Malaysia is already a very competitive country. Today it ranks 18 out of 189 economies in the World Bank Group’s Doing Business Index. Yet, its ambition is to become more competitive. And it wants to overtake some countries on the way up. Malaysia has long recognized that a concerted cross-ministerial and public-private collaboration is needed to do just that.
Malaysia’s Special Task Force to Facilitate Business (PEMUDAH), was established in 2007 to improve the ease of doing business in Malaysia. Testament to its success was Malaysia’s surge to 6th position in the 2014 Doing Business, up from 12th place in 2013 and 18th in 2012, placing it in the same league as Singapore, Hong Kong, and the United States. But since then, Malaysia has been challenged to keep up with the rapid pace of business reforms across the globe.
With this week's kickoff of the 2016 China “Business 20” (B20) proceedings in Beijing, this is an opportune time to reflect on some of the key accomplishments of the 2015 Turkey B20. As many readers of this blog know, the B20 is the premier dialogue platform of the business community with the G20 policymakers representing the most important economies of the world, and it is influential in identifying and supporting policies that are crucial for overall economic development. I believe that taking stock of the past enables us to learn from both successes and failures, and helps sustain the momentum on what worked and generated the desired impact.
Looking back at my involvement as Chair of the B20 Steering Committee, what strikes me as a major achievement is the amplification of the voice of small and medium enterprises (SMEs). I believe that, if we want our economies to have healthy and inclusive growths, this must remain as a key priority for the upcoming B20 in China.
Participants in the Turkish G20/B20 process shared the assessment that SMEs’ potential was not being fully realized. SMEs account for about two-thirds of all private-sector jobs globally and about 80 percent of net job growth. They are the engine for equitable growth and poverty alleviation. And they are the backbone of the middle class and of social stability. Yet they suffer disproportionately from limited access to markets, finance, talent, skills and innovation. In addition, regulations also often put them at a disadvantage. Until recently, SMEs had lacked an organization that would champion their cause.
With these major issues in mind, and with strong deliberations of the B20 Leadership and support from the G20 Finance Ministers, last year TOBB and the ICC officially founded the World SME Forum (WSF), with the mission to help improve the overall growth and impact of SMEs globally, by effectively tackling the key challenges they face. WSF aims to provide SMEs with effective representation and to advance the recognition of the role of SMEs in the global economy by partnering with international financial institutions (IFIs) and development agencies. WSF has membership from associations and chambers working in the SME space from all over the world.
WSF is ready to represent SME interests with regional and global bodies, and to advocate for better rules and regulations among standard-setters.
As I am on my way to Beijing, I cannot help but think that this is indeed a major achievement, which will give the SME development agenda a much better chance at succeeding. WSF can be a “bridge” across B20 presidencies, so that we can ensure continuity in the crucial SME agenda. WSF can help avoid any loss of momentum on the implementation of the recommendations we develop during each cycle.
Even better, after B20 China officially decided to continue the SME Development Taskforce, which was started for the first time by B20 Turkey, they invited WSF to be a Business Network Partner for the Taskforce. WSF will therefore be coordinating the network and will help drive the ideas that emerge from the Taskforce discussions into implementation.
Pop quiz: Which of these statements do you agree with?
- If you build “IT” they will come.
- Poor people don’t need mobile phones. They need clean water and food instead.
- Digital skills are only relevant for people who work in the ICT sector. The rest of us don’t need them.
When you ask young people from developing countries what they want for their country, they often say opportunity. The next generation wants jobs and knowledge; they want to be connected to the global economy.
Extractive industries can foster these types of opportunities through investment in skills training and transfer of technology to local workers and companies. These technical skills are demanded in the global marketplace today and empower workers to expand their horizons and lower their risk of unemployment.
We are discussing these issues today at a “Reconciling Trade and Local Content Development” conference we are co-hosting with the Mexican Ministry of Economy. This event aims to share knowledge on how investment in extractive industries can be leveraged to generate opportunities for economic diversification and employment.
The most valuable contribution to long term sustainability comes from the ability of extractive industries to generate benefits through productive linkages with other sectors. The International Finance Corporation (IFC) helped make this happen in Barmer, India, where we supported a Skill Development Center that trained 7,000 people to work in the operations of Cairn Energy. Not only did this training create direct job opportunities for the local population, but the acquired skills fostered the creation of an entire eco-system of small and medium-size enterprises that provided products and services to the oil company and related sectors.
