Asia-Europe Meeting (ASEM)Financial Crisis Response Trust Fund 2

(ASEM TF2)

Implementation Completion ReportAugust 2007

ACRONYMS ASEM Asia-Europe Meeting DOF Department of Finance EC European Commission EU European Union GDP Gross Domestic Product GSIS Government Service Insurance System ICR Implementation Completion Report ICSC In-Country Steering Committee IMF International Monetary Fund MOET Ministry of Education and Training MOF Ministry of Finance NBFIs Non-Bank Financial Institutions SBV State Bank of Vietnam SCORES State Council Office for Reform of the Economic System (China) SOCB State-Owned Commercial Bank SOE State-Owned Enterprises SSN Social Safety Net SSS Social Security System TF Trust Fund TF1 Trust Fund Phase 1 TF2 Trust Fund Phase 2

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Table of Contents

EXECUTIVE SUMMARY .......................................................................................................... 4

INTRODUCTION......................................................................................................................... 7

PERFORMANCE REVIEW ....................................................................................................... 7

Overall Sources and Uses of Funds ............................................................................................. 7

Outcomes of ASEM TF2 Operations .......................................................................................... 9

China ......................................................................................................................................... 15 Indonesia ................................................................................................................................... 18 Indonesia ................................................................................................................................... 19 Philippines................................................................................................................................. 23 Thailand .................................................................................................................................... 28 Vietnam..................................................................................................................................... 32 Regional .................................................................................................................................... 37

CLOSING EVENT ..................................................................................................................... 39

OVERALL FINDINGS AND RECOMMENDATIONS......................................................... 42

Tables

Table 1: Contributions to ASEM Trust Funds 2 (in millions) ....................................................... 8 Table 2: Disbursement Rates by Country .................................................................................... 13 Table 3: China Summary of Grant Performance ......................................................................... 15 Table 4: Indonesia Summary of Grant Performance ................................................................... 19 Table 5: Philippines Summary of Grant Performance................................................................. 24 Table 6: Thailand Summary of Grant Performance..................................................................... 30 Table 7: Vietnam Summary of Grant Performance ..................................................................... 35 Table 8: Regional Summary of Grant Performance .................................................................... 37

Figures

Figure 1: Allocation of ASEM TF2 Funds by Country ................................................................. 8 Figure 2: Allocation of Funds by Use............................................................................................ 9 Figure 3: Sectoral Distribution by Country ................................................................................... 9 Figure 4: Distribution of Grants by Achievement of Development Objectives .......................... 10 Figure 5: Distribution of Grants by Risk to Development Outcomes ......................................... 10 Figure 6: Disbursement Rates by Country................................................................................... 14

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Boxes

Box 1: Key Lessons Learned Box 2: China - Support for Financial Sector Reform Box 3: China - Public Service Unit Reform Box 4: China - Support for Enterprise Restructuring, Transformation and Governance Box 5: Indonesia - Improving Fiscal Policy Analysis Box 6: Indonesia - Developing a Diversified Financial Sector Box 7: Indonesia - Building Debt Management Capacity Box 8: Philippines - Strengthening Capacity for Bank Supervision Box 9: Philippines - Pension Reform Box 10: Thailand - Out of Court Mediation Capacity Building Project Box 11: Thailand - Financial Sector Assistance - Strategy and Implementation for a Competitive Financial Sector Box 12: Thailand - Education Reform Box 13: Vietnam - Support for the Operation and Monitoring of the Social Safety Net for Redundant Workers Box 14: Vietnam - Enhancing Poverty Reduction in the Education Budget Processes Box 15: Vietnam - Support for Banking Sector Reforms Box 16: Regional - Promoting Dialogue and Sharing on Regional Integration Issues Box 17: Regional - Poverty Mapping

Annexes 1. ASEM TF2 Standard Provisions 2. Summary Findings of Independent Evaluation Report funded by the European Commission 3. ASEM TF2 List of Grants

This report was prepared by Lloyd McKay (consultant) and Kunthary de Gaiffier under the supervision of Sajjad Ali Shah and with invaluable contributions from Winda D. Kosasih. Inputs from Trust Fund Coordinators in World Bank Field Offices - Louisa Huang (China), Taufikurrahman (Indonesia), Yolanda Azarcon, (the Philippines), Kanitta Kaikittipoom (Thailand) and Nga Thi Quynh Dang (Vietnam) - officials from many implementing agencies in recipient countries, and World Bank Task Team Leaders is acknowledged with thanks.

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Executive Summary

1. The Asia-Europe Meeting (ASEM) Financial Crisis Response Trust Fund 2 (ASEM TF2) has made major contributions in five Asian countries (China, Indonesia, the Philippines, Thailand and Vietnam) towards the attainment of two objectives -- sustainable reform of financial and corporate sector policies and institutions, and more effective poverty reduction efforts. The majority (some 75 percent) of the 71 grants financed from ASEM TF2 achieved their development objectives. The achievements include enhanced capacity for poverty analysis, substantial financial sector reforms in all countries, progress with enterprise transformation in China and Vietnam, public sector capacity improvements, such as fiscal policy in Indonesia, more effective social service delivery, such as education and out-of-court mediation in Thailand. Moreover, the high level of local ownership of these initiatives, being closely aligned with national priorities, and the fact that substantial reforms have already been implemented provide reasons to be confident that a very high percentage of ASEM TF2 activities will be sustained. 2. ASEM TF2 grants were most successful in China and Vietnam, while a significant number of regional programs and grant initiatives in the Philippines and Indonesia struggled to fully achieve their development objectives. Little more than half of the ASEM TF2 grants in Indonesia fully achieved their development objectives. 3. This relatively modest outcome for Indonesia and the Philippines is in part due to complicated procedures within government. Furthermore, there was a lack of a strong central agency with authority, capacity and a clear responsibility for coordinating and facilitating grants to ensure that the ASEM activities achieved maximum benefit. In addition, implementers of grants in Indonesia at this time faced the added complication of new and unfamiliar budget allocation systems for all their responsibilities and competition for attention from natural disasters. Moreover, the push for recipient execution has tended to disadvantage those countries that have not managed to provide grant coordination and supervision with the necessary resources and authority to make the best possible use of the opportunity provided by grant assistance. 4. The fact that only two thirds of regional grants fully achieved their development objectives reflects the fact that regional grants are generally less well supported by core national authorities and hence more challenging. However, they have been instrumental in promoting the sharing of experiences, ideas and findings, especially when focused at the technical level. 5. Some countries have more fully capitalized on the opportunity provided by ASEM grant assistance by making them a higher priority than other countries did. This difference in achievement between countries is also reflected in the role of, and support for, the In-Country Steering Committee. In China and Vietnam this Committee met regularly and was strongly led by the Ministry of Finance. The In-Country Steering Committee was not only involved in the prioritization and design of grants, they also monitored implementation. In the Philippines and Indonesia, the officials given responsibility for the In-County Steering Committee (the Ministry of Finance and National Development Planning Agency respectively) seem to be already overloaded and were not provided with adequate additional resources.

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6. Though disbursements began slowly, they accelerated rapidly during 2005 and 2006 and reached 87 percent of all commitments by the end of 2006. This was due to: (a) the normal back-loading of contracting for consultant services that have been a large part of ASEM TF2 technical assistance; and (b) the preparation and implementation of action plans to identify and overcome problems with slowly implemented grant initiatives. 7. The experience of ASEM TF2 grants yields the following key findings:

• Local ownership and alignment with national priorities are important for sustained success;

• Achieving genuine partnership between key agencies within the country, providers of international expertise, donors, and World Bank staff is important for sustained success;

• In-Country Steering Committees (ICSC) could have contributed more in terms of monitoring of implementation of ASEM activities, but this depends on their being provided with adequate resources and authority. In countries that were unable to endow their committees with substantive resources and authority, the ICSC could have contributed more in every respect;

• More realism in planning and the timely arrival of funds from donors are needed to avoid frustrated expectations;

• Regional grants can be effective but are more challenging. Creative ways of securing local ownership are needed. And care is needed to ensure that these grants serve the needs of the relatively weak and small, and not focus too heavily on the needs of the large and relatively strong;

• Doing better with regard to visibility is possible and is important for both donor and recipient countries;

• There is much in-country demand for further grant funded technical assistance. 8. The five recommendations arising from this review are:

• Consideration should be given to providing more support for the implementation of policy and institutional reform efforts as well as the design of reforms. Recognition of the importance of implementation also suggests that consideration be given to rolling grants, or longer life “program” grants for key sectors, rather than “project” grants;

• The World Bank needs to continue providing assistance with training on procurement, financial management and grant implementation as this has been important and many grants are with new agencies or with government officials who are unfamiliar with trust fund procedures;

• World Bank execution should be continued as an option, and should be determined by the situation rather than by artificial limits;

• Recipient countries need to establish a grant coordination mechanism and provide it with substantial authority and resources in order to make the best possible use of

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grant assistance and they need to expedite the provision of counterpart resources to avoid implementation delays; and

• Donors should allow grant funds to be used to pay taxes when tax rates are modest, to help improve grant effectiveness.

Box 1: Key Lessons Learned

• Strong local ownership is closely linked with grant funded initiatives being well aligned with

national priorities. • Tough policy decisions can only be achieved through strong local ownership with genuine

capacity. • Realistically planned and relatively narrowly focused, simply designed grants, implemented by

a single agency, have more chance of success. • In cases where solutions to certain important and complex needs cannot be effectively handled

by a single implementing agency, every effort needs to be made to establish clear and transparent working relationships between the various agencies involved.

• Effective and genuine partnership between key agencies within the country, providers of

international expertise, donors, and World Bank staff is important for the success and sustainability of grant-funded initiatives.

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Introduction 1. The Second ASEM Trust Fund (ASEM TF2)1 has made a further important contribution to sustained poverty reducing development and economic risk management in five Asian countries – China, Indonesia, the Philippines, Thailand and Vietnam. It reflects a genuine partnership between EU member countries and Asian countries that has been effective in focusing on national priorities and increasing local capacities. 2. This Implementation Completion Report (ICR) reviews the achievements of ASEM TF2, notes general findings and provides recommendations to help make possible future such technical assistance even more effective. The objective of ASEM TF2 was, like ASEM TF1, to provide technical assistance and training to governments for sustainable reform of their financial and corporate sector policies and institutions, and to design and implement interventions to re-orient sustainable poverty reduction efforts to meet evolving country requirements. 3. The majority of the initiatives funded under ASEM TF2 have been successful, highly valued by the Asian countries and sustainable. This review highlights not only that development partner assistance such as that provided under ASEM TF2 can make an important contribution, but how success is dependent on: (a) national ownership, (b) the timely arrival of funding from donors, (c) a clear understanding and common expectations between the implementing agency, World Bank staff and donor representatives, (d) a well-focused design for grant funded initiatives, (e) effective management and coordination, and (f) additional help for implementing agencies as needed. It also highlights the importance of timely actions to address problems when they arise and making tough decisions when grant implementation does not all proceed as planned. Although the Asian financial crisis that provided the impetus for the first ASEM TF is thankfully passed, there remains value in continuing this partnership to further build on this success. 4. This review first looks at the performance of grant funded initiatives in general and then by recipient country. Finally it notes overall findings and recommendations that could help inform future initiatives. The preparation of this ICR has drawn heavily on the progress reviews that have been prepared during the past three years (including the Independent Evaluation Report funded by the EC completed in March 2006) plus interviews with key in-country implementing agency officials, EC representatives and World Bank staff. Performance Review Overall Sources and Uses of Funds 5. ASEM TF2 was established in March 2001and became operational in April 2001. At that time the funding under ASEM TF1 was virtually fully committed and hence had little further capacity to address additional unfulfilled priority needs. Total contributions to ASEM TF2 have been US$38.2 million, with the European Commission as the largest contributor. The other 1 In October 2000, at their Third Summit, in Seoul, the Asia-Europe Meeting (ASEM) leaders welcomed the achievements of the ASEM Trust Fund and decided to launch an ASEM Trust Fund 2 (ASEM TF2).

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contributors were China, Denmark, Finland, France, Italy, Korea, the Netherlands, Sweden and the United Kingdom (see Table 1 for a breakdown).

Table 1: Contributions to ASEM Trust Funds 2 (in millions)

Donor Contribution Received (US$ million Equivalent)

European Commission 22.4United Kingdom 7.2Italy 2.5Netherlands 1.3France 1.3Sweden 1.2Denmark 1.0China 0.5Korea 0.5Finland 0.3

TOTAL 38.2Reflow from ASEM TF1 2.7

TOTAL 40.9 Source: World Bank

6. This US$40.9 million was used to fund 71 individual grants spread across 5 countries – China, Indonesia, the Philippines, Thailand and Vietnam. The allocation between countries is given in Figure 1 and illustrates that the funds were relatively evenly distributed between the countries. ASEM TF2 closed in December 2006.

