Background and Overview

ASEAN-UNDP’s long-standing relations began almost from the inception of ASEAN in 1967. However, it was in the early 1970s that the relationship assumed a more tangible form, when UNDP sponsored an in depth study lasting two years and involving 41 international experts to assist ASEAN with its first economic cooperation initiatives. This effort resulted in the Kansu Report (1972), which provided the basis for ASEAN’s subsequent cooperation in industrial development, agriculture and forestry, transport, finance, monetary and insurance services.

In 1977, UNDP was officially designated an ASEAN Dialogue Partner, the only multilateral aid organisation to be accorded this status. ASEAN-UNDP ties were further strengthened with the launching of the ASEAN-UNDP Sub-regional Programme in 1977 that aimed to better assist ASEAN with its regional cooperation and integration efforts. In the subsequent quarter century, UNDP has continually provided assistance to ASEAN through its initial attempts at regional economic cooperation, with the move towards ‘open regionalism’ built around the ASEAN Free Trade Area agreement; in adjusting to and mitigating the negative effects of the severe financial crisis starting in1997. UNDP has also provided significant support to the institutional development of the ASEAN Secretariat. Efforts are now underway to strengthen the effectiveness of UNDP ASEAN cooperation in facing new challenges to the region.

From the beginning, the ASEAN-UNDP sub-regional programmes (ASPs) provided the basis for the dialogue relationship between ASEAN and UNDP. The mechanism for dialogue was structured along the UNDP framework for regional/inter-country programmes, which generally operate on five- year cycles.

Early Efforts at Regional Economic Cooperation

UNDP’s financial commitment to the ASEAN Sub-Regional programmes grew rapidly from $700,000 in the second cycle (1977-81), to $3 million in the third cycle (1982-86), to peak at $12.7 million for the fourth cycle. UNDP technical assistance was instrumental in promoting regional cooperation in a wide range of areas: trade, industry, agriculture, environment, women in development, institution-building, scientific and technological programmes, educational and cultural exchanges, finance and banking and transport and communications.

Through these early cycles of rapidly expanding UNDP support for ASEAN, the UNDP country office in Thailand was given responsibility for coordinating assistance to ASEAN and the majority of the funds were funnelled to projects executed by other UN organizations, the most important of which were UNCTAD, UNIDO, WHO, ILO, IMO, UNESCO and ESCAP.

UNDP’s technical assistance also provided the basis for ASEAN’s early industrial development initiatives, such as the ASEAN Preferential Trading Agreement (PTA) , the Basic Agreement on Industrial Projects and the Basic Agreement on ASEAN Industrial Joint Ventures. This arrangement covered only about 5% of regional trade by the end of the 1980’s. However, the efforts at regional economic cooperation provided a foundation for ASEAN’s initiatives towards an outward looking and more open regionalism in the subsequent years.

Strengthening the ASEAN Institutional Structures

A major effort at “Strengthening of the ASEAN Secretariat” was undertaken by five eminent experts on the ASEAN region under UNDP funding in the 1990s. The study provided comprehensive recommendations on how the role and effectiveness of the ASEAN Secretariat could be enhanced to enable it to better serve the many emerging needs of ASEAN. The basis for many aspects of the ASEAN Secretariat’s operational structure can be attributed to this study.

The mechanism for the ASEAN-UNDP dialogue was significantly reinforced, allowing for closer, more direct and coordinated contact between the two Dialogue Partners. The ASEAN-UNDP Conference on the Technical Cooperation Programme Review in November 1990 in Lake Toba, Sumatra, saw this revitalised dialogue mechanism start to work. The conference deliberated and agreed on ASEAN’s emerging needs for the 1990s and how best to address them within the context of the ASEAN-UNDP cooperation framework.

ASP 5: Economic Cooperation and Outward Looking Regionalism

Since 1992, the ASEAN Secretariat has been the executing agency for the UNDP’s ASEAN Sub-regional programmes, under the UNDP’s Regional Bureau for Asia and the Pacific with assistance from the UNDP country office in Jakarta, Indonesia.. The ASEAN-UNDP Sub-regional Programme for the Fifth Cycle (1992-1996) was the first attempt to develop a thematic and programmatic framework for UNDP technical cooperation with ASEAN. The ASP-5 provided technical assistance in five sub-programme areas i.e. Trade and Investment Liberalization; Institutional Capacity Building; Human Resource Development; Trade and Environment; and Science and Technology.

ASP 5 – Program Components by Funding Level

program components

In the early 1990’s, there was a major effort to revitalize ASEAN regionalism in a process intended to support a broader opening of these economies with respect to the global economy. The objective was to strengthen the region’s position as an export platform well integrated with the world economy, to strengthen its position vis a vis other developing countries in the competition for foreign direct investment and to prevent the region being left out in a widespread move towards regional preferential trading arrangements in many other parts of the world. A proposed ASEAN Free Trade Area (AFTA) became the focal point of economic cooperation within the ASEAN region.

