Human rights: At the UN, China deflects criticism

The most recent visit by a UN human rights expert was that of Philip Alston in August 2016, whose remit was to look into extreme poverty and human …

by · Monday, 18 September 2017 · China, Philippines
How Islamic finance is helping fuel Malaysia’s green growth

How Islamic finance is helping fuel Malaysia’s green growth

Photo: bigstock/ f9photos

Income growth is not the sole aim of economic development. An equally important, albeit harder to quantify objective is a sense of progress for the entire community, and a confidence that prosperity is sustainable and shared equitably across society for the long term.  

Inclusive and sustainable development looks beyond GDP growth and can strengthen nations for generations to come.   However rising income inequality has impeded social mobility, increased social tensions, and undermined effective governance in many countries in recent decades.  In the World Bank Group, we are firmly committed to our twin goals of helping reduce the number of people living in extreme poverty, and to promoting shared prosperity, particularly among the bottom 40 percent of the population. 

Investments in infrastructure are essential for meeting both goals. Whether it be by connecting farmers to markets or by providing families with electricity and clean water, infrastructure investments can transform lives for the better. However, analysts estimate that developing countries require between US$1.7 trillion annually in infrastructure investment just to keep up with the rate of growth, while actual investment pledged each year is closer to US$880 billion – far short of the region’s needs. 

To close this huge infrastructure gap, we need more options for investment financing. It would be better yet if these options adhere to our principles of sustainable development, particularly given the specter of climate change. A tall order, but not impossible. 

Recently, with support from the World Bank, Malaysia launched a new initiative that addresses both these principles: financing sustainable, climate-resilient growth. 

When Islamic finance shot to prominence in 2008, performing well even during the global downturn, the investment community started taking notice. Though representing a tiny portion of the global financial market, growth of Islamic finance has been rapid. By 2015, the industry had surpassed US$1.88 trillion in size and its banking assets had doubled in merely four years. 

Islamic finance may just provide that extra helping hand to deliver more infrastructure to emerging markets and developing economies. 

Central to the premise is the sukuk, a bond that generates returns to investors without infringing Islamic ‘shariah’ principles, which prohibits the payment of interest. Given that the Islamic capital market is still relatively small, sovereign and quasi-sovereign sukuk can be used to finance infrastructure projects that can facilitate further inflows of private capital. Project-specific sukuk, instead of general-purpose sukuk, may be particularly helpful in bolstering infrastructure financing. 

In parallel, another development pioneered by the World Bank Group – ‘green bonds’ – is also making headway. Since 2008, the World Bank has issued US$10 billion in bonds through our green bond program for climate-sensitive investments, and has brought greater transparency and clarity to issuers and investors by participating in the crafting of the Green Bond Principles (voluntary guidelines framing the issuance of green bonds) and by setting best market practice for reporting on the use of proceeds. New issuances in the global market are expected to exceed $120 billion in 2017.   

Enter Malaysia with its innovative ‘green sukuk’ initiative, which will channel sukuk for climate-friendly investments, thus helping close the gap for both infrastructure and green finance.  

Malaysia is already a global leader in leveraging Islamic finance for infrastructure development, issuing more than 60 percent of the world’s infrastructure sukuk. Now the country’s regulators are taking one step further and using investments to achieving a public good. Launched this July with the issuance by a Malaysian company of MYR 250 million (about US$59 million) in bonds to finance a 50-megawatt solar photovoltaic plant, the ‘green sukuk’ is a bold new tool for development. 

The framework underlying this instrument is the result of collaboration between the Securities Commission of Malaysia, the Malaysian Central Bank and the World Bank Group. This was envisioned when Malaysia and the World Bank Group celebrated 58 years of partnership with the formal opening of our Global Knowledge and Research Hub in Malaysia in 2016.  

The ‘green sukuk’ is one of various corporate fixed-income securities of this type coming out of Malaysia. We hope that many similar issuances will follow, in Malaysia and in other countries, and that innovative green financing becomes the norm, not the exception. This development would take us one step closer towards our goal of sustainable and inclusive growth. 

