Economic and Social Survey of Asia and the Pacific 2020 Towards - PowerPoint PPT Presentation

Economic and Social Survey of Asia and the Pacific 2020 Towards sustainable economies Policy Dialogue with the Economic Research Institute for ASEAN and East-Asia Zheng Jian Macroeconomic Policy and Financing for Development Division 10 June 2020

Key messages The transformation towards an inclusive and sustainable economy is a primary development challenge for the Asia-Pacific region. Paradigm shifts in our consumption and production patterns would be central for achieving this objective. Sustainable consumption and production would require collective efforts of all stakeholders on four action fronts: - National action: government - Corporate action: businesses - People action: consumers & individuals - Global action: cross-border cooperation The COVID-19 crisis brings immense challenges for inclusive and sustainable development, but we can also turn it into a valuable opportunity

Time to deviate from the GDP growth-centric development approach and put PEOPLE and PLANET first

The growth-centric approach did create valuable economic opportunities for the poor, but hasn’t brought them fully on board Economic growth and its social impact in Asia and the Pacific 250 -50 GDP per capita Poverty headcount 200 0 (LHS) ($1.90 per day) Index, 2000 = 100 Index, 2000 = 100 (RHS) 150 50 100 100 Poverty headcount Poverty headcount ($3.20 per day) 50 150 ($5.50 per day) (RHS) (RHS) 0 200 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source : ESCAP data portal (accessed on 4 December 2019); ESCAP calculation based on World Bank, PovcalNet, available at http://iresearch.worldbank.org/PovcalNet/home.aspx (accessed on 13 February 2020); IMF, World Economic Outlook database, October 2019 (accessed on 4 December 2019); Global Carbon Atlas, available at www.globalcarbonatlas.org/en/CO2-emissions (accessed on 13 February 2020). Note : LHS = left-handed side axis; RHS = right-handed side axis.

The distribution of income has become more unequal Share of income (pre-tax national income) by income groups in Asia 100% Top 1% 90% 80% Top 10% 70% Next 9% 60% 50% 40% Middle 40% 30% 20% 10% Bottom 50% 0% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source : WID (accessed 3 October 2019)

The top 1% is now gaining more than the bottom 50% Share of income (pre-tax national income) by income groups in Asia 20% 18% 16% 14% Income groups 12% 10% Bottom 50% 8% Top 1% 6% 4% 2% 0% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source : WID (accessed 3 October 2019)

The sustainability of our environment (thus also our economy) is even a greater challenge Source : ESCAP (2020). Asia and the Pacific SDG Progress Report 2020 .

Natural resource use and carbon emissions have more than doubled since 2000, and will continue to rise albeit at slower pace Domestic material consumption and CO2 emissions in Asia-Pacific region 180 240 170 220 160 200 Index, 2000 = 100 Index, 2020 = 100 150 180 140 160 130 140 120 120 110 100 100 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2030 2040 2050 2060 Source : ESCAP, based on methodology in UNEP International Resource Panel’s Global Resource Outlook 2019 . DMC CO2 emissions Source : ESCAP data portal (accessed on 4 December 2019); ESCAP calculation based on World Bank, PovcalNet, available at http://iresearch.worldbank.org/PovcalNet/home.aspx (accessed on 13 February 2020); IMF, World Economic Outlook database, October 2019 (accessed on 4 December 2019); Global Carbon Atlas, available at www.globalcarbonatlas.org/en/CO2-emissions (accessed on 13 February 2020).

Source : ESCAP, based on UNDP Human Development Data and Global Footprint Network (accessed on 29 February 2020)

We need to systematically revisit the prevailing consumption and production patterns …and achieve the transition towards a sustainable economy! Consumption Production

Progress in SDG12 would be central to our overall progress on the whole Sustainable Development Agenda 15.1 Use of ecosystems 2.3 Double agricultural productivity and 15.3 Restoration of degraded land incomes of small-scale food producers 15.9 Ecosystems and biodiversity in 2.4 Ensure sustainable food production planning systems and resilient agricultural practices 14.2 Sustainably 4.7 Education for manage and protect sustainable development marine and coastal and sustainable lifestyles ecosystems 13.2 Integrate climate 6.3 Water quality change measures into 6.4 Water-use efficiency national policies, strategies and planning 11.6 Environmental impact of 7.2 Energy efficiency cities 7.3 Renewable energy 11.B Resource efficiency for disaster risk management 9.4 Upgrade infrastructure and retrofit industries 8.4 Global resource efficiency for sustained 9. A Sustainable and resilient infrastructure in economic growth. developing countries Source : One Planet Network, 2019.

The transition towards sustainable consumption and production is NO EASY TASK and requires collective actions of ALL STAKEHOLDERS

…requires collective actions of ALL STAKEHOLDERS Corporate National action action GOVERNMENTS Businesses Global People action action Cross-border Consumers cooperation

Governments should embed National sustainability in policymaking and action decarbonize their economies ❑ Remove fossil-fuel subsidies 500 Billion United States dollars Indonesia and Malaysia respectively 400 spend 1.7% and 0.5% of GDP on fossil fuel subsidies 300 $434 billion 200 $240 billion $150 100 billion 0 Fossil fuel subsidies Investment in renewable Average annual investment (in 2018) (in 2018) needed to achieve affordable and clean energy Source : ESCAP (2020 and 2019), IMF (2019) Note: Fossil-fuel subsidies or only post-tax. All pre-tax subsidies according to the definition of the IWF have been discontinued.

Governments should embed National sustainability in policymaking and action decarbonize their economies ❑ Remove fossil-fuel subsidies ❑ Adopt carbon pricing 4 Reductions in carbon emissions Carbon tax revenue 60 below business as usual in 2030 3.5 50 3 40 Percentage reduction 2.5 Percentage of GDP in 2030 2 30 1.5 20 1 10 0.5 0 0 Based on $35 per ton Additional amount based on $70 per ton Based on $35 per ton Additional amount based on $70 per ton Source : ESCAP, based on IMF (2019g)

Examples of decarbonisation efforts in ASEAN • • Energy subsidies reform: reducing subsidies from 3.3 Introduced carbon tax of $5/tCO2e from 2019 to 2023 • percent of GDP on average from 2012-2014, to an Plans to review carbon tax rate and increase it to average of 0.9 percent of GDP from 2015-2018 between $10 and $15/tCO2e by 2030. • A direct carbon tax has not been implemented in • Considering to implement a National Emissions the Philippines yet and plans for doing so have Trading System (ETS) been discontinued • Pilot project: Voluntary Emissions Trading Scheme • 2017 tax reform: Introduction of excise taxes on (Thailand V-ETS) carbon intensive products (petroleum, cars, coal)

Governments should embed National sustainability in policymaking and action decarbonize their economies ❑ Remove fossil-fuel subsidies ❑ Adopt carbon pricing The Bank of Indonesia is a member of NGFS. ❑ Green the financial systems Financial Incentives Regulatory Incentives • Specific lending terms for • Supporting sustainability green projects reporting, disclosure and • Credit enhancements and transition through TCFD government guarantees and NGFS • Tax breaks

• Stock Exchange • Securities Commission • Financial Services Sustainability- BSP announced its of Thailand(SET)​ related sustainable finance Malaysia(SC) Authority of Indonesia - 2010: Sustainable framework, circular - 2014: Sustainable and - 2017: Issuance of specific guidelines reporting guidelines​ #1085 on April 29, Responsible Investment regulation on sustainable finance – POJK 60 and - 2012: Principles of Sukuk Framework 20 Good Governance​ • Bursa Malaysia Securities guidelines on green bonds, - 2017: Corporate sustainable banking and Berhad Governance Code​ blended finance schemes - 2015: Sustainability • Thai Bankers’ Reporting Guide Association(TBA) and • Bank Negara Malaysia Bank of (BNM)​ Thailand(BOT)​ - 2019: Value-based - 2019: Sustainable Intermediation Financing Banking Guidelines- and Investment Impact Responsible Lending​ Assessment Framework for Islamic banking​

Partnership with IFC​ • TBA and IFC on SBN • Bangko Sentral ng • OJK and IFC partner (since 2012)​ Pilipinas and IFC on via the SBN (since • MOU between IFC and SBN (since 2013)​ 2012). Important • Department of BOT to accelerate project: sustainable financing in Environment -Sustainable Finance Thailand (2019)​ and Natural Resources Case Study of the Philippines (DEPN) on SBN (since 2013)​ Capacity building and knowledge- sharing platforms