Figure 1: Allocation of ASEM TF2 Funds by Country

ASEM TF2 Final Country Allocation, Net of Cancellation and Topping Up

Philippines 13% (US$5.2)Thailand

18% (US$7.3)

Vietnam 23% (US$9.2)

Regional9% (US$3.6)

China 18% (US$7.1)

Indonesia 17% (US$6.8)

7. In accordance with the agreed guidelines (see Annex 1) approximately half of the available resources were to be allocated to financial and corporate sector initiatives and half to sustainable poverty reduction efforts. The allocation of funds between the two categories

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(financial and corporate, and social) is given in Figures 2 and 3 and verifies that the overall allocation was close to 50-50 between these two categories, though it did vary from country to country.

Figure 2: Allocation of Funds by Use

Financial52%

Social 48%

Figure 3: Sectoral Distribution by Country

Outcomes of ASEM TF2 Operations 8. Overall the achievements and impact from ASEM TF2 have been very impressive. The overwhelming majority of grant funded initiatives (75 percent) have fully achieved their

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Financial 4.9 3.3 2.9 1.6 6.9 0.7

Social 2.1 3.5 2.3 5.7 2.3 2.9

China Indonesia Philippines Thailand Vietnam Regional

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development objectives2 (see Figure 4). Moreover, these achievements are highly likely to be sustained (89 percent had modest or low risk to development objectives) (see Figure 5). In Vietnam all but one of the 17 grants (i.e., 94 percent) fully achieved their development objectives. Only in Indonesia and for regional grants was this percentage below 70 percent. Differences between countries are quite striking. As discussed in the following country-specific reviews, these differences in performance reflect country circumstances, capacity for rapid change, and seemingly the level of national priority given to making the best possible use of this type of assistance. All countries consistently appreciated the contribution that grant-funded technical assistance makes to the attainment of their development objectives but they did not all manage to make the same very high quality use of these grant resources3.

Figure 4: Distribution of Grants by Achievement of Development Objectives

Highly satisfactory

Satisfactory

Moderately satisfactory

Moderately unsatisfactory

Unsatisfactory

Figure 5: Distribution of Grants by Risk to Development Outcomes

Negligable to low

ModerateSignif icant

High

2 Been rated as satisfactory or highly satisfactory with regard to achievement of development objectives. 3 The overall conclusion of impressive achievement may appear to be at odds with the Independent Evaluation Report funded by the EC finding that over 40 percent of ASEM TF2 grant initiatives had no impact. But in fact 84 percent (27 out of 32) of the grants that were classified as having no impact by the Independent Evaluation Report, were so classified simply because they were still under implementation and had not yet demonstrated impact.

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9. Forcing recipient execution has impeded success in some recipient countries. When countries don’t already have the capacity to undertake this role or where officials are heavily preoccupied with priority issues such as natural disasters and internal regional conflicts that are not naturally core parts of the ASEM agenda, recipient execution has created an additional burden. As a consequence, the push for recipient execution has tended to disadvantage Indonesia and the Philippines. In the case of Indonesia in particular, the combination of domestic events combined with the rapid imposition of entirely new internal budgeting procedures have left recipient agencies struggling to give ASEM grants the attention they need to achieve timely implementation. In China, Vietnam and Thailand, the challenge presented by recipient execution has largely been overcome by the provision of authority and resources to a core group of officials that have included those leading the In-Country Steering Committees. 10. All countries have been very successful at ensuring that grant funded initiatives were relevant to the twin objectives of ASEM TF2 - financial and corporate sector reform, and sustainable poverty reduction efforts – as was confirmed by the Independent Evaluation Report funded by the EC. China and Vietnam were rated as having 100 percent of their ASEM TF2 very relevant. And all six regional grants were considered to be very relevant. The Independent Evaluation Report considered only one grant in each of Indonesia, the Philippines and Thailand to be marginally relevant, and further one in Thailand to be irrelevant. The one considered irrelevant was “Stimulating Voluntary Counseling and Testing and Early Recruitment into Antiretroviral Therapy”. Though this was closely aligned with national priorities and the Millennium Development Goals, it was not considered well aligned with the stated focus of ASEM TF2. 11. In general, the In-Country Steering Committees (ICSC) operated well, improving focus and communications as was intended, though they were most effective in China and Vietnam. This appears to reflect strong national investment in the ICSC by both China and Vietnam, their provision of substantive secretarial support by the Ministry of Finance (MOF) to these committees, their having substantial authority, and their holding more regular ICSC meetings. The establishment of dedicated World Bank Trust Fund coordination officers in each country has clearly helped achieve focus and performance with grant assistance, but has not been able to offset a lack of core national investment in, and capacity for, effective coordination and management of grant assistance. Interestingly, it is worth noting that the countries in which the ICSC operated most effectively were also the countries in which overall ASEM TF2 performance was the best. However, rather than conclude that a well functioning ICSC is the key to strong performance, this general finding probably suggests that the same generic causes of more modest ICSC performance are also the causes of more modest grant achievements. All countries considered the ICSC to be a valuable addition, but some were unable to invest the time and resources necessary to make more effective use of their ICSCs. 12. Most ASEM TF2 initiatives took longer than was anticipated and grant activity became heavily concentrated in the latter part of the ASEM TF2 period, with the result being that almost all grants were extended. This is due to a combination of: (a) overly optimistic planning; (b) the late arrival of a lot of the pledged donor contributions combined with the nature of the Trust Fund process; and (c) specific in country circumstances. The competitive process for gaining grant approval creates a tendency to be somewhat optimistic in planning and

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promise more than can realistically be achieved in the specified time period. This tendency is amplified when it becomes well known that grant extensions are common, and it can also contribute to development of overly complicated grant initiatives with multiple implementing agencies. 13. Second, although ASEM TF2 became effective in March 2001 with funds from the UK, the majority of the other contributions only materialized in 2004, and some as late as October/November 2004. Overall, US$17.7 million of contribution were received in 2004 (46 percent of total grant program). US$12.6 million of this (33 percent of total grant program) was from the EC while France and Italy only signed their donor agreements and made their contributions (US$1.27 million and US$2.47 million respectively) in 2004. Together with the cash accounting system, this meant that calls for proposals had to be slowed down in order to ensure that the funds were available before approved grants could be processed and activated. At the same time, it was recognized that the program closing date would need to be extended from end 2005 by at least one year. Until this was formalized it was necessary to restrict all closing dates for approved grants to the end of 2005. Meanwhile, grant coordination was in a catch 22 situation in that it was not possible to get an extension of the closing date until more progress had been achieved and all funds were fully committed. This was finally achieved by the end of June 2004, but not without incorporating closing dates that were unrealistic. 14. These interrelated issues resulted in having 27 proposals worth US$13.4 million approved between December 2003 and June 2004, which in turn meant that 27 new grants would have an implementation duration of about a year because the program closing date was still set at end December 2005 at that time. The expectation that a grant would be implemented in a year is almost always unrealistic. 15. Third, cumbersome in-country decision making systems and, in the case of Indonesia, a new in-country system for handling government finances also delayed implementation. Cumbersome and time consuming systems for acquiring in-country counterpart financing for own contributions and even for receiving grant proceeds have continued to be a problem, as has the inability to use ASEM grant funds to finance modest taxes as part of the project. Also, the welcome rise in public accountability has tended to make some government officials more reluctant to make decisions for fear their decisions may subsequently be considered inappropriate. 16. In response to disappointingly slow implementation, all countries developed and implemented action plans in 2005 to accelerate implementation. Each country’s ICSC, together with the World Bank, undertook a review of all grants under implementation to identify and overcome impediments in an effort to more fully achieve the objectives of ASEM TF2 and to promote visibility. The follow-up actions included strengthening the capacity of some weak implementing agencies, changing the design of some grant supported initiatives, and reallocating funds as needed to achieve better results. These action plans and the increased attention to grant implementation that underpins them did achieve more rapid results and a sharp increase in disbursements.

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17. As of end December 2006, 87 percent of ASEM TF2 grant commitments had been disbursed, up from 49 percent on October 13, 2005. The disbursement rate was highest in China, Vietnam and Thailand (95 percent, 94 percent and 93 percent respectively) and lowest in Indonesia and the Philippines (72 percent and 79 percent respectively - see Table 2 and Figure 6). This rapid late rise in disbursement rates was achieved in all countries and hence reinforces the finding regarding extensions of closing dates discussed above. Over half of all disbursements occurred within 16 months of the end of the ASEM TF2 program period. This bunching of disbursements reflects, in part, the natural back-loaded pattern of disbursements with technical assistance, the late arrival of a large portion of ASEM TF2 resources and the resultant need to slow down grant approvals, and slower than planned implementation of individual grants, especially in the Philippines. Nevertheless, the impressive overall disbursement rate reflects well on the coordination and management of ASEM TF2 initiatives, the commitment of recipient countries and the success of these action programs. 18. It is worth noting though that the back-loaded nature of most consultant contracts that comprise a large share of the cost of technical assistance means that disbursement percentages at any given time are not a very good indicator of progress or impact. Considering disbursements alone makes progress look even slower than it was because much of a consultants payment is only disbursed after all the work is satisfactorily completed. A blend of commitments and disbursements would generally provide a more reasonable indication of the progress with regard to grant implementation. Even better would be to combine financial indicators with other indicators of progress.

Table 2: Disbursement Rates by Country

Country March 15, 2005

October 13, 2005

June 15, 2006

September 7, 2006

December 31, 2006

China 50% 67% 84% 93% 95%

Indonesia 26% 44% 60% 69% 72%

Philippines 12% 34% 54% 66% 79%

Thailand 33% 49% 81% 89% 93%

Vietnam 32% 43% 76% 92% 94%

Region 47% 59% 70% 80% 85%

TOTAL 33% 49% 72% 83% 87%

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Figure 6: Disbursement Rates by Country

0%10%20%30%40%50%60%70%80%90%

100%

15-M ar-05 13-Oct-05 15-Jun-06 07-Sep-06 31-Dec-06

China

Indonesia

Philippines Thailand

Vietnam

Region

19. As part of the Actions Plans, six grants were topped up with additional financing. Four of these were in China for a combined amount of US$623,100, one was in Thailand (Education Reform for US$300,000, see Box 12) and one was in Vietnam (for US$260,000). In each of these cases, progress was good and it became clear that they could very effectively use additional resources to achieve more. Three grants were cancelled - Promoting Rural Financial Markets (China, where there was a change in key personnel and subsequent lack of agreement regarding changes to the grant focus, see Box 2), Trade of Wood Products (Indonesia), and Strengthening Reforms in the Urban Shelter Programs for the Poor (Philippines, where the grant was not well supported by the National Economic Development Agency). 20. Strong country ownership and substantial implementation of reforms provides reason to be confident that ASEM TF2 supported reforms will be sustained and built upon. Admittedly reforms can be reversed, but national commitment to the twin objectives of ASEM TF2 in all five recipient countries further enhances this confidence. Even in Indonesia where the disbursement rate was 72 percent, only one of 15 grants was thought to have more than a modest risk of the development impact not being sustained, and there is a pervasive commitment to financial and corporate sector reforms to avoid another crisis and to poverty reduction. In the Philippines, political difficulties slowed progress in some areas, such as pension reform, but in areas where reforms have been made, such as banking supervision, these reforms are highly likely to be sustained. In Thailand, reform is well entrenched, but the heavy concentration on capacity building means that there remains a risk until the process is complete. In Vietnam and China, reform is being continued with understandable regard to political constraints. 21. Lastly, there is substantial scope for further high impact ASEM TF2-type assistance to deepen, extend and replicate reforms. For example, there is an opportunity to replicate assistance on fiscal management to various levels of government to secure the effective implementation of decentralizations initiatives in Indonesia. Similarly, public sector reforms, including enterprise transformation in China and Vietnam, are an ongoing process

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China 22. ASEM TF2 grants in China have an impressive achievement record, with 79 percent of the 14 grants being rated as highly satisfactory or satisfactory, or in the case of the Independent Evaluation Report funded by the EC, having high impact4. Furthermore, the impact of these ASEM TF2 grants is highly likely to be sustained, first because of the strong local ownership and focus on national priorities, and second, because there has already been substantial implementation of resulting development outcomes. The 14 grants received by China amounted to US$7.1 million (see Table 3) and 95 percent of this was disbursed by the end of 2006.

Table 3: China Summary of Grant Performance

TF No. Execution Country TF Name Grant Amount Achievement of TF Dev. Obj.

Overall Risk to Dev. Outcome

TF050677 Country China China Social Security Reform 777,000 S L

TF029759 Country China Developing Government Securities Market 310,000 S L

TF050486 Country China Technical Support to the Chinese Securities Regulatory Commission (CSRC)

850,000 S L

TF053170 Country China Promoting Rural Financial (RF) Markets 14,684 U H

TF052842 Country China Enterprise Privatization, Restructuring and Governance

650,000 HS L

TF053169 Country China Insolvency Reform 300,000 MS L

TF052649 Country China Strengthening Public Health Programs in Rural Poverty Areas

564,000 S L

TF053384 Country China Establishing a Professional Association of Government Financial Managers

300,000 MS H

TF050381 Bank China Technical Support for the State Council Office for Reform of the Economic System (SCORES)

600,000 S L

TF052334 Country China Study on Public Service Unit Reform 780,000 HS L

TF052832 Country China Building Capital Flow Vulnerability Analysis and Early Warning System in China

640,100 HS L

TF052902 Country China Labor Market Policy Development: Addressing Unemployment and Developing Human Resources for the Future

450,000 S L

TF051293 Country China Building the Public Debt Recording, Monitoring and Analyzing System in China

500,000 S M

TF054557 Country China Capacity for Regional Research on Poverty and Inequality

315,605 HS L

14 7,051,389 Ratings for Achievement of TF Development Objectives: Highly Satisfactory (HS), Satisfactory (S), Moderately Satisfactory (MS), Moderately Unsatisfactory (MU), Unsatisfactory (U) and Highly Unsatisfactory (HU) Ratings for Overall Risk to Development Outcome: Negligible to Low (L), Moderate (M), Significant (S) and High (H) 23. Some key achievements of the ASEM TF2 program in China are:

4 These 14 grants supported reforms programs in two areas: financial sector and corporate restructuring (70 percent) and social welfare and safety nets (30 percent).

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• building local knowledge of public service reform options and helping design recommendations for reform. This includes a strategy for categorizing public service units and applying differentiated reform policies, and promoting greater private participation in providing public services; (see Box 3);

• bringing international expertise and building local knowledge and capacity regarding enterprise transformation, providing policy makers with accurate information on State Owned Enterprises, and helping to shape the Company Law of 2005 (see Box 4). Key amendments include various protections for public shareholders, limits on related party transactions, and fiduciary duties for corporate directors;

• building sustained local capacity for applied analysis of poverty and inequality. As part of this effort to help build regional capacity for economic policy analysis, 27 people wee trained in the latest statistical techniques for developing and reconciling regional accounts and another 15 received training on the use of a dynamic regional model;

• helping local authorities reduce the risk of fiscal crises, control debt costs and improve market perceptions of financial risks in China, by installing an integrated public debt transactions reporting and management software; and

• building technology and human resource capability to do capital flow vulnerability analyses.

All these achievements are sustained by strong local commitment and directly focused on ASEM TF2’s twin objectives. 24. According to China’s Ministry of Finance, success has been due to three key factors:

• strong local ownership from beginning to end, with grant projects being initiated by local agencies, counterpart funds being provided, and highly qualified staff being given responsibility for implementation;

• the provision of professional guidance by World Bank staff, together with training as needed and effective support from the Trust Fund Coordinator in the local Beijing office; and

• the valuable role played by the ICSC.

There is no doubt the strong Government capacity in China was a major factor in making the first of these possible and contributed substantially to the effectiveness of the ICSC. 25. It is worth adding that such strong local ownership is closely linked with grant funded initiatives being well aligned with national priorities. However, this is not synonymous with recipient execution. As highlighted by the two grants providing assistance to the financial sector – Technical Support for the State Council Office for Reform of Economic Systems executed by the Bank, and Promoting Rural Finance Markets that was to be recipient executed. Both began with strong committed counterparts and were addressing important policy and institutional issues. The first happened to be World Bank executed and was successful largely because of strong and effective teamwork between the grant execution team in the State Council, the Ministry of Finance, the Central Bank and substantial Bank involvement. Effective teamwork enabled this grant to respond effectively to a rapidly evolving set of key priorities. Meanwhile,

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Box 2: China - Promoting Rural Financial Markets This grant was designed to: (a) survey demand for and supply of rural finance, both formal and informal, and provide recommendations on corporate governance and the regulatory framework for rural financial institutions; and (b) achieve knowledge sharing and capacity building through seminars and training workshops to disseminate research methodologies and findings, seminars and training workshops to disseminate best practices in regulating rural finance markets, and guided study tours to select countries known for their implementation of best practices in rural finance. In stark contrast with the vast majority of the ASEM TF2 program in China, this grant was unsuccessful due to a change in key personnel leading the implementing agency, their lack of appreciation of grant operating and procurement procedures, lack of agreement regarding key changes to the grant design, and the political sensitivity of deregulating interest rates. It was eventually cancelled. This is clear example of how changes in key personnel, the subsequent lack of adequate senior level attention, especially when the issue is politically sensitive can undermine success, even for grants that are focused on national priorities.

the grant focused on rural markets ran into difficulties because of a key change in personnel in the executing agency that resulted in a desire to change the objectives focus, conflict over procurement procedures, a loss of interest, and eventually grant cancellation.

26. Twelve of the 14 grants had their closing date extended, suggesting that there is still a tendency for initial scheduling to be unrealistic. This has not compromised the effective achievement of development objectives, but does point to the likelihood of grant teams being pushed to be somewhat unrealistic regarding scheduling in their planning during the grant approval process. There is a natural tendency to want to achieve more than is realistic. 27. Grants in China have generally not experienced difficulties with procurement (except for the rural finance case discussed above). This was a combined effect of training and assistance form the World Bank as needed and the commitment and capacity of local grant executing agencies. Similarly, financial management, grant reporting and auditing have been achieved in a timely and satisfactory manner. 28. The ICSC in China was effective in focusing grants on national priorities and in helping grant executing agencies successfully implement grants. It was chaired by the Ministry of Finance, received substantial authority and capacity from government and held meetings regularly. Hence it contributed to more effective grant coordination as was hoped. As highlighted in Boxes 3 and 4, there has been strong national ownership of grants in China and this has contributed to the high success rate and provides a sound basis for confidence that reforms will be sustained.

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Box 3: China - Public Service Unit Reform The success of this Grant can be highlighted by the fact that it began as a $600,000 grant and the demand for this work was so great that a further $180,000 was added. By providing timely technical assistance it was able to help ensure that the proposed public services reform strategy and guidelines were developed within a sound framework, reflecting the full complexity of China’s public service sector, and drawing on a wide range of relevant international experiences. Though it is acknowledged that this ASEM TF2 grant was one of a number of sources of assistance to the National Development and Reform Commission, it produced 27 consultant reports, 2 large scale workshops and 3 study tours, and has clearly been very helpful in enabling the Commission to submit a wide range of well informed reform recommendation to the State Council. Its success was build upon strong and able local commitment and leadership with senior Chinese support. However, it also benefited from strategic support from the World Bank Lead Economist and Country Director and regular interaction between the executing agency and well informed World Bank staff. There remains an opportunity for further assistance with implementation of these reforms.

Box 4: China - Support for Enterprise Restructuring, Transformation and Governance This grant was successful in mobilizing international expertise and helping explore options for reform in four key areas: (a) enterprise restructuring and transformation (including introducing non-state shareholding to achieve mixed ownership), (b) improving corporate governance procedures, (c) financial and risk management, and (d) performance management systems. This assistance held many small seminars and drew effectively on international best practice, adapting them to the China context. In view of concerns regarding employment, officials have understandable adopted a rather gradual reform approach rather than make rapid radical changes. Nevertheless this assistance has clearly already had a substantial impact including contributed much to the formulation of a new company law which was passed in 2005. The success of this grant was due to clear national interest and commitment, good design, and effective teamwork between the executing agency and World Bank team.

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Indonesia 29. Indonesia has clearly made much progress with regard to the ASEM TF2 objectives, some drawing on ASEM trust fund resources, some drawing on other development assistance, and much the direct result of own-financed national initiatives. There has been much sustained reform of financial and corporate sector policies and institutions. And poverty reduction efforts have been re-oriented to address evolving country requirements. The financial crisis and associated social upheaval and political crisis was so deep in Indonesia that reform became a broad national priority and moved ahead rapidly. Curiously though, there was a wide variation in how successful individual ASEM TF2-funded initiatives were, with individual initiatives in Indonesia frequently falling short of potential.

Table 4: Indonesia Summary of Grant Performance

TF No. Execution Country TF Name Grant

AmountAchievement of

TF Dev. Obj.Overall Risk to Dev. Outcome

TF050793 Country Indonesia Supporting Pro-Poor Policy Development in a Decentralized Indonesia

207,500 MS M

TF050033 Country Indonesia Improving Fiscal Policy Analysis (Expansion of activities funded under ASEMI TF022661)

200,000 HS L

TF050483 Bank Indonesia 50,000 S L

TF050484 Country Indonesia 451,000 S L

TF052962 Country Indonesia Housing Finance Policy Reform 289,000 MS M

TF053785 Country Indonesia Institutional Strengthening for Department of Community and Village Development

602,900 U S

TF054163 Country Indonesia Economic Benefits of Community Investment Projects

350,000 S M

TF050268 Bank Indonesia Building Debt Management Capacity in Government

250,000 S L

TF053895 Country Indonesia Strengthening Fiscal Policy Analysis Capacity In Ministry of Finance

360,000 S M

TF053347 Country Indonesia Developing a Diversified Financial Sector in Indonesia: Strengthening Capacity of the Capital Market and Non-Bank Financial Institutions

1,716,600 MS M

TF053460 Bank Indonesia A Methodology for Regional Civil Service Reform

547,200 S M

TF054312 Country Indonesia Human Resource Capacity Building of the Anti Corruption Commission

350,000 S M

TF053367 Country Indonesia Rural Investment Climate Survey (RICS) 200,000 MU M

TF053168 Country Indonesia Poverty Reduction through Collective Action 297,700 MS M

TF053383 Country Indonesia Environmental Governance and Sustainable Cities Initiative

457,350 S L

TF053282 Country Indonesia Designing Effective Community Empowerment Programs

450,000 MS L

15 6,779,250

Building Investor Confidence by Promoting Good Corporate Governance

Ratings for Achievement of TF Development Objectives: Highly Satisfactory (HS), Satisfactory (S), Moderately Satisfactory (MS), Moderately Unsatisfactory (MU), Unsatisfactory (U) and Highly Unsatisfactory (HU) Ratings for Overall Risk to Development Outcome: Negligible to Low (L), Moderate (M), Significant (S) and High (H)

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Box 5: Indonesia - Improving Fiscal Policy Analysis Building on the fiscal policy improvements supported under the first ASEM TF, this grant helped government further improve and expand the fiscal policy analysis model and provided training for a core group of model builders and model users. In particular, this assistance improved the model by developing a more elaborate real sector and expanding the debt module, and ran a series of on-the-job training workshops. As the government debt to GDP ratio was almost 100 percent following the Asian Financial crisis it was critical that government develop a solid fiscal policy planning tool and equip staff to use it to assess both the effects of economic variables on fiscal balances and the effects of fiscal policies on the economy. Key factors contributing to the success of this assistance were: (a) the clear need and commitment from the Ministry of Finance, (b) its simple design and single contract for the delivery of services, and (c) strong World Bank involvement.

30. Indonesia received 15 grants under ASEM TF2 worth US$6.8 million (see Table 4). At the end of 2006 US$4.9 million or 72 percent of the funds had been disbursed. This is the lowest rate of disbursement of any country. Sustained impacts include:

• an improved and expanded fiscal policy analysis model, with a trained core groups of model builders and users (see Box 5);

• increased awareness of options for further financial sector development and a financial sector reform package (see Box 6);

• increased transparency and confidence in corporate governance; • a methodology for regional civil service reform to support effective decentralization;

and • local capacity for pro-poor policy development in a decentralized Indonesia.

31. Little more than half of the grants in Indonesia were considered to be fully satisfactory or better (53 percent), in spite of the overwhelming majority of grants being focused on very relevant issues. However, successes were well spread between the financial sector and governance initiatives and poverty-focused initiatives. They included efforts to: (a) improve fiscal policy analysis (see Box 5), (b) promote good corporate governance, and (c) assess and publicize the benefits of community investment projects.

32. Relatively poorly performing grants are similarly widely spread, from reform of housing finance and developing a diversified financial sector (see Box 6), to poverty reduction through collective action, rural investment survey work, and efforts to strengthen the capacity of the Department of Community and Village Development. And there is considered to be at least a moderate risk of their outcomes not being sustained. In general though, the existence of strong national commitment to financial and corporate sector reforms and to poverty reduction provides a reason for confidence that reforms financed by ASEM TF2 will be sustained. Moreover, there is considerable scope for expanding assistance and replicating reforms at sub-national levels of government in support of decentralization initiatives.

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Box 6: Indonesia - Developing a Diversified Financial Sector The success of this ASEM funded initiative was limited by two key factors – project design which had a unit in the Ministry of Finance executing the grant but with five different agencies as participating recipients (The Capital Markets Advisory Agency (Bapepam), Jakarta Stock Exchange (JSE) and other Self Regulating Organizations, Directorate of Insurance, Directorate of Pension Funds, and Directorate of Banking and Other Financing Service), and sweeping changes in government budget procedures which left officials struggling with their continued management of regular programs let alone additional one-off initiatives. The grant is intended to build capacity and substantially further the process of developing a diversified financial sector in Indonesia by strengthening the regulators of the Indonesian capital market and non-bank financial institutions (NBFIs) through promoting international standards and best practices among the regulators. In retrospect it is impressive that grant achieved as much as it did, though some of these difficulties could have been anticipated. After substantial delay consultants were hired to assess the situation for each of the five recipient organizations and provide advice to address shortcomings and develop a strong diversified financial sector. However, delays in initiating this work resulted in all consultancies being shortened and related training programs also being compressed. The grant was successful in raising public awareness on options for financial sector development for authorities and policy makers to consider. The Government has developed a financial sector policy package. Bapepam and the Directorate General of Financial Institutions has been merged, and Surabaya Stock Exchange was merged with the JSE. Clearly financial sector reform is an ongoing process and considerable time is needed to really achieve the necessary capacity building. The achievements of this grant were substantial though they fell short of what was hoped for. More could probably have been achieved in this time frame with Bank execution, given the multiplicity of agencies involved and delays arising from the new government budget system.

33. One key reason for the relatively low performance and low disbursement rate of grant-funded initiatives at this time is the sweeping changes in government budget procedures which left officials struggling with their continued management of regular programs let alone additional one-off initiatives. As a result, grant initiatives almost universally encountered delays arising from new internal government procedures that officials were struggling to understand. A second reason is the demand placed on government officials by unfortunate concurrent events, in particular natural disasters and regional conflicts within the country. Natural disasters alone demanded top priority of political leaders and national authorities, thus pushing everything else down the list of priorities. Third, the widespread move to increase accountability in public

decision making, good though this is, contributed to added caution by officials with regard to hiring consultants and contracting technical assistance. 34. In general this modest performance does not appear to have been a failure to correctly focus grant activities on issues that were national priorities. The Independent Evaluation Report funded by the EC confirmed that almost all the Indonesia grants were designed to address very relevant issues. Rather, this modest performance seems more to have been due to the implementation challenges mentioned in the previous paragraph and in some cases an overly

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Box 7: Indonesia - Building Debt Management Capacity This grant is noteworthy for the fact that its development objectives were achieved but largely with the concurrent use of AusAID assistance rather than disbursement of ASEM TF2 resources. Indonesia has moved substantially towards international best practice in debt management with the establishment of capacity in the Ministry of Finance (a Directorate General for Public Debt Management) to manage the country’s overall public debt (external and internal together) and to coordinate it with fiscal risk management. National commitment, together with assistance from a number of development partners, especially, AusAID, IMF, ADB, USAID and the Work Bank, have led to this good outcome. Nevertheless, while being pleased to see important progress with debt management, it is disappointing that a lack of effective aid coordination and/or a lack of flexibility to adapt project design quickly as circumstances changed militated against the more effective use of this assistance.

complicated and ambitious design. Assistance aimed at strengthening the development of capital market and non-bank financial institutions, for example, was inevitably going to be challenging in view of it embracing five implementing agencies (see Box 6). Moreover, designing such reform and building capacity needed to implement them was always going to take a considerable amount of time, and more than was envisaged in the grant proposal. 35. Indonesia’s ICSC was able to ensure that ASEM grant proposals were well focused on national priorities, but was not able to avoid duplication between various donors. Hence, some of the planned assistance became unnecessary (see Box 7)5. Though the presence of a dedicated Trust Fund Coordination office in the World Bank local office helped enhance grant implementation, it seems that the ICSC was not provided with the necessary in-government priority and secretariat support and did not meet regularly enough to enable it to have maximum impact. This is highlighted by the fact that Indonesia was the only country to have more than one grant cancelled. Three grants were actually cancelled, one of which before the Grant Agreement was processed. 36. Audit and financial management reports were provided in a relatively timely manner. However, grant completion reports were not always generated on a timely basis. In some cases this has been due to protracted discussions regarding outcome ratings and hence is linked with grant performance itself.

5 Partial use of the resources available for debt management is on such example.

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Philippines 37. In the Philippines there were 8 grants totaling US$5.2 million, though 3 of these were part executed by the recipient and part executed by the World Bank (see Table 5). These grants were relatively evenly distributed between the two ASEM objectives – reform of financial and corporate sector policies and institutions (e.g., bank supervision, corporate governance and strengthening procurement), and design and implement innovations to re-orient sustainable poverty reduction efforts (e.g. pension reform and poverty monitoring). Performance varied widely, from highly satisfactory to marginally unsatisfactory and one on housing finance was cancelled6. 38. Assistance to Strengthening the Capacity of Bank Supervision clearly achieved its development objective (see Box 8) by supporting the Central Bank in more closely aligning information technology and risk management with international best practice. Moreover, the advanced implementation of reforms, coupled with the very strong institutional ownership of the outcomes, suggest that the grant’s development impact is highly likely to be sustained. This highly successful initiative was implemented by a relatively independent agency – the Central Bank and enjoyed very close substantive partnership between the implementing team and the World Bank. This grant highlights the value of: (a) having strong local ownership of the grant objectives, (b) strong partnership between the implementing agencies team and World Bank staff, and (c) having well focused objectives and a relatively simple design. Not surprisingly, the Independent Evaluation Report funded by the EC rated this grant as very relevant and high impact. 39. In addition to this important and sustained impact on bank supervision, other achievements of the ASEM TF2 program in the Philippines include:

• helping improve governance and strengthen the capacity of the Office of the Ombudsman;

• supporting government efforts to improve governance through better procurement and financial management processes;

• strengthened capacity for poverty analysis (with special attention to decentralized analyses) and improved the timeliness and reliability of poverty estimates; and

• improved pro-poor policy formulation and social service delivery.

6 A ninth grant - Strengthening Reforms in the Urban Shelter Programs for the Poor – was cancelled 10 months after being approved.

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Table 5: Philippines Summary of Grant Performance

TF No. Execution Country TF Name Grant Amount Achievement of TF Dev. Obj.

Overall Risk to Dev. Outcome

TF050955 Country Philippines Knowledge Enhancement of Key Issues in Corporate Governance

444,000 MS S

TF051862 Bank Philippines Closing the Productivity Gap 300,000 S L

TF053181 Country Philippines Strengthening Capacity for Bank Supervision 479,650 HS L

TF052298 Bank Philippines 742,500 MU H

TF052349 Country Philippines 250,000 MU H

TF052722 Country Philippines 86,000 MS M

TF052723 Bank Philippines 669,250 MS M

TF054210 Country Philippines Strengthening the Institution of the Office of the Ombudsman for Good Governance

716,600 S M

TF052163 Country Philippines 717,600 S L

TF052164 Bank Philippines 101,400 S L

TF053254 Country Philippines Strengthening the Implementation and Enforcement Capacity of Procurement Institutions for Sustainable Good Governance

716,000 S L

8 5,223,000

Sustainable Poverty Reduction and Good Governance

Pension Reform

Poverty Monitoring and Analysis

Ratings for Achievement of TF Development Objectives: Highly Satisfactory (HS), Satisfactory (S), Moderately Satisfactory (MS), Moderately Unsatisfactory (MU), Unsatisfactory (U) and Highly Unsatisfactory (HU) Ratings for Overall Risk to Development Outcome: Negligible to Low (L), Moderate (M), Significant (S) and High (H) 40. Unfortunately, several of the ASEM TF2 funded initiatives in the Philippines struggled to fully achieve their objectives for one reason or another and their achievements face sustainability risks. As confirmed by the Independent Evaluation Report funded by the EC, these grants focused on highly relevant and important objectives that were national priorities. But they often did not achieve their potential due to a variety of implementation and design problems, with the result being that the ASEM TF2 program in the Philippines did not achieve its full potential in terms of development impact. Problems included: (a) a lack of continuous high level commitment or capacity to make difficult policy decision in the case of Pension Reform (see Box 9); (b) a relatively complicated project design with multiple implementing agencies but with no clearly established working arrangements between the various agencies (e.g. Sustainable Poverty Reduction and Good Governance, and Poverty Monitoring and Analysis), and (c) the very tight fiscal situation and resulting difficulties in getting needed government funds. Disbursements were so slow in the Philippines that only 12 percent of the total was disbursed by March 15, 2005, though subsequent rapid disbursement increased this to 79 percent by the end of 2006.

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Box 8: Philippines - Strengthening Capacity for Bank Supervision The success of this grant-supported-initiative to help strengthen the Philippines Central Bank’s (BSP) supervisory capacity highlights the value of:

• Having a committed and capable implementing agency, the BSP; • Having a well focused, clear and relatively simply project design; • Having concurrent complementary assistance from a second source, in this case the IMF; • Continuity within both the Bank team and key personnel in the implementing agency; • Having dedicated support with project management, procurement, financial management

and reporting. The grant funded a consultant to assist the Central Bank in the implementation, financial management, monitoring and reporting of the grant.

Specifically this grant helped strengthen the BSP’s capacity to supervise the banking sector by:

• Developing and implementing information technology (IT) supervision capacity - establishing an Information Technology Supervision Unit and training of BSP staff in IT supervision; and

• Upgrading the BSP’s bank supervision procedures and training staff to strengthen capacity for risk based consolidated supervision.

Improvements in supervision are already in operation with examinations already being conducted as per revised procedures, thus effectively eliminating the risks to the sustainability of these TF supported outcomes. Moreover this central unit model is now also being adopted by the Central Bank as a means of better addressing other supervisory functions such as credit and market risk as well.

41. This Philippine experience illustrates that implementation problems are most commonly associated with situations in which there is no strong local champion and/or where grant design covers a number of implementing agencies and lacks a clear understanding between these agencies. The Philippine experience and modest achievement under ASEM TF2 clearly highlights again the importance of strong local ownership which has genuine capacity to make tough policy decisions. Similarly, the sustainability of reforms depends heavily on local ownership. For example, Central Bank reform of banking supervision (see Box 8) is highly likely to be sustained, whereas the outcome of support for pension reforms is more modest and remains vulnerable. 42. The grant that was cancelled - Strengthening Reforms in the Urban Shelter Programs for the Poor – highlights the importance of strong local ownership and close alignment with national priorities. Though initially agreed to, this grant was not well supported by the government’s national planning agency (NEDA) as a priority. Moreover, concurrent work on lending for housing also slipped down the government’s list of priorities, with the result being that both initiatives were cancelled. 43. With regard to the issue of complexity, it is clear that where possible grants should be narrowly focused, that the design is simple, and that they can be implemented by a single agency. However, important needs do not always come in simple packages and frequently do not lend themselves to single agency solutions. Real world problems are frequently complex, involve a variety of stakeholders and necessitate tough decisions. Nevertheless, it does seem

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Box 9: Philippines - Pension Reform This grant was designed to support the following improvements in the three major pension systems: (a) rationalizing the existing pension schemes: Recipient’s Social Security System (SSS), Government service Insurance System (GSIS), and Armed Forces of the Philippines Retirement and Separation Benefit System (AFP-RSBS); (b) improving pension management; (c) improving pension fund investment governance and management; (d) defining pension eligibility, and, (e) assessing the related fiscal transition costs and possible sources of funding. However, due to lack of interest by the GSIS during the early part of implementation, the grant was refocused on SSS, RSBS and the Department of Finance, but even so, progress was slow and the closing date was extended. While there was generally stated political commitment to pension system reform, the lack of substantive commitment from all but a few concerned officials illustrated that this “commitment” was highly qualified, which is not really surprising for such a highly political topic. The result was slow and unsatisfactory progress with many of the grant components. In the end, achievement with regard to an actuarial and financial review for the RSBS was substantial, the Improving Funds Management assignment was successfully completed and some of the suggestions incorporated in the SSS Corporate plan for 2006, but the analytical work with regard to SSS and GSIS was so delayed that it remained preliminary when the grant was closed. There were marginal changes to the SSS contribution rate thus narrowing the gap between contributions and defined benefits, and extending the life of SSS but not yet making it sustainable. Though this grant was clearly focused on an important and highly relevant need, its outcome appears to be a casualty of: (a) the absence of an adequately broad and politically powerful local constituency, (b) complexities associated with having several agencies involved in implementation, even though reality is such that these agencies all need to be involved, and (c) frequent changes of key personnel.

important that when solutions can be simplified to single agencies they should be, and when they cannot, every effort needs to be made to establish clear and transparent working relationships between the various agencies involved. Effective partnership, firstly between the implementing agency, consultants and supporting donor and Bank staff, and secondly between national agencies when there are more than one involved, clearly has an important link with success, so extra effort is needed to ensure this interaction.

44. At the start of ASEM TF2 some grants suffered delays due to inadequate understanding or support with procurement procedures and financial management, but active training and assistance effort by World Bank staff form the Manila office rectified this problem. Similarly, financial management has improved over time with training and a growing awareness of its importance and procedures for ASEM grants. However, delays with regard to audit reports continue to be a problem whenever grants are dependent on government audit services. The Commission on Audit does not see the auditing of grants as a core part of their business and hence generally do not give it priority. Some of the more recent ASEM TF2 grants overcame this by including financing for an external audit as part of the grant, thus circumventing these delays. Complications arising from a lack of own funding was a problem that delayed implementation and, although Bank procedures now allow for the payment of taxes from grant and loan funds when the rates are modest, grants from the EU are still not free to fund taxes. Hence this remains a problem whenever implementing agencies do not receive sufficient own-funds to pay for taxes in a timely manner.

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45. This moderate achievement cannot simply be attributed to a less effective In-Country-Steering-Committee. Rather, common causes seem to lessen the effectiveness of the ICSC and limit grant achievements. The establishment of a full-time TF coordinator in the Manila office of the World Bank has clearly helped with the entire trust fund program, but trust fund coordination still needs more dedicated attention from core Philippine Government agencies if the potential benefit from TF assistance is to be fully realized. Adding coordination of the ICSC to the work load of people who are already busy, as has been the general practice, seems certain to limit its effectiveness. The Philippine ICSC met irregularly and remained heavily dependent of the World Bank’s trust fund coordinator for logistical and coordination support, rather than being itself owned capacity and being driven by government. The Philippine government needs to find a way to give more high-level attention to grant prioritization, selection, design and management in order for grant funded assistance to more fully achieve its potential. The greater priority given to loans is highlighted by the fact that they are subject to review by the inter agency Development Budget Coordinating Committee and, if large, the Investment Coordination Committee. This is not to say that grants should follow the same process, as this would be excessively cumbersome and time consuming. But it is essential that some way be found to provide grant coordination with the capacity and authority needed to more fully realize the potential development impact of grants.

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Box 10: Thailand - Out of Court Mediation Capacity Building Project This assistance strengthened the capacity of the Alternative Dispute Resolution Office, with particular attention to out-of-court mediation of financial disputes. In doing this it: (a) developed curriculum and undertook training for mediators and administrators, (b) supported development of a set of mediation rules and code of conduct, and (c) developed a market communication strategy. The mediation rules and code of conduct were adopted by the Alternative Dispute Resolution Office, and the number of mediators and administrators trained exceeded targets. Given the importance of easing the backlog of non-performing loan cases in the court system this assistance has been an important contribution to Thailand’s recovery from the Asian Financial Crisis. Training by the World Bank on procurement and financial management guidelines was important, as was the commitment and capacity of the executing agency and having clearly defined objectives. In drawing on a team of two international and two local mediation experts, this grant illustrates the value of blending international experiences local knowledge to achieve successful and sustainable development outcomes.

Thailand 46. Thailand’s experience with ASEM TF2 highlights how development partner assistance can still be very valuable when there is no need for a large lending program. Moreover, it illustrates how the World Bank with its worldwide experience and technical expertise can make a very positive contribution without having a substantial lending program. Such success is the product of genuine partnership between donors, the recipient, and the World Bank, to jointly address nationally identified priorities (see Boxes 10 and 11). Donor funding and technical expertise, together with World Bank knowledge, experience, and capacity for grant management can effectively support national authorities and officials and achieve strategic development outcomes and knowledge transfer.

47. Thailand received 11 grants totaling US$7.3 million from ASEM TF2 (see Table 6). Seventy three percent of these 11 grants were fully satisfactory with regard to the attainment of their development objectives. Key achievements include:

• strengthened supervision and regulation of financial institutions, and a medium-term strategy, including microfinance (see Box 11);

• finance reform for the Ministry of Education to increase effectiveness, and to build capacity of school-based management and teacher development (see Box 12);

• enhanced access to justice by building capacity for out-of-court mediation; • improved capacity for analyzing poverty and developing a poverty reduction strategy;

and • strengthened governance and social service delivery through public sector reform.

48. Thailand grants somewhat surprisingly had the highest rates of risk to the sustainability of their development outcomes. Given the heavy capacity building content in many of these grants it is not surprising that sustainability remains a risk at the time grants are closed because completion of capacity building initiatives generally takes considerable time. Meanwhile,

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Box 11: Thailand - Financial Sector Assistance - Strategy and Implementation for a Competitive Financial Sector

This assistance helped Thailand: (a) strengthen the supervision and regulation of financial institutions (especially the Bank of Thailand’s supervision of banks), (b) develop a medium-term strategy for the financial sector, (c) develop a framework for supporting microfinance, (d) establish hedge instruments and (e) begin the transition to a limited deposit insurance program. In the process, this assistance has been able to broaden and deepen the consultative process in Thailand on issues such as microfinance, deposit insurance and banking supervision. Unfortunately initial grant approval took a long time and later delays in key legislation such as those of financial institutions, the Central Bank and Deposit Insurance were delayed, thus delaying the full benefits of this assistance. Until the transition to limited deposit insurance is complete, for example, the potential moral hazard continues, although these have been considerable increase in awareness of this potential problem. Nevertheless, this assistance has continued the very important progress made with ASEM TF1 assistance. Not only is bank supervision much stronger but there has been an increase in access to microfinance. The heavy involvement of the Ministry of Finance and the Bank of Thailand with this work provide reason for confidence that reforms will be sustained. Achievements in this area illustrate how grant assistance can be effective in building sustained capacity. Moreover, this assistance effectively illustrates how the World Bank, in partnership with donors can still make important contributions to development objectives without there being a large lending program.

impressive and sustained achievement with recovery from the Asian Financial Crisis does provide reason for confidence in the sustainability of these reforms. Thailand has continued with the initiatives supported under the first ASEM TF, thus demonstrating a real commitment to sustained reforms to address factors related to the Asian Financial Crisis and related social consequences.

49. Reflecting this impressive recovery and substantial financial sector reforms during the time of ASEM TF1 is the fact that 78 percent of ASEM TF2 grants in Thailand were in the social rather than financial sector (see Box 12 on education for an example). Extensive assistance during the period of the first ASEM grant, together with vigorous local effort had already made very rapid progress with addressing financial and corporate sector issue. There is a clear desire in Thailand to go beyond financial and corporate sector reforms to address key social consequences of the Asian financial crisis as well. This desire to address social challenges even extends to socially sensitive issues such as the fight against HIV with testing and the provision of needed drugs, though the EU review considered this assistance to be irrelevant to the objectives of ASEM TF2.

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Box 12: Thailand - Education Reform The ASEM TF2 grant helped Thailand’s Ministry of Education with: (a) budget finance reform to resources were allocated to promote equity, efficiency and increased transparency, (b) supported education decentralization and school-based management through training for school board members and school administrators, and (c) teacher development with core curriculum skills through training on lesson planning, effective question strategies, self confidence and self reflection, and pedagogical practices. Though not completed, the on-going implementation and institutionalization of education reforms reflects strong local ownership and is already having a positive effect on education outcome. The success of this grant illustrates the improvements that can be achieved with a combination of local commitment, effective learning from, and adaptation of, international experience, and effective coordination of assistance. Its slow beginning illustrates again how difficult it is for many government agencies to get counterpart resources quickly. Nevertheless, this type of project could well be replicated in other countries and in other service- delivery Ministries within Thailand that are interested in reforms to improve performance.

Table 6: Thailand Summary of Grant Performance

TF No. Execution Country TF Name Grant Amount Achievement of TF Dev. Obj.

Overall Risk to Dev. Outcome

TF050488 Bank Thailand 207,000 S L

TF050489 Country Thailand 375,000 S L

TF050491 Country Thailand Out of Court Mediation Capacity Building Project

400,000 S L

TF053057 Country Thailand Education Reform 850,000 S M

TF054498 Country Thailand Stimulating VCT and Early Recruitment into ART in Thailand

260,000 S M

TF052331 Country Thailand Strengthening Governance and Social Service Delivery through Public Sector Reform

996,600 S M

TF052385 Country Thailand Strategy and Implementation for a Competitive Financial Sector

990,000 MS H

TF053461 Country Thailand Thailand’s Preparation for Financial Services Liberalization

218,000 S L

TF053040 Country Thailand Participatory Watershed Management for Ping River Basin

700,000 MS S

TF050975 Country Thailand Strengthening Social Protection 985,000 S M

TF052904 Country Thailand 720,000 S S

TF052905 Bank Thailand 200,000 S S

TF053550 Country Thailand Skills and Competitiveness for Poverty Reduction in Northeast Thailand

370,300 MS L

11 7,271,900

Capacity Building and Strategy for Poverty Reduction

Capacity Building and Strategy for Poverty Reduction II

Ratings for Achievement of TF Development Objectives: Highly Satisfactory (HS), Satisfactory (S), Moderately Satisfactory (MS), Moderately Unsatisfactory (MU), Unsatisfactory (U) and Highly Unsatisfactory (HU) Ratings for Overall Risk to Development Outcome: Negligible to Low (L), Moderate (M), Significant (S) and High (H)

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50. Attention given to grant focus, design and implementation by core government officials has clearly contributed to the success of ASEM grants in Thailand. This effort to ensure that grant resources are well used to draw on international experience and address key priority issues has been in spite of the fact that external assistance is relatively modest relative to domestic resources. The ICSC functioned reasonably effectively as part of this coordination effort, although the desire to be inclusive has resulted in ICSC meeting having 40-50 people present, thus making it very difficult for them to effectively operate as a decision making forum. The fact that such a large and inclusive ICSC has worked as well as it has seems largely due to the priority attention and secretarial services provided by the Ministry of Finance and the fact that a smaller technical review committee consisting of the Ministry of Finance, National Social Development Board, Ministry of Foreign Affairs and the World Bank screen proposals first and effectively operate as an “executive committee” for the ICSC. To have the ICSC operate effectively as a one stop decision making body would necessitate reducing its size. 51. The continued inability to fund taxes from ASEM TF resources, together with complicated and time consuming internal government fund allocating procedures, has delayed implementation. In fact, it has tended to make recipients prefer alternative grants that do not have this restriction. As is the case in most countries, the government budget process is an annual cycle and it is difficult to get special allocations outside this process. 52. As in other countries, the training in procurement, financial management and trust fund reporting and management by the World Bank has helped contain delays for new implementing agencies and staff implementing grants for the first time. However, in spite of this there were major challenges in meeting procurement and administrative regulations. Overcoming this took a special effort from a trouble shooting team consisting of a high level Ministry of Finance official and the World Bank’s portfolio manager and trust fund coordinator. After this team intervened, disbursements rose rapidly from 33 percent in March 2005 to 81 percent by June 2006 and 93 percent by the end of 2006. 53. The close partnership between World Bank staff and counterparts in implementing agencies has been important for successful grant implementation. Where problems have arisen (e.g., with the Participatory Watershed Management for Ping River Basin) they have tended to occur when there are several implementing agencies and where there have been changes in key staff of implementing agencies. Assistance with financial sector reforms and with the education sector both illustrate how effective ASEM TF2 assistance has been and the fact that further such assistance would still be valuable in helping Thailand pursue strategic development objectives. The benefits of drawing on experiences from elsewhere in the world is clear, and the type of partnership effort that ASEM resources have facilitated has been instrumental in this. 54. The challenge now is how best to continue the partnership in view of achievements to date and Thailand’s rapid development and expanding own capacity. Knowledge transfer and technical assistance will continue to be valuable, while there is little foreseeable need for development assistance loans.

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Vietnam 55. ASEM TF2 has been an important source of technical assistance in Vietnam, providing Vietnam officials, policy makers and agencies with valuable supporting expertise and exposure to reform experiences in other countries. By financing analytical work on priority Vietnamese issues, within a partnership involving internal and local experts and responsible local authorities, this assistance has helped develop reforms that are well tailored to the Vietnamese situation. 56. Vietnam received 17 ASEM TF2 grants for a combined total of US$9.2 million. US$8.7 had been disbursed, 94 percent of the total portfolio. Vietnam consistently made very effective use of ASEM TF2 resources, with all but one of the 17 grants fully achieving their development objectives and there is a low risk of these development outcomes not being sustained (see Table 7). Indeed, 6 of the 17 grants were rated as highly satisfactory, the highest such share achieved by any country. Even if these ratings reflect in part a positive spin of achievements there is no doubt that this has been an impressive and very satisfactory outcome. 57. Examples of important sustained achievements from the ASEM TF2 program in Vietnam include:

• improved safety, transparency and soundness of the banking system, together with prudential regulations and norms for asset classification and loan losses by banks;

• strengthened analytical capacity for decision makers on banking reforms and capital market development;

• a solid foundation for restructuring several State-Owned Commercial Banks; • accelerated State Owned Enterprise reforms by helping establish a social safety net

fund for redundant workers, and enhanced awareness of corporate governance; • strengthened capacity to develop effective evidence-based pro-poor social policies;

and • new policies to improve social protection, including passage of the first Social

Insurance Law. 58. The Vietnamese view is that grants are an important opportunity that can have many positive development impacts. Grant assistance contributes to important policy reform by being designed to support agencies and officials with relevant expertise and inform policy makers of experiences from other countries (see Boxes 13, 14 and 15). The keys to success with grant-funded assistance in Vietnam have been:

• a high level of national ownership and involvement with the selection and design of grant operations to ensure that they are well aligned with national and sectoral priorities and deliver assistance that is demanded;

• smooth and effective coordination of assistance from external development partners; and

• active involvement and support from, and interactive dialogue with, World Bank staff.

59. Pro-active local agency involvement reflected a focus on Vietnamese priorities and led to local ownership of the results of analysis and proposals for policy and institutional reform. The

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Box 13: Vietnam - Support for the Operation and Monitoring of the Social Safety Net for Redundant Workers

This grant supported implementation of the Social Safety Net (SSN) for redundant workers from State Owned Enterprises (SOE). In particular, it facilitated the smooth operation of SSN provisions for displaced workers, and helped SOE’s prepare SSN proposals and government authorities in screening these proposals. It provided training on SSN policies, regulation and procedures to more than 1000 government officials and SEO managers, and supported monitoring of the SSN. Given the political importance of employment and the tendency for SOEs to be overstaffed, this was an essential part of the government’s strategy for restructuring SOEs. Without SSN assistance, potentially displaced workers would resist and delay reform. Within 3 years of adoption a SSN policy, the assistance to redundant workers reached 122,000 from 2,210 SOEs. This assistance illustrates the importance of complementing good policy design with effective support for implementation, and could provide a model for other such support.

ICSC, chaired by the Ministry of Finance, met quarterly and operated as an effective partnership with active involvement by the European Commission and the World Bank, plus the Ministry of Planning and Investment and the State Bank of Vietnam. It was important not only for grant planning and ensuring focus of high priority issues, but for monitoring and management as well. By jointly being involved in monitoring and supervision the Ministry of Finance, World Bank and EC were able to help implementing agencies take timely actions to overcome problems. This was particularly important for agencies that were not already familiar with grant implementation procedures. Moreover, the close involvement of senior government officials both in the ICSC and directly with individual grants helped ensure implementation and sustainability of reform initiatives. 60. Even so, there were delays during the initial phase of implementation arising from two key challenges; first the inability to use ASEM resources to pay any taxes, and second, the time taken to get needed clearances in government and in the World Bank. The EC’s prohibition on paying for any taxes means that implementing agencies had to source additional counterpart funds for this purpose and this made ASEM TF resources less easy to use. The decentralization of many World Bank decision to the Hanoi office has made Bank clearances quicker but procurement reviews still create delays. Meanwhile complicated government clearance procedures remained a source of delay on grant establishment and procurement, as well as the provision of counterpart funding already mentioned.

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Box 14: Vietnam - Enhancing Poverty Reduction in the Education Budget Processes This assistance helped the Minister of Education and Training (MOET) evaluate current budget practices, develop proposals for reform (including ensuring that the needs of poor and vulnerable groups are not neglected), and strengthen its capacity to coordinate the education sector budget. In this it helped the MOET: (a) move to a medium term planning framework, (b) revise funding norms and increase the pro poor focus of education expenditures, (c) pull together the fragmented parts of education expenditure and increase budget integration both horizontally (recurrent and investment) and vertically (central government and provincial), and (d) actually prepare a medium-term-expenditure framework budget submission for 2006-2008. As this was the first technical assistance grant that the MOET managed there was a steep learning curve which slowed implementation in the early part. Nevertheless, by drawing on international experiences and adapting them to the local situation, this grant has helped achieve valuable development outcomes. Education is a clear national priority and receives the largest single share of the national budget. However, because of its high profile, it also attracts support from many donors and this creates a coordination challenge for the Ministry. This medium term expenditure framework approach is subsequently being replicated in three other sectors – health, agriculture and transport.

61. One concern is the fact that 75 percent of ASEM TF2 resources in Vietnam were allocated to grants focusing on the first of the twin objectives, financial and corporate sector policy reforms. In fact 7 of the grants, having a combined total value of US$4.8 million or 52 percent of the total for Vietnam, were implemented by a single agency, the State Bank of Vietnam. 62. Compliance with audit and reporting requirements have consistently been timely and satisfactory, another reflection of the priority attention given to ensuring that grant assistance is effectively utilized.

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Table 7: Vietnam Summary of Grant Performance

TF No. Execution Country TF Name Grant Amount Achievement of TF Dev. Obj.

Overall Risk to Dev. Outcome

TF050280 Country Vietnam Support for the Operation and Monitoring of the Social Safety Net for Redundant Workers

342,000 HS L

TF050454 Country Vietnam Banking Reform Program 694,000 S L

TF050255 Country Vietnam Strengthening Community Driven Development

419,000 S M

TF054268 Country Vietnam State Bank of Vietnam’s (SBV) Road Mapping/Master Planning Technical Assistances to Support of the Implementation of the International Economic Integration Strategy for the Banking Sector

342,000 S M

TF052643 Country Vietnam Training of Directors and Management of Enterprises on Corporate Governance

325,000 S M

TF053228 Country Vietnam Support Development of Social Security Law (SSL) in Vietnam

434,500 S L

TF053229 Country Vietnam Support for the Operation and Monitoring of the Social Safety Net for Redundant Workers (Phase 2)

369,926 HS M

TF053933 Country Vietnam Support for Strengthening Evidence-Based Pro-Poor Policy Making in Vietnam

305,640 HS M

TF053193 Country Vietnam Mekong Housing Bank: Diagnostic Review and Preparation for Strategic Partnering/Equitization

350,400 HS L

TF054113 Country Vietnam Support for the resolution of non-performing debt and asset of state - owned enterprises

427,594 MS S

TF051834 Country Vietnam Monitoring of SOE New Establishment and Transformations

660,000 S M

TF051961 Country Vietnam Enhancing Poverty Reduction in the Education Budget Processes

450,000 S L

TF052587 Country Vietnam Banking Sector - SOCB Audit and BASLE Core Principle Assessment

640,000 S L

TF053399 Country Vietnam Accelerating Capital Markets Development 650,000 S L

TF052046 Country Vietnam Banking Sector Regulation, Supervision and Development

944,500 HS L

TF053365 Country Vietnam Technical Twinning Arrangement for the Implementation of the BIDV Restructuring Plan

874,000 S M

TF053398 Country Vietnam Improving Banking Sector Transparency and Reforming Policy Lending

975,500 HS L

17 9,204,060 Ratings for Achievement of TF Development Objectives: Highly Satisfactory (HS), Satisfactory (S), Moderately Satisfactory (MS), Moderately Unsatisfactory (MU), Unsatisfactory (U) and Highly Unsatisfactory (HU) Ratings for Overall Risk to Development Outcome: Negligible to Low (L), Moderate (M), Significant (S) and High (H)

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Box 15: Vietnam - Support for Banking Sector Reforms There were seven grants totaling $4.8 million focused on various aspects of banking sector reform and implemented by the State Bank of Vietnam (SBV). These were: (i) banking sector reform, (ii) Mekong Housing Bank: diagnostic review and preparation for strategic partner/equitization, (iii) banking sector regulation, supervision, and development, (iv) State-Owned Commercial Bank (SOCB) Audit and Basel core principles assessment, (v) improving banking sector transparency and reforming policy lending, (vi) technical twinning arrangements for the implementation of Bank of Investment and Development of Vietnam (BIDV) restructuring plan, and (vii) SBV’s road mapping/master planning technical assistances to support of the implementation of the international economic integration strategy for the banking sector. These grants have done much to help Vietnam design and progressively implement reforms to strengthen the banking sector and lesson its vulnerability to a crisis. However, this has taken considerable resources and time. These achievements have included: (i) supporting changes in management, governance, credit and risk management, operational risk, asset and liability management, and staff training and development for the BIDV, (ii) bringing the Mekong Housing Bank to a point where it could actively seek a strategic investor, (iii) helping the SBV with improvements to debt classifications, provisioning, prudential rations for credit institutions, corporate governance and supervision; (iv) an audit of the SOCB and an assessment of compliance with Basel core principles that highlighted many areas for improvement, and (v) helped the SBV develop a master plan for ongoing financial sector reform. The experience of this support for backing sector reform highlights:

• The importance of local ownership by officials or institutions with authority; • The value of having World Bank experts involved from design and right through

implementation; • The importance of having sufficient flexibility within the grant design and arrangements

(or a series of grants) to respond effectively to evolving needs; • The need for grants to have sufficient resources to mobilize expertise to address needs in a

substantive way; and • Implementation schedules need to allow sufficient time as capacity building and

institutional reforms take time.

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Regional 63. Six regional grants for a total of US$3.6 million were financed from ASEM TF2 resources. Though half of the six grants were on financial and corporate sector issues, these were the three smallest and only amounted to 20 percent of the total of US$3.6 million. Regional grants suffered from less pro-active involvement from individual countries, and often experienced delays in gaining approval from recipient countries. Only two thirds of the six fully achieved their development objectives (see Table 8).

Table 8: Regional Summary of Grant Performance

TF No. Execution Country TF Name Grant Amount Achievement of TF Dev. Obj.

Overall Risk to Dev. Outcome

TF050293 Bank Regional Regional ASEM Forum on Public Debt Management

75,000 S L

TF050674 Bank Regional Corporate Dynamics and Restructuring in East Asia, 2000-10

108,000 U M

TF053459 Bank Regional Promotion of dialogue and sharing of experience between Europe and Asia on Regional Integration Issues with assistance from the Boao Forum Asia Secretariat (Hainan, China)

500,000 S L

TF050031 Bank Regional Poverty Mapping in Indonesia, Thailand and China

985,000 HS L

TF050193 Bank Regional Building Capacity for Decentralized Financing and Delivery of Services

1,000,000 S M

TF052857 Bank Regional Improving Information and Analytical Capacity for Monitoring and Evaluation of Human Development

884,500 MS L

6 3,552,500 Ratings for Achievement of TF Development Objectives: Highly Satisfactory (HS), Satisfactory (S), Moderately Satisfactory (MS), Moderately Unsatisfactory (MU), Unsatisfactory (U) and Highly Unsatisfactory (HU) Ratings for Overall Risk to Development Outcome: Negligible to Low (L), Moderate (M), Significant (S) and High (H) 64. Experience with ASEM TF2 suggests that regional grants are most successful when they focus of cross-country cooperation at the technical level (e.g. poverty mapping by statistical experts) and when there is a vested champion within the region (e.g. Boao Forum Asia Secretariat, see Box 16). As with single country grants they are also more successful when focused on clear regional priority and have a simple design (e.g. the regional forum on public debt management). However, the involvement of several countries does mean that approval processes take longer, meaning that regional grants are generally slower to get started and take longer to implement. Not surprisingly, where there is no local agency with a strong vested interest, implementation of outcomes from regional grants is also more difficult. 65. The greater success of assistance with poverty mapping in the Philippines under a regional grant executed by the World Bank, than with a somewhat similar single country grant on poverty monitoring and analysis that was recipient executed, illustrates the importance of the local partner and some of the advantages of Bank execution (see Box 17). Both contributed to capacity building and were well aligned with national priorities, but the Bank executed grant had a simpler design with fewer in-country implementing agencies and was free of the complications arising from time consuming in country financing arrangements and decision making processes.

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Box 17: Regional - Poverty Mapping All four participating countries – China, Indonesia, the Philippines and Thailand – produces spatially disaggregated poverty maps, thus establishing capacity to do so, and were relatively successful in disseminating the results through workshops and conferences. These poverty maps have heightened awareness of the importance of poverty eradication and are being used by the countries to generate targeted poverty reduction programs. In addition to in-country dissemination, a regional workshop was held in Siem Reap in Feb 2006 with policy makers and officials from central statistical offices participating from 9 countries – Malaysia, Thailand, Cambodia, Mongolia, China, Indonesia, Vietnam, Laos, and the Philippines – thus extending the benefits beyond the four participating countries. This grant highlights the potential for beneficial regional assistance and effective sharing of experiences on important issues at a technical level. Naturally, how findings are used to impact policy is likely to vary from country to country, but cooperation and sharing at a technical expert level can be mutually beneficial.

In addition, the principal recipient for the regional grant was with the Central Statistical Agency, whereas the Philippines-only grant was primarily with the National Economic Development Agency. 66. Another challenge confronting regional grants is how to ensure that they effectively serve the needs of the relatively small and therefore weaker countries and not focus excessively on the needs of the large and hence relatively strong countries. Different stages of development for participating countries, and different country sizes, inevitable create differences in key needs and interests. For example, large countries face different issues when considering closer regional integration than small countries do (see Box 16). Similarly, more developed and higher wage countries face different issues than less developed and lower wage ones. Finally, in all countries there is a need to adapt international experiences to local circumstances, so this needs to be accommodated in regional grants. But whereas the best source of helpful experience for relatively development countries within the region may be outside the regions (Europe for example) the best source of experience for less developed countries may well be from neighbors.

Box 16: Regional - Promoting Dialogue and Sharing on Regional Integration Issues This grant facilitated dialogue and the sharing of experience between ASEM countries and European countries on social and economic development and regional integration issues. This grant supported ASEM beneficiaries’ learning from the EU’s experience through: (i) visits by expert teams to regional forums/institutes in Asia and Europe (six study tours and 3 conferences); (ii) strengthening BFA Secretariat’s program of economic studies, with a focus on EU experience; and (iii) outreach by the BFA Secretariat, including dissemination of information on regional integration experiences, annual Economic Monitors, and support for extension of newsletter and website activities. This grant also illustrates the added time-consuming challenges faced by regional grants in terms of initial activation and in obtaining nominations for study tours and conferences. First it took 6 months to activate this grant because of the need to get at least 3 of the five participating countries to sign off. Second, getting nominations from four or five countries for multi-topic study tours in a particular time frame is difficult, and hence necessitates a relatively long planning schedule. The success of this grant owes much to the pro-active and central role of the Boao Forum Asia Secretariat (BFA, Hainan, China) in coordination and facilitation, thus illustrating the importance of having a champion in the region.