A version of this blog appears in the South China Morning Post.

by · Friday, 15 September 2017 · China, Malaysia

Belt and Road mustn’t pave way for crime

Many of them stand to benefit from China’s experiences in, for example, poverty alleviation, decentralisation, the economic development of remote …

by · Thursday, 14 September 2017 · China, Thailand
Fresh thinking on economic cooperation in South Asia

Fresh thinking on economic cooperation in South Asia

Young Economists sharing the stage with Sanjay Kathuria, Lead Economist and Coordinator, Regional Integration (Left to Right: Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir & Surendar Singh/ Bangladesh) Photo By: Marcio De La Cruz/ World Bank

That regional cooperation in South Asia is lower than optimal levels is well accepted. It is usually ascribed to – the asymmetry in size between India and the rest, conflicts and historical political tensions, a trust deficit, limited transport connectivity, and onerous logistics, among many other factors.

Deepening regional integration requires sufficient policy-relevant analytical work on the costs and benefits of both intra-regional trade and investment. An effective cross-border network of young professionals can contribute to fresh thinking on emerging economic cooperation issues in South Asia.

Against this background, the World Bank Group sponsored a competitive request for proposals.  Awardees from Bangladesh, India, and Pakistan, after being actively mentored by seasoned World Bank staff over a period of two years, convened in Washington DC to present their new and exciting research. Research areas included regional value chains, production sharing and the impact assessment of alternative preferential trade agreements in the region.

Young Economists offer fresh thoughts on economic cooperation in South Asia

Mahfuz Kabir, Acting Research Director, Bangladesh Institute of International and Strategic Studies and Surendar Singh, Policy Analyst, Consumer Unity Trust Society (CUTS International) presented their research: Of Streams and Tides, India-Bangladesh Value Chains in Textiles and Clothing (T&C). They focus on how to tackle three main trade barriers for T&C: a) high tariffs for selected, but important goods for the industries of both countries; b) inefficient customs procedures and c) divergent criteria for rules of origin classification.

Sreerupa Sengupta, Ph.D. Scholar at Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi discussed Trade Cooperation and Production Sharing in South Asia – An Indian Perspective. Reviewing the pattern of Indian exports and imports in the last twenty years, her research focuses on comparing the Global Value Chain (GVC) participation rate of India with East Asian and ASEAN economies. Barriers to higher participation include a) lack of openness in the FDI sector; b) lack of adequate port infrastructure, and long port dwell times; and c) lack of Mutual Recognition Agreements (MRAs).

Aamir Khan, Assistant Professor, Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad presented his work on Economy Wide Impact of Regional Integration in South Asia – Options for Pakistan. His research analyzes the reasons for Pakistan not being able to take full advantage of its Free Trade Agreement (FTA) with China, and finds that the granting of ASEAN-type concessions to Pakistan in its FTA with China would be more beneficial than the current FTA arrangement. The work also draws lessons for FTAs that are currently being negotiated by South Asian countries.

by · Monday, 11 September 2017 · Bangladesh, China, India, Pakistan
Online regulations and LGBT rights: A test for China’s legal system

Online regulations and LGBT rights: A test for China’s legal system

On June 30, 2017, the official China Netcasting Services Association (CNSA) released a new regulation related to online broadcasting. This is the latest step in a government-led effort to tighten political and administrative control over mass communication and social media through the implementation of new laws, rules, and regulations. In a country with 1.3 billion…




by · Friday, 1 September 2017 · China, India
Protecting Poor Thai Families from Economic Hardship

Protecting Poor Thai Families from Economic Hardship

An elderly man waits for medicine at a hospital counter in Thailand. Photo: Trinn Suwannapha/World Bank

Thailand recently announced that it will put into action a national social assistance program for poor families. Such a program can help reduce poverty significantly. It would also move Thailand into the growing ranks of middle-income countries, such as China, Malaysia, Brazil, Turkey and the Philippines, that provide the poor with a ‘safety net’.

This week, the cabinet approved a package worth around 42 billion baht to finance cash allowances for the poorest and other subsidies for almost 12 million low-income families. For many poor families in Thailand, regular social assistance means their children being able to finish school or not going to bed hungry. For farmers, regular social assistance can help cushion the impact of natural disasters such as floods and droughts, which can wipe away a lifetime of savings.

Global evidence suggests that regular cash transfers can enable poor families to meet basic needs such as food, healthcare and education, and that they continue to work just as hard. Such studies have addressed concerns in many countries that cash transfers are mere handouts that encourage complacency. They have shown instead that a helping hand improves nutritional and educational outcomes, and the capacity of individuals and communities to cope with shocks, ultimately resulting in lower poverty and inequality.

But, according to the recently published World Bank Thailand Systematic Country Diagnostic, accurate targeting is key. An effective and efficient social assistance program consistently and reliably identifies those who need support the most.

Here is where challenges set in. With work in the informal sector so prevalent in Thailand, verifying household incomes can be difficult. Experience from other countries can help.  

Where self-declared income may not be reliable, other information such as land and vehicle ownership status, educational levels of adults, and presence of household members with disabilities can be useful. Different countries screen these non-income indicators in different ways. Some simply tally the other welfare indicators for each family, while others do a more complex calculation of how important each factor is in predicting if a family is poor. Whatever the approach, countries often supplement such information with community-based validation to take advantage of local knowledge. Thailand is using such an approach, with information on employment status, property ownership and savings to help determine who is low income.

Developing countries also use “social registries” to cross-check indicators of household welfare. These data platforms allow cross-checking of household welfare indicators, ranging from land and car ownership to social security participation, and are used by multiple public programs as a common source of information.

The most comprehensive social registries include not only program beneficiaries, but the larger population. Pakistan includes around 90 percent of its population in its social registry. The Philippines and Chile respectively include 75 percent in their databases. Turkey cross-checks against approximately 28 public databases to confirm the accuracy of information about a family.

Multiple agencies refer to the social registries to determine eligibility for their programs. In many countries, the registries serve many initiatives: some 80 programs in Chile, over 50 in Philippines, and approximately 30 in Colombia, Pakistan and Brazil.

Thailand is now taking steps to establish its own social registry, beginning with the database of low-income families and consolidating dozens of welfare schemes. As the government embarks on this journey, it is already helped by an important foundation: the national ID system. Last year, the national ID system helped the government to eliminate over 650,000 ineligible beneficiaries who were already benefiting from agriculture schemes or who held cash and property that disqualified them from being considered poor. The system is also building on the government’s e-payment system to improve efficiency and convenience.

This is an exciting time for Thailand, as it seeks to establish a social protection system that is more suited to the needs and expectations of an upper middle-income country. The task is not a straightforward one. There will be competing pressures for public resources, challenges in program design and delivery, and new needs for cross-agency coordination.

But that step in the right direction has been taken. Thailand has enabled the building of a social protection system that can better serve all its citizens, and help the country towards its goal of further reducing poverty.

A version of this blog appeared in the Bangkok Post.

by · Thursday, 31 August 2017 · China, Malaysia, Pakistan, Philippines, Thailand, Turkey

China’s Jiangxi TV seeks ties with PH, other ASEAN channels

In February last year, President Xi visited Jinggangshan including Shenshan village to know more about the poverty alleviation program in the area.

by · Thursday, 31 August 2017 · China, Philippines

China begins trial of prominent rights lawyer Jiang Tianyong

United Nations Special Rapporteur on extreme poverty and human rights, Philip Alston speaks during a news conference held in Beijing, China, …

by · Tuesday, 22 August 2017 · China, Nepal

China begins trial of prominent rights lawyer Jiang Tianyong

United Nations Special Rapporteur on extreme poverty and human rights, Philip Alston speaks during a news conference held in Beijing, China, …

by · Tuesday, 22 August 2017 · China, Nepal

The heat is on

India has a priority to combat poverty and, like China, is torn between economic growth and emissions reduction. “The consequences of climate …

by · Monday, 21 August 2017 · China, India, Thailand