Economic Outlook for Southeast Asia, China and India 2017: Addressing Energy Challenges: Edition 2017 (Volume 2017)

264 Pages·2017·4.21 MB·English

by  Oecd Organisation For Economic Co-Operation And Development

Economic Outlook for Southeast Asia, China and
India 2017
ADDRESSING ENERGY CHALLENGES
Economic Outlook for
The Economic Outlook for Southeast Asia, China and India is a bi-annual publication on regional economic
growth, development and regional integration in Emerging Asia. It focuses on the economic conditions of
Southeast Asia, China and India
Association of Southeast Asian Nations (ASEAN) member countries: Brunei Darussalam, Cambodia, Indonesia,
Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam. It also addresses relevant
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economic issues in China and India to fully reflect economic developments in the region. The 2017 edition of the
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Outlook comprises four main parts, each highlighting a particular dimension of recent economic developments
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in the region. The first part presents the regional economic monitor, depicting the near-term and medium-term o
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economic outlooks, as well as macroeconomic and regional integration challenges in the region. The second part ic ADDRESSING ENERGY CHALLENGES
discusses the recent progress made in key aspects of regional integration. The third part presents this edition’s O
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special focus: addressing energy challenges and renewable energy development in particular. The fourth part t
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includes structural policy country notes offering specific recommendations. o
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Contents r S
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Chapter 1: Economic outlook and macroeconomic assessment for Emerging Asia u
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Chapter 2: Regional integration challenges in ASEAN and Emerging Asia e
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Chapter 3: Developing renewable energy in Emerging Asia t A
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Chapter 4: Structural policy country notes ia
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Consult this publication on line at http://dx.doi.org/10.1787/saeo-2017-en E
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41 2016 12 1 P1

Economic Outlook
for Southeast Asia,
China and India 2017
ADDRESSING ENERGY CHALLENGES
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1. fOrewOrd
Foreword
The Economic Outlook for Southeast Asia, China and India is a biannual publication on
Asia’s regional economic growth, development and regional integration processes.
It focuses on the economic conditions of the Association of Southeast Asian Nations
(ASEAN) member countries (Brunei Darussalam, Cambodia, Indonesia, Lao PDR,
Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam) and two large
economies in the region, China and India. This publication evolved from the Southeast
Asian Economic Outlook. Beginning with the Outlook Update, released in June 2016, the
Outlook has become a biannual publication, with the main report released in the autumn
and its update released the following spring.
The Outlook was initially proposed at an informal reflection group on Southeast Asia
in 2008 as a follow-up of the Council Meeting at Ministerial level (MCM) in 2007 and
was accepted by ministers/senior officials from ASEAN countries at the occasion of the
2nd OECD-Southeast Asia Regional Forum in Bangkok in 2009. The Outlook project was
officially launched in 2010 and each edition is regularly presented at the occasion of
the ASEAN/East Asia Summit. It was included in the OECD’s Southeast Asia Regional
Programme (SEARP) at the Steering Group Meeting in Jakarta, Indonesia in March 2015,
with its role of providing a horizontal view of activities, identifying emerging trends in the
region and providing a backbone for the different streams of the Programme confirmed
at the 2015 MCM. The Outlook serves as a strategic foresight and policy dialogue tool
for the SEARP and includes summaries of recent developments in the region on issues
related to the Programme’s six Regional Policy Networks and three Initiatives.
Each edition of the Outlook is comprised of four main parts: a regional economic
monitor, an overview of recent developments in regional integration, structural policy
country notes and a thematic focus specific to each year’s report. The 2017 edition of
the Outlook focuses on the energy challenges faced by Emerging Asia as economic and
population growth result in large increases in energy demand. At the same time, most
of the region has committed to specific targets for implementing renewable energy
technologies to slow the increase of fossil fuel use in the future. While the region has
considerable potential, expanding the supply of energy and improving the prospects
of alternative energy sources in particular requires the implementation of the right
policies. Private investment in the energy sector is also likely to play a major role in the
sector’s future development.