Bangladesh has a major opportunity to address one of its most pressing development challenges: creating 20 million new jobs over the next decade. And the trade agenda will be a centerpiece of any strategy that seeks to address this challenge.
Join me for a Facebook Q/A chat on January 28 to discuss this and other findings from the recently released report Toward New Sources of Competitiveness in Bangladesh co-authored with Mariem Mezghenni Malouche.
Below are some 4 highlights from the report, which we will be discussing. I look forward to your questions and a vibrant discussion!
- Bangladesh will need to expand its linkages with neighboring countries such as China and India as well as other Asian countries like Japan and South Korea. Not only are these very large markets, they are also potential sources of greater foreign direct investment. What are the critical steps that will allow this to happen? How can the recently signed Motor Vehicles Agreement between Bangladesh, Bhutan, India and Nepal help? What are the barriers to Bangladesh’s venturing into new markets?
- Bangladesh will need to gradually diversify its export base into new product areas while also strengthening its position as the second-largest garment producer in the world (after China). Our report explores the critical challenges that could allow this to happen. In your view, what challenges lie ahead if Bangladesh tries to diversify its exports? Can you name some prospective industries (for diversification)? What will be the role of foreign direct investment in this diversification? What kind of reforms are needed to attract more domestic as well as foreign direct investment?
Digital technology dominates our everyday lives, and with each passing day, even more so. How can the global community benefit from the new digital era?
The World Bank’s World Development Report 2016 (WDR 2016) provides a useful framework and guidance for harnessing the potential of the internet for development. “To get the most out of the digital revolution, countries also need to work on regulations, skills and institutions—by strengthening regulations that ensure competition among businesses, by adapting workers’ skills to the demands of the new economy, and by ensuring that institutions are accountable,” says the Report. This may sound familiar, but it is not. Let me explain.
The successful conclusion of the Trans-Pacific Partnership (TPP) negotiations has generated a lot of interest. While much of the discussion has focused on what the mega-regional trade agreement – the largest in a generation – means for environmental or labor standards, equally important are the regulatory standards on agricultural and food products known as Sanitary and Phytosanitary (SPS) measures, which are addressed in Chapter 7 of the agreement.
But how much do SPS standards really matter for trade?
Countries impose food safety standards for good reason, namely to protect the health of domestic consumers. However, domestic food safety standards often deviate from international ones. From an exporter’s point of view, such standards are likely to be seen as barriers to entry. Producers must modify production processes in order to meet each individual market’s product regulations, which raises the cost of the product for consumers. Economists and policy-makers are hungry for micro-level evidence on the effects of such standards on trade.
New World Bank Group research (Fernandes, Ferro, Wilson 2015) offers a first look at how a specific set of mandatory product standards—in this case, the maximum pesticide residue permitted on unprocessed food—impacts exporters. Novel firm-level data for exporters from 42 developing countries from 2006-2012 were analyzed along with data on pesticide standards for 243 agricultural and food products in 63 importing countries. We found that pesticide standards differ greatly across countries.
The World Bank Group has often argued that delivering outcomes in WTO negotiations around the core issues of the Doha Round is critically important for developing countries. Let’s take one example: with three-quarters of the world’s extreme poor living in rural areas, fulfilling the Doha Round mandate on agriculture could make a real contribution to the Bank Group’s goal of ending extreme poverty by 2030.
But recent news reports on global trade talks suggest that WTO Members are finding it hard to develop a shared vision on key issues and are unlikely to deliver significant progress at the upcoming WTO Ministerial Conference in Nairobi from December 15-18. Efforts are being made to produce outcomes on important issues like export competition in agriculture but large gaps remain only one week before the Ministerial Conference.
This continued impasse on the Doha Round is indeed a significant missed opportunity, but should this be cause for despair about the future of global trade governance? We don’t think so. There have been developments in the global trade agenda that are worthy of our attention, which should provide some hope in the lead-up to the Nairobi conference that with political will, it is possible to move forward. Here are five of these developments: