World Bank sees a great promise in NDA government’s three pronged development agenda. It feels that Prime Minister Narendra Modi led government’s strategy of promoting fast and durable economic growth; involving states as active development partners; and improving the delivery of social benefits and extending social safety to the elderly and the underprivileged, will accelerate inclusive and sustainable growth but reforms have to be stepped up.
World Bank report, India Development Update, April 2015, said that the Indian government has already started implementing reforms to improve the business environment; liberalize FDI; boost both public and private investment in infrastructure; quickly resolve corporate disputes; simplify taxation, and lower corporate taxes. The states are going to receive more resources and power while the implementation of GST will improve tax to GDP ratio.
The report said that the reforms of the government, coupled with favorable external environment like reduced oil prices, have led to growth acceleration, inflation decline and narrowing of current account deficit. However, it also cautioned about the negative impact that oil price rise or tightening of US monetary policy can have on the country.
The bank also said that new investments to the country are still dented due to the debt overhang in the corporate balance sheets, which has extended to the Public Sector Banks (PSB). Promotion of private investment to bridge the infrastructural deficit was also required.
The report offered some solutions too, like the need to increase manufacturing competitiveness significantly to carve a space among the world’s large exporters. It also talked of the need for infrastructural boost to bring India at par with the world’s manufacturing hubs, in addition to the competitive supply of labor, land, finance, and skills, as well as a friendly business environment.
The World Bank report also emphasized on the role of MGNREGS in the process of development in India.
Thailand’s poverty rate has been rising in recent years despite steady, if slow, overall economic growth, a new World Bank report says, widening the gap between rich and poor in Southeast Asia’s second-largest economy.
“Taking the Pulse of Poverty and Inequality in Thailand,” launched last week, says the country’s poverty rate jumped from 7.2% to 9.8% between 2015 and 2018, adding nearly 2 million new people to the ranks of the poor. Inequality, as measured by household consumption, also spiked in 2016 for the first time in four years and has eased little since.
Analysts see a direct link between those figures and the results of last year’s general elections, Thailand’s first since a 2014 military coup led by then-General Prayut Chan-ocha, now the country’s prime minister.
Pheu Thai, a party tied to former Prime Minister Thaksin Shinawatra, won the second most votes and the largest share of seats in the popularly elected House of Representatives, the lower house of the National Assembly, with strong support from some of the country’s poorest provinces in the North and Northeast.
A junta-appointed Senate and Election Commission finally tipped the contest to form a majority government in Prayut’s favor, but the numbers echoed the lasting disaffection of the country’s poor.
“Plummeting incomes were clearly a major factor in the opposition’s strong showing in the 2019 general election. That is why Pheu Thai did so well — especially given that rural farmers and also urban households continue to be attracted by the populism of Thaksin,” said Paul Chambers, a political analyst and lecturer at Thailand’s Naresuan University.
Thaksin was first elected prime minister in 2001, after the shock of the Asian financial crisis of the late 1990s, and reelected four years later only to be kicked out of office by a military coup in 2006. The telecoms tycoon now lives abroad, avoiding a 2008 corruption conviction that he disputes. However, the subsidies, cash transfers and other populist policies he pushed have left him and his proxies with a loyal following among the farmers of Thailand’s rural North and Northeast, who feel left behind by an urban elite cloistered mostly in the capital, Bangkok.
“That is partly why Thaksin was able to rise in the early 2000s, because of grievances over this disproportionate allocation of resources,” said Harrison Cheng, an associate director with consulting firm Control Risks who follows Thailand.
He said the concentration of wealth and power in Bangkok has continued under Prayut.
The World Bank report backs him up. It shows poverty hovering steadily at about 2% between 2015 and 2018 in Bangkok while rising everywhere else, nowhere more so than in the strife-torn South. Riven by a Muslim insurgency, the South became the country’s poorest region in 2017, only just edging out the Northeast with a poverty rate of about 12%. The South again topped the Northeast in 2018 with a poverty rate just over 14%.
The report ascribes the latest rises in poverty and inequality to droughts, slow economic growth and falling incomes among both rural farmers and urban businesses.
The bank says Thailand has now seen four such spikes since 2000, more than any of the other nine Association of Southeast Asian Nations countries.
The report’s author, Judy Yang, attributes that, at least in part, to slow wage growth during the period, slower than in any of the bloc’s other large economies.
“If you are a household, what really pulls you out of poverty is getting a better-paying job, getting more income, getting labor market income,” she said.
What also sets Thailand apart is its political turmoil. The coup-prone country has seen four swings between military and civilian rule since 2006, governments cut short by controversial court orders and several rounds of mass protests, some of them deadly.
The World Bank said many of Thailand’s poverty spikes coincided with regional or global financial crises or with drought but added that periods of political instability also tend to depress consumption and investment, which can drive incomes down and poverty rates up.
Cheng, of Control Risks, said his conversations with clients confirm that Thailand’s volatile politics have kept many potential investors at bay, holding the economy back.
“A lot of the investors are staying away and taking a wait-and-see approach for a long, long time now,” he said.