The OECD Development Centre is committed to working alongside governments
of developing and emerging economies and regional actors to identify key areas of
intervention in order to address these challenges. The Centre enjoys the full membership
of three Southeast Asian countries, namely Indonesia, Thailand and Viet Nam, as well
as India and China. This project has also benefited from the generous support of other
Emerging Asian countries.
This edition of the Outlook is the result of policy dialogue and consultation at the
regional level, at the 5th OECD-AMRO-ADB/ADBI-ERIA Asian Regional Roundtable on
Macroeconomic and Structural Policy Challenges, held in Tokyo, Japan, in July 2016.
Like other regional economic outlooks produced by the OECD Development Centre,
the report was prepared in collaboration with regional partners; UNESCAP and the
Economic Research Institute for ASEAN and East Asia (ERIA) contributed to the 2017
edition. The Outlook also benefited from discussions with the ASEAN Secretariat. The
OECD is committed to supporting Asian countries in their efforts to promote economic
and social well-being through rigorous analysis, peer learning and best practices.
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Acknowledgements
The 2017 edition of the Economic Outlook for Southeast Asia, China and India: Addressing
Energy Challenges was prepared by the Asia Desk of the OECD Development Centre, in
co-operation with United Nations Economic and Social Commission for Asia and the
Pacific (UNESCAP) and Economic Research Institute for ASEAN and East Asia (ERIA). The
publication also benefited from discussions with the ASEAN Secretariat.
The team was lead by Kensuke Tanaka, Head of the Asia Desk and overall guidance
was provided by Mario Pezzini, Director and Naoko Ueda, Deputy Director of the
OECD Development Centre. This volume was drafted by a team composed of Kensuke
Tanaka, Masato Abe, Derek Carnegie, Jingjing Xia, Juita Mohamad, Guro Persen, Megumi
Kubota, Ryan Jacildo, Prasiwi Ibrahim and Han Phoumin. Jingjing Xia also contributed to
statistical work related to this publication and Candice Lea Marie Branchoux and Jaewon
Kim provided useful inputs. Laura Golden provided useful administrative supports for
this project. Elizabeth Nash, Delphine Grandrieux, Studio Pykha and Aida Buendia
turned the manuscript into the publication.
The Outlook 2017 benefited from discussions with OECD Delegations at three
Informal Consultation Group (ICG) meetings in Febuary, October and December 2016 in
Paris, led by co-chairs of the Outlook consultation group, Ambassador Jong-Won Yoon
and Ambassador Maria Theresa Lazaro, together with Ambassador Pierre Duquesne.
The Outlook also benefited from discussion with experts in the region at the 5th Asian
Regional Roundtable on Macroeconomic and Structural Policy Challenges, jointly organised
by the ASEAN+3 Macroeconomic Research Office (AMRO) and the Asian Development
Bank (ADB), the Asian Development Bank Institute (ADBI), ERIA and the OECD, in Tokyo
on 14-15 July 2016. The Outlook was presented at the occasion of the ASEAN/East Asia
Summit in Vientiane, Lao PDR in September 2016 in a joint session with ERIA. The
authors are grateful to Rintaro Tamaki, Deputy Secretary-General of the OECD, Chang
Junhong, Director of AMRO, Naoyuki Yoshino, Dean of the ADBI, Hidetoshi Nishimura,
Executive Director of ERIA, as well as Endy D. Tjahjono, Jesus Felipe, Izuru Kobayashi,
Ng Chuin Hwei, Luke Hong, Yumiko Murakami, Jay Rosengard, Suahasil Nazara, Xunpeng
Shi, Toshiyuki Shirai, Kazushige Tanaka, Laszlo Varro, Sanjayan Velautham, Etsuaki
Yoshida, Fauziah Zen, and Joseph E.Zveglich,Jr.