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Closing Event 67. The European Commission organized a "closing event" of the ASEM TF2 which was held in conjunction with the ASEM Finance Deputies' Meeting, hosted by South Korea. The meeting took place in Muju, South Korea on June 14, 2007. The main objective of the closing event was to share experiences and lessons learned from ASEM TF2 implementation. The closing event also gave an opportunity to partner countries to highlight the achievements and lessons learned of the ASEM TF2. 68. The event was organized in two parts:

• A special session on the ASEM TF2 where the Asian Partners, the EC and other donors, and the World Bank met to review the final implementation completion report of the ASEM TF2, as well as to hear from the Asian Partners about the completion of their grants; and

• A joint session with the ASEM Finance Deputies to present the ASEM TF2 results

and lessons learned, success stories, and discuss future cooperation initiatives.

69. The main conclusion of the special session was that ASEM TF2 has been successful. The grants have made significant development impact. This success is mainly due to three factors: relevance; local ownership; and partnership. In general, the ASEM TF2 grants provided an appropriate, vital and timely response to the Asian financial crisis, thus meeting the objectives of the program. 70. The European Commission presented the conclusions of the special session to the Finance Deputies. This was followed by presentations by China, Indonesia, Thailand and Vietnam on the achievements and implications of the ASEM TF2. The European Commission also presented the proposal to establish a new ASEM Dialogue Facility. The Facility, with initial funding of Euro 2.0 million for 2008, is expected to be approved by the EU in late 2007 and will focus on economic and financial matters, employment and social policy, environment, and cultural diversity and intercultural dialogue. 71. Performance of ASEM TF2: It was generally felt that ASEM TF2, although relatively small in size ($40 million), acted as a catalyst for policy reforms, helped with institutional changes to implement the reforms and leveraged additional resources. The costs of slow start-up far outweighed the benefits of the countries taking on ownership in implementation. In-country dialogue on financial, corporate and social issues was strengthened through convening of the steering committees comprised of beneficiaries, donor partners and the World Bank. The overall

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success rate of 75% was comparable to other technical assistance programs, most of which are not addressing complex reform programs in a crisis situation.

72. Perspective of Beneficiaries. The countries presented selected cases to illustrate the successes of ASEM TF2. For example, in China, a representative from the State Administration of Foreign Exchange (SAFE) explained how the ASEM TF2 Grant which helped to build its capacity to monitor cross-border capital flows, analyze external risks and manage balance of payments. This work contributed to China's low sovereign risk and macro vulnerability. In Indonesia, the official from the Ministry of Finance presented the results of a successful grant which financed a macroeconomic model to manage fiscal policy with a special feature on disaggregation of the budget designed to assist the government in dealing with economic recovery challenges. In the Philippines, consensus is being built on pension reforms, including a new pension system, according to a representative from the Department of Finance. In Thailand, the representative from the Bank of Thailand made a presentation on how supervision and regulation of banks have been further strengthened and models have been developed for capital markets and effective risk management. Also, in Thailand, decentralizing school-based management, teacher development and education financing are having an impact, according to the Director of the Bureau of Educational Innovation Development, Ministry of Education. In Vietnam, the representative from the Ministry of Finance explained how support to redundant workers from SOE reforms is now being provided more systematically through the operation of a Social Safety Net Fund to ensure adequacy of funding and compliance with regulations.

73. Views of Donors. The donors were of the view that ASEM TF2 has been more successful than the first phase, with impressive results on sustainable poverty reduction

processes. More than 75% of the projects financed have achieved their reform goals to a very high or high degree; 87% of the funding has been utilized; and, there have been good results in terms of the stated objectives to deal with both the finance and the social sector aspects of the reforms. ASEM TF2 has addressed the urgent needs; but equally it has been a lever and a tool for putting in place

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medium- to long-term reforms in areas such as market regulation, governance, pension and public finance management. The key important lessons are:

• Local ownership and alignment with national priorities have contributed to the

sustainability of the project results at national level. The high degree of local ownership was achieved thanks to the decision taken up front that projects would be implemented by the beneficiary countries themselves. While it is true that country-led implementation caused some delay in start-up, the disadvantage of the slower start of projects was outweighed by far by the very positive results on local ownership and responsiveness to national needs;

• The In-Country Steering Committees (ICSC) have played a vital role in guiding the process at policy level despite the different experiences of the beneficiary countries. However, more guidance to the implementation of the projects could have been provided in some instances. Nonetheless, the In-Country Steering Committees now represent an important indirect result of ASEM TF2 and it remains to be determined how countries and donors can continue to use this platform;

• Regional grants can be effective but they are more challenging. There has been a sense that they have responded too little to shared concerns at regional level. It may be necessary to explore a new method for ASEM cooperation at the regional level, as well as take a harder look at how more value added can be generated from the regional cooperation;

• It is also necessary to find better and more user-friendly ways to share reform results between countries. Many countries cope with comparable issues – in debt management, in governance, in pension reform – and countries need to learn from one another in a more practical and faster way;

• And finally, doing better with regard to visibility is important for both donors and recipient countries.

74. While the Asian financial crisis has been long over, it is recognized that the ASEM Trust Fund Program has made contributions to the recovery that the five beneficiary countries have witnessed. However, the economies of the five beneficiary countries (and, in fact of several other Asian countries) are still developing and so are their market regulation, their market governance and their social sector instruments. It is in this context that the Donors need to look to the future

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and continue the cooperation within the ASEM framework. In this connection, the European Commission presented the proposal to establish a new ASEM Dialogue Facility. Overall Findings and Recommendations 75. Local ownership and alignment with national priorities are very important for effective implementation of grant initiatives and for the sustainability of development outcomes. With single country grants this means having the focus of grant supported activities well aligned with national priorities, having a strong single local implementing agency wherever possible, and allocating sufficient local resources and qualified personnel to the activity. There are exceptions to this generalization, such as when the emergence of a national priority is anticipated when a grant agreement is being developed rather than already existing, but they are rare. Procedures and institutional arrangements for ASEM TF2 have effectively ensured a very high degree of local ownership of grant funded activities. 76. Achieving genuine partnership between key agencies within the country, providers of international expertise, donors and the World Bank staff is important. Successful implementation of grant funded initiatives is highly correlated with the existence of effective partnership between staff in relevant national agencies, World Bank staff, consultants, and where possible donors as well. This partnership necessitates effective, and therefore frequent, communication between all parties. However, such teamwork and communication needs to grow from a genuine recognition of the fact that more effective development outcomes can be achieved by working together. Regulated communication, or imposed information reporting, is far less effective than communication that grows naturally from teamwork. Progress with harmonization of donor procedures is one aspect of partnership and is being applauded. It reduces the burden on recipient countries and helps facilitate better aid coordination. 77. In-Country Steering Committees can contribute more in terms of monitoring implementation. In cases where the ICSC became a substantive platform for information sharing and joint decision making, they clearly improved prioritization. In these cases the ICSCs became institutionalized, held regular meetings and had some agency provide effective secretarial services to this Committee. Vietnam and China are such examples. However, where they remained ad hoc and held only very irregular meetings, as in the case of the Philippines, they did not fulfill their objective to the same extent. 78. There is now substantial interest in expanding the role of the ICSC and having them more involved in monitoring and evaluation. Indeed this was already happening in Vietnam. In general, the ASEM TF2 experience suggests that having the ICSC more involved in monitoring and evaluation would be helpful, but this would make the effective empowerment of government representatives with sufficient resources, time and authority even more important. To be effective in this role, the ICSCs would need adequate resources and authority and they would need to be pro-active in monitoring progress and addressing difficulties that arise in a timely manner. Otherwise, this could create another cause of delay and hence create a problem rather than become part of the solution.

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79. More realism in planning and the timely delivery of donors funding are needed to avoid frustrated expectations and to reduce the number of closing date extensions. The fact that the vast majority of grants in all countries have had their closing dates extended suggests that there is a widespread lack of realism in planning grant implementation. Indonesia had the smallest percentage of grants extended, yet 69 percent of their grants still had their closing date extended. Almost 100 percent of grants in both the Philippines and Thailand had their closing dates extended. China and Vietnam had 86 and 88 extended respectively. This is likely to have been due to a combination of: (a) incentives to promise more during the grant proposal and approval process than is likely to be feasible, and (b) optimism with regard to what is feasible. This lack of realism creates disappointment and frustration. 80. Regional grants can be effective but are more challenging. The lack of a single focus recipient to own implementation of regional grants makes them more difficult to implement but success is still possible. And given that some important topics, such as regional integration, naturally lend themselves to a regional approach, they should still be included in future such assistance. In the context of multi-country recipients or regional grants, local ownership does not necessarily mean strong and active local support within each and every country. But, as the experience with the Regional Integration Issues grant where the Boao Forum Asia Secretariat in Hainan China was very pro-active illustrates, having a strong and active local counterpart in at least one of the recipient countries is very important for achieving strong local ownership for regional grants. With regional grants, extra effort needs to be made to achieve ownership by some key institution and extra time needs to be allowed to mobilize participation from recipient countries. Without this, knowledge transfer is undermined and the sustained implementation of outcomes is significantly reduced. 81. With regional grants there is a risk of the relatively strong and administrative able countries gaining the majority of the benefit rather than the more needy countries. Care in design and implementation of regional grants will be important to avoid this risk and ensure that the needs of the relatively weak are effectively addressed, not just the interests of the relatively strong. 82. Doing better with regard to visibility is important for both donor and recipient countries. Though past efforts in this regard are acknowledged and appreciated, it is important to do even better in the future to sustain support within donor countries. Without genuine and visible acknowledgment and recognition, donor countries are finding it increasingly difficult to sustain grant financing for technical assistance. At the same time, it is important to do an effective job of disseminating the findings broadly in recipient countries to deepen and broaden support for sustained policy and institutional reforms. 83. There is much in-country demand for further grant funded technical assistance. All country officials highlighted the important contribution that has been made by the ASEM TF2 and argued that there was still much that further such assistance could contribute. Though the rationale of helping achieve sustained recovery from the Asian financial crisis, and help prevent a re-occurrence has naturally weakened, the development impact of ASEM TF2 grants demonstrates the potential contribution such assistance can still make.

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84. The five key recommendations from this review are:

• Consideration should be given to providing more support for the implementation of policy and institutional reform efforts as well as the design of reforms because impact depends so heavily on effective implementation. While grant supported initiatives have been effective in evaluating options, transferring knowledge and in helping countries design policy and institutional reforms, they have often stopped short of assisting with the actual implementation of such reforms. However, it is well recognized that implementation is critical for real and sustained reform and that, in fact, implementation is often one of the most difficult parts of the reform process. Where implementation is resource and time intensive it is understandable that it is beyond the capacity of trust fund resources and ideally would be factored into national expenditure programs. But in cases where implementation is neither resource nor time intensive it is recommended that future grant proposals consider incorporating this as well. However, given that one cannot assume at the outset that there will be agreement to proceed with the implementation of substantive reforms, it would seem necessary to be creative with grant amendments to accommodate this possibility as grant implementation proceeds. This suggests that rolling grants, or longer life “program” rather than “project” grants, be considered for key sectors.

• The World Bank needs to continue providing assistance with training on

procurement, financial management and grant implementation as this has been important and many grants are with new agencies or with government officials who are unfamiliar with trust fund procedures. This assistance from the World Bank has been important to help recipients implement grants without delays. Only in the rare case of a follow up grant with the same implementation team would this help not be needed.

• World Bank execution should be continued as a possibility, and should be made

easier and determined by the situation rather than by artificial limits. Having strong local ownership is not synonymous with a grant being implemented by the recipient and forcing recipient execution has impeded the success of ASEM TF2 grants, especially in countries where the capacity to cope with complicated internal government processes is not so strong. Sometimes there is no one natural counterpart agency, such as was the case with non-bank financial sector reform in Indonesia or pension reform in the Philippines, even for well focused grants addressing national priority issues. Sometimes, new procedures within government, such as the budget system reform in Indonesia, create such uncertainty that recipient execution is bound to be logistically difficult and problematic for a time. Sometimes current uncertainties regarding institutional arrangements or the need for flexibility during implementation militate against recipient execution. In addition, regional grants are a clear example where recipient execution would often be difficult. To achieve the best possible outcome for such situation, the possibility of Bank execution should be maintained in future grant options and not limited to a set percentage of grants. Admittedly, capacity building is a core part of technical assistance, but that too is not

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synonymous with recipient execution. The regional grant in support of poverty mapping in statistical agencies is an example of where capacity has been built with Bank execution. Indeed, requiring recipient execution for a single grant, necessitates considerable grant specific capacity building for this relatively short time period. The decision regarding who executes a grant should be a grant by grant decision based on the specific situation together with the nature of the grant focus and design.

• Recipient countries need to establish a grant coordination mechanism and

provide it with substantial authority and resources in order to make the best possible use of grant assistance. One possibility would be for all countries, rather than only some countries, to endow their ICSC with the authority and resources that they need to do this task, and for their role to be broadened to embrace all grant technical assistance and expanded to include a more active role with regard to monitoring and supervision.