“If they are not in Thailand already, they will be thinking very seriously about whether they should do so because what if there’s a change in government again? What if there are massive street protests like in 2013, 2014? Are you going to repeat the 2010 Bangkok standoff between the Red Shirts and the military?” he added, referring to Thaksin supporters by their color-coded apparel of choice.
Cheng said the constant and sudden turnover in governments has also fostered a habit of short-term policy prescriptions on poverty and inequality that have done more to soothe the symptoms than cure the causes.
Chambers and Cheng agreed that if the latest bout of bad numbers gets worse, Prayut’s problems will also be increased by swelling ranks of not just the poor but also of disenchanted voters.
The World Bank report proffers poverty and inequality figures only up to 2018 but adds that “trends beyond this year are not optimistic, given continued low economic growth rates and stagnant wages.”
Another severe drought devastated farmers last year as the country’s gross domestic product growth rank sank to 2.4%, its lowest since 2014. GDP forecasts for 2020 are even worse, owing much to the novel corona virus outbreak, which has hit the country’s important tourism sector hard.
To counter those blows, Prayut’s government has ramped up and introduced new social welfare programs for the poorest households and last week approved a stimulus package expected to pump some $12.6 billion into the economy.
The World Bank recommends that authorities continue to strengthen the country’s safety net and create better jobs for low-income earners in the short term. In the longer term, it says giving all children equal access to health and education opportunities would be the best way to make future generations more prosperous and more equal. (VOA)
A division of the World Bank has just made its first so-called “green loan” to a bank in Vietnam, meant for businesses to help with environmental problems in a nation that has one of the world’s highest emissions rates relative to its economy. Vietnam has a fast growing economy but also has a fast growing pollution problem.
The loan package of $212.5 million to VPBank was announced this month under the Green Loan Principles, a voluntary set of international guidelines to make loans for eco-friendly projects, such as to promote solar power or biodiversity.
In explaining why it packaged the loan, the World Bank’s International Finance Corporation (IFC) said that Vietnam is the most “carbon intensive” nation in the Asia Pacific region, after China and Mongolia. Carbon intensity measures how much carbon dioxide a nation emits for every dollar of gross domestic product (GDP) it generates. In other words Vietnam’s economy costs a lot of greenhouse gas, and the IFC hopes loans like this one can help reduce the pollutants.
This meets a “strategic objective of increasing financing for climate-smart initiatives to boost environmentally sustainable development in emerging markets with high potential of greenhouse gas emissions reduction such as Vietnam,” Rosy Khanna, the IFC financial institutions group director for Asia Pacific, said.
She said there is “high interest” among investors to provide a “source of capital while helping the country tackle climate change at the same time.”
Climate problems mean Vietnam has a business opportunity that the IFC values at $753 billion for investors looking to tackle them.
The Southeast Asian nation has one of the highest GDP growth rates in the world but that growth is causing worry about the potential impact on the environment. Vietnamese citizens are increasingly worried about everything from the plastic rubbish that is ending up in the ocean, to the toxic chemicals that could be polluting their food and water supply. Khanna said Vietnam has a lot of potential to reduce emissions, but the reason emissions are so high is that the nation is increasingly generating electricity through coal, the dirtiest source of energy.
VPBank, officially known as the Vietnam Prosperity Joint Stock Commercial Bank, said it would use the loan to invest in alternatives.“
This is also an opportunity to help VPBank make positive contributions to national objectives by providing financial solutions to the segment of corporate customers investing in eco-friendly projects, such as renewable energy, national energy security, energy efficiency, green buildings, green transport, [and] waste treatment,” the bank said in a press release.
The IFC has also collaborated with businesses to facilitate green finance in other developing nations such as Costa Rica, Egypt, India, Mexico, and Ukraine.
It said the loans in Vietnam would likely be used for green infrastructure, in addition to energy projects, particularly involving small or medium size businesses.
VPBank has committed to setting up a management system to ensure accountability for the green loan, allowing it to record and monitor the types of green projects the loan finances, as well as allowing for third party verification. (VOA)
The World Bank has approved a $310 million loan for Sri Lanka to reduce and mitigate the flood risks in parts of the capital and improve weather forecasting as well as early warning systems across the island country, the media reported on Thursday.
The World Bank said in a statement that the Climate Resilience Multi Phase Programmatic Approach project in the island was the first of a three-phase investment programme totalling $774 million which will be implemented over eight years.
Evidence suggests flood frequency will increase and nearly 87 per cent of Sri Lankans are living in areas which are likely to experience extreme temperatures and rainfall that will impact their lives, the statement cited by Xinhua news agency said.
“This comprehensive climate resilience programme will reduce losses to people’s livelihoods and public assets while reducing shocks on the economy,” said Idah Z. Pswarayi-Riddihough, World Bank County Director for Nepal, Sri Lanka and Maldives.
“Compelling evidence has informed this long-term programme which will help the government build socially responsive infrastructure and communication systems to protect lives and assets,” she added.
The programme aligns with the government’s plans to ensure fiscal and physical resilience and reduce the vulnerability of Sri Lanka’s economy in the aftermath of the 2016 and 2017 floods.