Support from OECD delegations and embassies of Asian countries in Paris, in
particular, Ambassador Kazuo Kodama, Rapunzel Acop, Fajar Harijo, Tran Phan Linh,
Takuma Kajita, Masahiro Katsuno, Sisouphanh Keobandavong, Venugopal Menon,
Canh Cuong Nguyen, Sovanra Nong, Tze Shen Ong, Hye Ryoung Song, Widya Sadnovic,
Rakesh K. Sharma, Houmpheng Souralay, Soveasna Sun, Jürg Schneider, Sirichada
Thonhtan, Seinn Lei Tun and Tomoki Watanabe, is gratefully acknowledged.
The Medium-term Projection Framework for Growth and Development (MPF) used
in this edition was prepared by a team managed by Kensuke Tanaka and Masakazu
Someya.
Last but not least, the OECD Development Centre would like to acknowledge gratefully
the financial support received from the goverments of Japan, Korea and Switzerland.
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Table of contents
Acronyms and abbreviations ....................................................................................................................................................10
Editorial ....................................................................................................................................................................................................15
Executive summary .........................................................................................................................................................................17
Overview .................................................................................................................................................................................................19
Chapter 1. Economic outlook and macroeconomic assessment for Emerging Asia ............................43
Introduction ...................................................................................................................................................................................44
Recent macroeconomic developments and near-term prospects ...............................................................46
Medium-term growth prospects .......................................................................................................................................58
Risks and policy challenges .................................................................................................................................................69
Conclusion .......................................................................................................................................................................................88
Notes ...................................................................................................................................................................................................89
References ......................................................................................................................................................................................90
Chapter 2. Regional integration challenges in ASEAN and Emerging Asia ...............................................93
Introduction ...................................................................................................................................................................................94
Trade in goods ...............................................................................................................................................................................96
Trade in services .........................................................................................................................................................................99
Investment and capital market liberalisation .......................................................................................................103
Competition and consumer protection .....................................................................................................................105
Intellectual property ..............................................................................................................................................................108
Infrastructure and connectivity ....................................................................................................................................110
Small and medium-sized enterprises ........................................................................................................................113
Food, agriculture and forestry .........................................................................................................................................118
Tourism ..........................................................................................................................................................................................121
Human and social development ....................................................................................................................................125
Energy .............................................................................................................................................................................................131
Initiative for ASEAN Integration ....................................................................................................................................134
References ....................................................................................................................................................................................138
Chapter 3. Developing renewable energy in Emerging Asia ...........................................................................139
Introduction ................................................................................................................................................................................140
Energy outlook for Emerging Asia towards 2040 .................................................................................................140
Potential and targets for renewable energy in Emerging Asia ...................................................................144
Providing support for renewable energy development in Emerging Asia ...........................................147
Investments in renewable energy .................................................................................................................................152
Challenges to renewable energy development in Emerging Asia .............................................................155
Conclusion ....................................................................................................................................................................................159
Notes ................................................................................................................................................................................................161
References ....................................................................................................................................................................................161
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Chapter 4. Structural policy country notes.....................................................................................................................165
Indonesia ........................................................................................................................................................................................168
Malaysia ..........................................................................................................................................................................................176