ASP 5 supported ASEAN as the region took dramatic steps towards ‘open regionalism’, i.e. using the regional integration process to develop a more competitive and open regional economy. Almost half of a funding level of $5.8 million was allocated to: supporting ASEAN’s regional trade liberalization under the ASEAN Free Trade Agreement (AFTA); efficiently implementing the Common Effective Preferential Tariff System (CEPT); beginning the process of identifying and working to moderate non-tariff barriers to regional trade; supporting the development of a region wide ASEAN Investment Area (AIA); and helping to establish an ASEANWEB with a rapidly expanding coverage of numerous areas of ASEAN cooperation.

The capacity building component further strengthened the Secretariat’s capabilities to both execute the UNDP ASP, but also the rapidly growing number of activities funded by other dialogue partners. Assistance was provided for preparing manuals and processes for project development, management, performance appraisal, and financial reporting, as well as developing forward-looking plans on ASEAN cooperation including upgrading of the skills and knowledge of the ASEAN Secretariat’s professional and support staff.

The human development program helped formulate a “Three-Year Plan of Action on Drug Abuse Control”. The implementation of the plan assisted ASEAN Member countries in reducing the threat of drug abuse and trafficking, as well as enhancing the security, social and economic well-being of its people. This component also helped establish the ASEAN University Network in line with the decision made by the Fourth Summit in Singapore, which directed that “ASEAN should help hasten the development of a regional identity and solidarity, and promote human resources development by considering ways to further strengthen the existing network of leading universities and institutions of higher learning in the ASEAN region.

The heavy weight given to the ASEAN Free Trade Area (AFTA) and related ASEAN Investment Area (AIA) in the ASP 5 program was in line with the main thrust of ASEAN regional integration efforts. These efforts in regional cooperation to plan, agree on and to begin implementing a key element of a consistent policy environment for trade and investment across the whole region put ASEAN economic cooperation on a completely different level. Much of the work in this core area of ‘regional integration’ was carried out by the ASEAN secretariat under funding by UNDP.

UNDP ASEAN Consultation and Dialogue

Two ASEAN-UNDP events held in October 1996 in Kuala Lumpur were additional testimonies to the much strengthened dialogue mechanism between the two entities. The first meeting of the Joint Management Committee (JMC) took place, attended by the ASEAN Directors-General, the ASEAN Secretariat and UNDP. This achieved a prompt and effective resolution of all outstanding implementation issues of the ASEAN Sub-regional Programme for the Fifth Cycle (ASP-5). The First Meeting of the ASEAN-UNDP Dialogue also took place, co-chaired by the Secretary-General of ASEAN and the UN Assistant Secretary General and Director of the Regional Bureau for Asia and the Pacific. As the first formal dialogue session between the two Dialogue Partners, this meeting was historically significant: it gave both parties the opportunity to cordially exchange their views outside the framework of the sub-regional programmes. Respective goals and priorities, current issues and possible areas for future collaboration were among the issues discussed.

ASP 6: Responding to the Asian Financial Crisis

ASP 6 was originally seen as a continuation of ASP 5, with similar levels of funding and, based on program formulation work funded by UNDP, with a similar balance of priorities. However, the East Asian Financial Crisis that began in August 1997 greatly altered these plans. UNDP funding was scaled back as some UNDP resources were reallocated to other sub regional and national programs responding to the aftermath of the crisis. ASP 6 was reformulated as a ‘fast track’ response to the financial crisis and to the impact of the crisis on low income and vulnerable groups, although smaller sub components dealt with trade and investment issues and institutional development issues.

ASP 6: Program Components by Funding Level

program components 1

One of the sub-components in the financial sector work aimed at developing a Surveillance System within the Secretariat capable of providing early warning of problems in the financial systems within the region and to produce an ‘Economic Outlook’ paper to keep ASEAN policy makers up to date with economic, financial and investment developments. Another sub-component surveyed developments in financial sector reform programs in the more developed ASEAN 6 economies with an eye to lessons that might be useful for the new CMLV member states (Cambodia, Myanmar, Laos and Vietnam. Other sub-components explored the scope for using ASEAN currency payments mechanisms, developing an ASEAN bond market within the region, and developing a regional swap facility to reduce the vulnerability of the region to international financial crisis. The work on the regional swap facility expanded to include cooperation with other Asian countries (China, Japan and the Republic of Korea), an early step in the development of an ASEAN + 3 cooperation framework.

Given the severity of the financial crisis and the negative impact on lower income groups, another component was directed towards increasing the capacity to monitor the economic well being of low income groups and developing social safety nets to mitigate the impact of economic crises on these groups. Given the many country specific factors that need to be taken into account in the design of social safety nets, and the very significant difference in these factors amongst the ASEAN member states, the design and implementation of such programs is best be carried out at the national level. However, the ASEAN programme was used to highlight the issue and to exchange experiences within the region on this important issue. In addition, ASEAN’s efforts maintain a momentum towards ‘outward looking’ regional integration and to re-establish high rates of growth provided hope for improved living conditions throughout the region.

The trade component was originally designed to address the sharp drop off in exports that occurred during the early stages of the financial crisis as the credit system in many countries contracted sharply. However, exports recovered rapidly with the strong incentives provided by sharply depreciated currencies in the region. Much of the focus of the work shifted to identify reforms in the policy environment needed to regain dynamic growth and competitiveness in the region. The work on trade also considered the implications of WTO accession by China for the regional economies, and the increased competition and opportunities that are likely to result from the deeper integration of China into the global economy. Work was also carried out comparing investment incentives within the region to related policies in other countries competing for private foreign investment with the region, Steps were also taken towards making the ASEAN region as a whole into a successful attraction for tourists with the development of tourist promotions geared to the whole region.

The institutional development component was used to carry out a review of the role and function of the ASEAN secretariat, a review that found that the Secretariat was fulfilling its major mandate of supporting the consultative processes and servicing the ASEAN structures with reasonable efficiency.

ASEAN-UNDP Consultation and Dialogue

A meeting between the ASC Chairman and the UNDP Administrator, held on 20 September 2000 in New York, recognized the need for more intensive consultations between the two sides to enhance cooperation. Thus, a brain storming session between ASEAN Directors-General and UNDP Representatives in ASEAN countries was convened for this purpose on 11 October 2000 in Ha Noi. The brainstorming session provided useful insights to strengthen future ASEAN-UNDP collaboration.

On 21 March 2002, the Second ASEAN-UNDP Joint Management Committee and ASEAN – UNDP Dialogue meetings took place. ASEAN and UNDP took stock of previous and present collaboration and exchanged views on future cooperation. On the basis of a comprehensive review of the last two cycles of the ASEAN Sub-Regional Programmes, it was concluded that UNDP support to ASEAN has been most effective when programmes:

· are focused on the ASEAN agenda of developing a well-integrated and peaceful region that is ‘outward-looking’ and that supports a successful integration of the regional economy into the world economy;

· respond to an agenda set out by the ASEAN member states through their consultative processes;

· are designed with a good understanding of the capabilities and the limitations of the ASEAN Secretariat and related ASEAN institutional structures;

· deal with issues that are best tackled at the regional level where regional agreements have been entered into or where there are good prospects for such agreements.

In reviewing the areas of focus of the last two programme cycles, it was agreed that ASEAN had successfully advanced open regionalism, especially as a result of ASP-5. Reflecting on the achievements of UNDP ASEAN cooperation over the 1990’s, the consensus was that UNDP should build on such efforts during the next phase of UNDP support.

Current ASEAN – UNDP Partnership

At the second ASEAN-UNDP Joint Management Committee and Dialogue meetings, it was agreed that a facility would be established for the next phase of ASEAN-UNDP cooperation to support ASEAN in the identification, analysis, and dialogue on policy issues relating to regional economic integration. It was further agreed that special attention would be given to management of the integration process, particularly in CLMV countries with a view to minimizing the short-term adjustment costs.

The US$1.45 million ASEAN-UNDP Partnership Facility (AUPF) project was accordingly designed to provide analytical and advisory support services to ASEAN for deepening and broadening regional economic integration in a way that leads to reduction in poverty and socio-economic disparities, and to narrowing of the development gap within and across ASEAN Member Countries.

The three-year project was launched with the signing of the project document in July 2003 by the Secretary-General of ASEAN and the UNDP Administrator on the occasion of the Post Ministerial Conferences in Phnom Penh, Cambodia. A senior UNDP Adviser was contracted to provide in-house advisory support services to the ASEAN Secretariat in managing the Facility and in dealing with policy issues relating to economic integration and formation of the ASEAN Community.

As of 31 December 2004, AUPF funds had been fully earmarked for a number of sub-projects that are on-going or in the pipeline. They include: (a) preparation of an ASEAN Benchmark Report to establish the baseline situation against which progress towards realizing the ASEAN Community is to be measured, monitored and reported; (b) support to implementation of roadmaps for accelerated integration in 11 priority sectors; (c) analysis of labour and employment impact of economic integration and (d) regional cooperation in formulation of economic integration strategy to assist CLMV countries in the management of the integration process .