable(b)

Deepen the economic, trade and investment linkages among the APT
countries to take advantage of the opportunities of rapid growth in theregion(c)Improve labor mobility and capital flows, as well as technological transfers
among the APT countries to facilitate the upgrading and restructuring ofeconomies(d)Promote further development of SMEs in the local economy(e)Enhance human resource capacity in the APT countries through measures
such as better access to quality education and training to enable
individuals to be gainfully employed and to upgrade themselves(f)

Improve institutional capabilities and coordination among government
ministries and agencies related to inclusive growth in the APT countries

4(g)Identify and implement regular programs and initiatives to help thevulnerable groups in the APT countries(h)Publicize best practices and successful examples of inclusive growth in
the APT countries(i)

Involve, recognize and encourage stakeholders such as organizations andindividuals to contribute to broad-based participation in implementing thestrategy of inclusive growth in the APT countries(j)Consider introducing an APT blueprint to support inclusive growth anddevelopment.....

5Annex

List of Participants(in alphabetical order by country)
No.

CountryName
Mr. Tan Tai Hiong

Organization

1

ASEAN
Secretariat

ASEAN Secretariat

2

Brunei-3

Cambodia

Mr. Sisowath Doung
ChantoDeputy Head, Division of Social
Policy Analysis and Research,Supreme National Economic
Council, Royal Government ofCambodia

4

China

Dr. Feng Xingyan

School of International Economics,
China Foreign Affairs University

5Indonesia

Dr. Evi Fitriani(Co-Chair)

Lecturer, International Relations
Department, Faculty of Social andPolitical Science, University ofIndonesia

Dr. Syamsul Hadi

Lecturer, International Relations
Department, Faculty of Social andPolitical Science, University ofIndonesia-6JapanProf. Watanabe
Yorizumi

Professor, International Political
Economy, Keio University

7KoreaProf. Choong Lyol Lee

Chairperson, Department ofEconomics, and Director of BK21
Economics and Statistics Education
Program, College of Business andEconomics, Korea University at
Sejong8Laos, PDR

Mr. Thavone Singharaj

Deputy Director, Research Division,
Institute of Foreign Affairs

9Malaysia

Mr. Firdaos Rosli

Senior Analyst, Institute of Strategicand International Studies, Malaysia

10Myanmar

Ms. Kyi Kyi Sein

Director/Researcher, Myanmar
Institute of Strategic andInternational Studies, Ministry ofForeign Affairs

11Philippines

Dr. Adoracion M.
NavarroSenior Fellow, Philippine Institutefor Development Studies (PIDS)

12Singapore

Prof. John Wong(Chair)

Professorial Fellow, East Asian
Institute

Mr. Lye Liang Fook

Assistant Director and ResearchFellow, East Asian InstituteAsso. Prof. Tan Khee
Giap

Co-Director, Asia CompetitivenessInstitute, Lee Kuan Yew School of6

Public Policy
Asso. Prof. Tan Kim
Song

Associate Professor of Economics(Practice), School of Economics,
Singapore Management University

Dr. Ooi Kee Beng

Deputy Director, Institute ofSoutheast Asian Studies

Dr. Tan Meng Wah

Independent Scholar

13

ThailandDr. Sineenat Sermcheep

Faculty of Economics,
Chulalongkorn University14Vietnam

Mr. Nguyen Tien
Phong

Head, International Relations
Division, Diplomatic Academy ofVietnam7