Philippines .....................................................................................................................................................................................183
Thailand ..........................................................................................................................................................................................191
Viet Nam .........................................................................................................................................................................................198
Brunei Darussalam ..................................................................................................................................................................204
Singapore .......................................................................................................................................................................................211
Cambodia .......................................................................................................................................................................................220
Lao PDR ............................................................................................................................................................................................225
Myanmar ........................................................................................................................................................................................235
China .................................................................................................................................................................................................244
India ..................................................................................................................................................................................................252
Annex A. Statistical annex .......................................................................................................................................................259
Tables
Overview
1. Real GDP growth in ASEAN, China and India ..............................................................................................19
2. Revealed comparative advantage of selected economies in their top five exported
goods to China ..............................................................................................................................................................22
3. Reported use of NTBs in ASEAN and selected trading partners in the region ...................23
4. Progress in Emerging Asia’s integration in key policy areas .........................................................27
5. Renewable energy policy supports in Emerging Asia .........................................................................32
6. Medium-term policy challenges and responses in Emerging Asia ............................................36
Chapter 1
1.1. Real GDP growth of ASEAN, China and India ..........................................................................................44
1.2. Real GDP growth in Emerging Asia ................................................................................................................47
1.3. R evealed comparative advantage of selected economies in their top five exported
goods to China .............................................................................................................................................................75
1.4. Reported use of NTBs in ASEAN and selected trading partners in the region ...................76
Chapter 2
2.1. Progress in Emerging Asia’s integration in key policy areas ..........................................................95
2.2. Difference between TPP and RCEP based on the current negotiations ...................................98
2.3. Share of services sector in ASEAN (% of GDP) .........................................................................................99
2.4. Strategic areas identified in MPAC 2025 ....................................................................................................111
2.5. SME share of total establishments in ASEAN, 2014 ...........................................................................113
2.6. SME share of total employment in ASEAN, 2014 .................................................................................113
2.7. International tertiary students in Emerging Asian countries, by country of origin ....127
2.8. Comparison of IAI priorities in Blueprint 2015 and Blueprint 2025 .........................................135
Chapter 3
3.1. Renewable energy policy support in ASEAN, China and India ..................................................147
3.2. Comparison of FIT systems in ASEAN-5, China and India ............................................................151
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Chapter 4
4.2.1. Percentage of home ownership as of 2010 for selected economies ..............................................177
4.6.1. Employment opportunities generated by the Bio-Innovation Corridor in
Brunei Darussalam .....................................................................................................................................................207
4.7.1. Benefits to elderly Singaporeans in the Pioneer Generation Package ........................................215
4.9.1. SEZ investment by sector ........................................................................................................................................230
4.9.2. Tourist arrivals to Lao PDR by nationality ...................................................................................................231
4.12.1. Share of top investing countries’ FDI equity inflows ............................................................................254
4.12.2. Sectors attracting highest FDI inflows ...........................................................................................................254
4.12.3. Selected Startup India investments, 2016.. .................................................................................................256
Annex
A.1. Real GDP growth of Southeast Asia, China and India ...........................................................................259
A.2. Current account balance of Southeast Asia, China and India .........................................................259
A.3. Private consumption in Southeast Asia, China and India .................................................................260
A.4. Gross fixed capital formation in Southeast Asia, China and India ..............................................260
A.5. Public finances of Southeast Asia, China and India...............................................................................260
Figures
Overview
1. Change in credit-to-GDP ratio and lending rate, 2011 vs 2015 ...........................................................24
2. Median TFP in Indonesia, by ownership, 2013 .............................................................................................25
3. Average annual growth in TFP by firm size in the Philippines, 1997-2012 ................................26
4. Total primary energy supply in Emerging Asia, 1990-2040 .................................................................31
5. New installed capacity of renewable energy by energy source in ASEAN in 2015 ...............33
6. Greenfield FDI inflows in Emerging Asia’s renewable energy sector ............................................34
Chapter 1
1.1. Consumer price inflation (headline CPI) in Emerging Asia .................................................................50
1.2. Consumer price inflation (core CPI) in Emerging Asia ............................................................................50
1.3. Evolution of inflation and policy interest rates in Emerging Asia ...................................................51
1.4. Nominal exchange rate in Emerging Asia, 2010-16 ...................................................................................52
1.5. Nominal effective exchange rate in Emerging Asia, 2010-16 ..............................................................53
1.6. Credit Default Swap (CDS) premiums in Emerging Asia .......................................................................54
1.7. Stock returns in Emerging Asia .............................................................................................................................54
1.8. Non-performing loans in Emerging Asia .........................................................................................................56
1.9. Foreign holdings of local currency government bonds for selected Asian countries .............57
1.10. Real export growth in Emerging Asia ................................................................................................................58
1.11. Real GDP growth of Southeast Asia, China and India .............................................................................59
1.12. Private consumption in ASEAN-5, China and India .................................................................................60
1.13. Gross fixed capital formation in ASEAN-5, China and India ...............................................................62
1.14. Current account balances of Southeast Asia, China and India..........................................................65
1.15. Fiscal balances (central government) of ASEAN-5, China and India .............................................66
1.16. China’s imports from top trade partners .........................................................................................................70
1.17. China’s imports from ASEAN and India ............................................................................................................71
1.18. Indonesia’s exports to China, 2011-14 ................................................................................................................72
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1.19. The Philippines’ exports to China, 2012-15 ....................................................................................................72
1.20. Cambodia’s exports to China, 2011-14 ...............................................................................................................73
1.21. Viet Nam’s exports to China, 2011-14 .................................................................................................................73
1.22. Change in credit-to-GDP ratio and lending rate, 2011 vs 2015 ...........................................................78
1.23. Spread of average yields, Emerging Asia vs OECD .....................................................................................80
1.24. Difference in average yields, 1-year vs 10-year ...........................................................................................81
1.25. General government gross debt ............................................................................................................................82
1.26. Annual growth in total factor productivity in Emerging Asia, 2000-13 .......................................83
1.27. Annual growth in labour productivity in Emerging Asia, 2000-13 ..................................................84
1.28. Labour productivity growth by sector in Emerging Asia, 2000-13 ..................................................85
1.29. Average annual growth in TFP by firm size in the Philippines, 1997-2012 ................................86
1.30. Median TFP in Indonesia, by ownership, 2013 .............................................................................................87
Chapter 2
2.1. Trade shares of ASEAN, ASEAN plus 3, and ASEAN plus 6 countries, 1995-2015 ..................96
2.2. ASEAN trade in services with the rest of the world in 2005 and 2014 .......................................100
2.3. Intra-ASEAN trade in services by categories in 2010 and 2014 .....................................................100
2.4. Comparison of scores for CLMV and ASEAN countries in eight policy areas, 2014 ...........114
2.5. Intra-ASEAN food trade in 2010 and 2014 ....................................................................................................119
2.6. Tourism revenues per visitor 2000-15.............................................................................................................121
2.7. Top ten country/regional sources of ASEAN visitors in 2014 ..........................................................122
2.8. Tourist service infrastructure in ASEAN, 2015 .........................................................................................122
2.9. Cause of death in Emerging Asia, 2000 and 2012 ....................................................................................129
2.10. Immunisation rates in Emerging Asia, 2013 ...............................................................................................130
2.11. Transmission capacity in the ASEAN Power Grid by system region ...........................................132
2.12. Progress made in TAGP projects, 2012-15 .....................................................................................................133
2.13. Narrowing Development Gap Indicators, 2012 .........................................................................................136
Chapter 3
3.1. Emerging Asia’s total final energy consumption by sector, 1990-2040 ......................................141
3.2. Emerging Asia’s total final energy consumption by country grouping, 1990-2040 ............141
3.3. Emerging Asia’s total primary energy supply by source, 1990-2040...........................................142
3.4. Total primary energy supply in ASEAN, China and India, 1990-2040 .......................................143
3.5. Targets for installed capacity in renewable energy in ASEAN member states ....................145
3.6. Targets for renewable energy shares in ASEAN member states ...................................................146
3.7. New installed capacity, feed-in tariffs (FIT) and average levelised costs of electricity
(LCOE) for solar and wind power in ASEAN-5 and India, 2014 ........................................................149
3.8. New installed capacity of renewable energy by energy source in ASEAN in 2015 153
3.9. Greenfield FDI inflows in Emerging Asia’s renewable energy sector ........................................154
Chapter 4
4.1.1. International tourism in ASEAN by number of arrivals, 2000-14 .................................................169
4.1.2. Fuel price by province in Indonesia .................................................................................................................173
4.2.1. Increase of Malaysia’s House Price Index from 2000 to 2015...........................................................177
4.3.1. Overall infrastructure quality in ASEAN-5 countries ..........................................................................184
4.3.2. Employment to population ratio, 15+, 2000 and 2014 ..........................................................................186
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