• Donors could assist grant effectiveness by allowing grant funds to be used to pay

taxes when tax rates are modest. Without this change, recipients will have a preference for other grants that do not have this restriction. The problem for grant implementing agencies arises from the complicated and time consuming process of getting a local fund allocation for tax components to make procurements possible under a standard disbursement percentages process. Moreover, unless this change can be made this prohibition will continue to be an incentive for Bank execution of ASEM type funding, because goods and services are then contracted net of taxes.

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Annex 1

ASEM Trust Fund 2: Standard Provisions Applicable to Grants to the Trust Fund

In October 2000, at their Third Summit, in Seoul, the Asia-Europe Meeting (ASEM) leaders welcomed the achievements of the ASEM Trust Fund and decided to launch an ASEM Trust Fund 2 (ATF2). Following this decision, the Third Asia-Europe Finance Ministers’ Meeting was held in Kobe, Japan, in January 2001. The Ministers endorsed the outline of the modalities for ATF2. Further, participants of an ASEM Trust Fund workshop organized by the European Commission in Bangkok, Thailand in March 2002, reviewed draft standard provisions prepared by the Bank in April 2001 after the ASEM Partners Review Meeting. The review was to draw lessons from an independent evaluation of ATF1. Accordingly, ATF2 will be guided by the following provisions (the Standard Provisions), which will be applicable to all agreements entered into between the Bank and donor countries and/or organizations that provide grants (Contributions) to the Bank for ATF2. 1. Eligible Technical Assistance Activities Activities supported by ATF2 will address two key priorities:

(a) providing technical assistance and training to governments for sustainable reform of their financial and corporate sector policies and institutions; and

(b) providing technical assistance and training to governments to design and implement

interventions to re-orient sustainable poverty reduction efforts to meet evolving country requirements.

2. Country Eligibility Eligible countries for ATF 2 are the same as for ATF 1, namely China, Indonesia, Korea, Malaysia, the Philippines, Thailand and Vietnam. It is understood that as country circumstances change, some of these countries may no longer desire this assistance while other countries not listed may become eligible. 3. Use of Funds ATF2 funds will be used to:

(a) provide grants to governments (or with their agreements, to non-governmental organizations, educational institutions and other entities acceptable to the Bank) (the “Recipient”), as determined by the Bank in consultation with the country, for the purpose of financing technical assistance, training and related costs for activities to be supported by ATF2;

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(b) pay the compensation and reimbursable expenditures of consultants and experts engaged by the Bank, in consultation with the relevant beneficiary country or countries, for the activities to be supported by ATF2, in accordance with the procedures described below; and

(c) compensate the Bank for administration and related expenses arising in connection

with ATF2. 4. Allocation of Funds The Bank will allocate ATF2 funds according to the following guidelines, over the duration of the ATF2:

(a) fifty percent (50%) for Financial and Corporate Sector activities and fifty percent (50%) for Social Sector activities. These guidelines should be implemented flexibly in light of country needs and available alternative support; and

(b) at least sixty percent (60%) for activities in lower and lower-middle income

countries as defined by the Bank. Upper middle income countries are expected to utilize less of ATF2 than they did under ATF1.

5. Bank’s Use of Trust Fund All contributions made available as grants to ATF2 (collectively the “Trust Fund” funds) will be accounted for as a single Trust Fund. The Trust Fund funds may be commingled with other Trust Fund assets maintained by the Bank, but shall be kept separate and apart from the funds of the IBRD and the IDA, and shall be accounted for separately. The “Trust Fund” funds may be freely exchanged by the Bank into other currencies as may facilitate their disbursement. The Bank may invest and reinvest the “Trust Fund” funds pending their disbursement in any instrument in which the Bank is authorized to invest its own funds. The Bank shall credit all investment income arising from the ATF2 to ATF2 to be used for the same purposes as the Contributions. 6. Administrative Cost Recovery Arrangements In order to assist in the defrayment of the costs of administration, including design, management and supervision costs, and other expenses incurred by the Bank with respect to the Contribution, the Bank may retain an amount of such investment income equivalent to five percent (5%) of the amount of the Contribution for its own account. If the amount of investment income earned on the Contribution is less than the amount that the Bank is entitled to retain under this paragraph, the Bank may retain such difference from the Contribution. In no case shall payments by the Donor exceed the amount of its Contribution. 7. Liability

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The Bank will exercise the same care in the discharge of the functions described in the Letter of Agreement (of which these Standard Provisions form an integral part) as it exercises with respect to the administration and management of its own affairs and shall have no greater responsibility to the Donor in respect thereof. Otherwise than for failure to perform its obligations set forth in this Agreement, the Donor will not under any circumstances whatever be liable for damages caused either to the Bank or third parties during the performance of this Agreement. No claim can be submitted to the Donor for compensation or for restoration of any such damage or loss. 8. Procurement The selection and recruitment of consultants and experts, and the procurement and financing of expenditures for related goods and services shall be done in accordance with normal Bank procedures applicable to such activities, provided, however that the Bank will make every effort to seek in the first instance to select consultants and experts from countries participating in the ASEM process. 9. Procedures to Govern Bank Grants As administrator of the Trust Fund, the Bank shall enter into a grant agreement with the Recipient of the funds. The grant agreement shall provide that the Contribution shall be used by the Recipient to finance expenditures for technical assistance and training services and related costs, as the case may be, in accordance with the Bank’s Guidelines on "Procurement under IBRD Loans and IDA Credits" and on the "Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency", as in effect at the date of the grant agreement and shall be disbursed in a manner consistent with the Bank’s procedures for disbursements. The grant agreement shall further provide that no amount of the grant funds may be used for the payment of taxes levied by or in the territory of the Recipient country. 10. Visibility All contracts or grant agreements entered into by the Bank in relation to activities financed under the Trust Fund, all training programs, seminars or symposia financed under the Trust Fund, and all press releases or other information materials shall clearly indicate that the activities in question are financed under the ASEM Trust Fund Phase 2. 11. Country Strategy Planning, Programming and Reporting An in-country steering committee7 will be established in each recipient country. The committee shall comprise representatives from the recipient country, ATF donors, and the Bank. The committee will prepare country strategy notes and prioritise ATF2 programs. Proposals for the

7 If a recipient country has an existing institutional arrangement for the purpose of overall technical assistance and donor coordination, it is understood that the arrangement will be used to undertake the task.

49

prioritised programs will be reviewed by the Bank ASEM Committee8 for consistency, quality enhancement and cross-fertilisation purposes.

The in-country steering committee will provide the Donors through the Bank on a semi annual basis with an updated strategy note, together with a progress and accomplishment report on the activities financed by ATF2. The steering committee through the Bank shall consult specifically with Donors in relation to activities to be considered for financing under the Trust Fund which require funding greater than US$1,000,000 (One Million United States Dollars) in any one case, or which otherwise the committee and the Bank feel may have a particular policy significance.

12. Counterpart Support The recipient countries of ATF2 will make their counterpart support available to ATF2 programs. The counterpart support will be in the form of either in-kind contribution or cash contribution. The level of such counterpart support will be calculated for each program and counted as the recipient’s contribution to ATF2 programs. 13. Monitoring and Evaluation The steering committee will closely monitor the progress of ATF2 activities with a view to deepening the reform agenda, improving the sustainability of actions taken, and making adjustments to the overall ATF2 operations as deemed necessary. An independent evaluation of ATF2 activities will be undertaken. The independent evaluation exercise will be managed by the European Commission on behalf of ASEM partners. Annual meetings for ASEM partners will be organised by the Bank to review the overall progress and accomplishment, to discuss the country strategy notes, monitoring and evaluation report as well as any policy issues as they pertain to the operations of ATF2. 14. Information and Knowledge Sharing Activities promoting knowledge sharing and dialogue among those involved in policy formulation in Asia and Europe should be encouraged. Regional or multi country activities, and particularly those which will promote such knowledge sharing and dialogue, will also be encouraged. Information and knowledge sharing will also be encouraged through the ASEM website established for ATF1 by the Bank. 15. Auditing The Bank will provide to Donors, within six months following the end of each Bank fiscal year, a management assertion together with an attestation from the Bank's external auditors on the 8 The Bank ASEM Committee was established to guide ATF1 activities. The Committee is chaired by the Vice President of the East Asia and Pacific Region and comprise two directors, a senior operations officer and an analyst.

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adequacy of internal control over cash-based financial reporting for trust funds as a whole. The cost of such an attestation shall be borne by the Bank.

The Bank will maintain separate records and ledger accounts in respect of the aggregate ATF2 funds for the agreed activities and disbursements made there from. Within 90 days of each March 31, June 30, September 30 and December 31, for as long as any ATF2 funds remain with the Bank, the Bank shall prepare cash-based quarterly un-audited statements of receipts, disbursements and fund balance with respect to the ATF2 funds and forward a copy to Donors. Such statements will be prepared in the United States Dollars.

Following the completion of all financial transactions associated with the ATF2 funds, the Bank will provide the donors with a copy of the externally audited financial statement with respect to the ATF2 funds. The cost of such an audit, including the internal costs incurred by the Bank, shall be paid for by ATF2 funds. In the event that there are insufficient ATF2 funds remaining to pay for such an audit, each Donor shall reimburse the Bank with its pro rata share of the cost of such an audit based on the percentage share of its contribution to the total contributions from all the Donors to ATF2.

16. Commencement and Duration

Operation of the ATF2 shall commence as soon as the first Donor has made its contribution. Unless the parties hereto agree in writing on a different course of action, commitments under the ATF2 shall cease two years thereafter, with disbursements extending for a further 18 months after that date. On the assumption that operations commence in the period May-June 2001, commitments are foreseen to cease on 30 June 2004, and disbursements to cease on 31 December 2005. 17. Termination The Trust Fund arrangement covered by this agreement shall terminate on December 31, 2005, unless otherwise agreed between the parties hereto. Within six months of such termination the Bank shall furnish the Donors with a final accomplishment report, summarizing the activities and achievements of the Trust Fund together with particular lessons learned in its implementation. In addition, any remaining ATF2 funds, including accrued investment income and less the costs of the external audit, shall be returned to the Donors, on a pro rata basis within three months of the completion of the external audit specified in amended Paragraph 15 above. In the event of early termination, and subject to consultation among the parties hereto, any agreement already entered into between the Bank and third parties shall not be affected.

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Annex 2

 EUROPEAN COMMISSION

   

STRATEGIC EVALUATION OF THE IMPACT PROVIDED BY THE ASEM ASIA FINANCIAL

CRISIS RESPONSE TRUST FUND PROGRAMME IN SUPPORT OF ECONOMIC AND SOCIAL REFORM IN

ASEM BENEFICIARY COUNTRIES (CHINA, INDONESIA, PHILIPPINES, THAILAND AND VIETNAM)

 AMS/451-Lot N°10 RfS N°2005/108668

 

FINAL REPORT     

MARCH 2006

THIS REPORT HAS BEEN PREPARED WITH THE FINANCIAL ASSISTANCE OF THE EUROPEAN COMMISSION.

THE VIEWS THEREIN ARE THOSE OF THE CONSULTANTS AND THEREFORE DO NOT NECESSARILY

REFLECT THE OFFICIAL OPINION OF THE EUROPEAN COMMISSION, THE WORLD BANK OR ANY OTHER DONOR FUNDING THE PROGRAMME

    

POHL CONSULTING & ASSOCIATES  

  

52

1  Executive Summary  1.1  The ASEM Process 1 ASEM  (the Asia‐Europe Meeting)  is an  informal process of dialogue and cooperation  initiated  in 

1996 bringing together twenty‐five EU Member States and the European Commission with thirteen Asian 

countries.   

2 ASEM  is  an  informal  process  of  dialogue  and  cooperation,  based  on  equal  partnership  and 

enhancing mutual  understanding,  which  addresses  political,  economic  and  cultural  issues,  with  the 

objective of  strengthening  the  relationship between  the  two  regions,  in  a  spirit of mutual  respect  and 

equal partnership9. 

3 ASEM covers potentially all  issues of common  interest  to Europe and Asia, but activities can be 

grouped into three main ʺpillarsʺ: political, economic, and cultural / intellectual.    

4 To help set out the underlying principles, objectives, priorities and coordination mechanisms of the 

ASEM process, an Asia‐Europe Cooperation Framework was adopted at the London Summit in 1998. An 

updated version of this (the AECF 2000) was approved by leaders at the Seoul Summit in October 2000. 

 

1.2  The Asian Financial Crisis 5 The financial crisis that erupted  in Asia  in mid‐1997  led to sharp declines  in the currencies, stock 

markets,  and  other  asset  prices  of  a  number  of Asian  countries;  threatened  these  countriesʹ  financial 

systems;  and disrupted  their  real  economies, with  large  contractions  in  activity  that  created  a human 

crisis alongside the financial one.  

6 The unexpected and massive  financial and economic crisis was  translated  into a high  level of  job 

losses and consequential social distress – particularly in Indonesia, Thailand and the Republic of Korea.  

 

1.3  The EU response – the ASEM Asia Financial Crisis Response Trust Fund 7 The ASEM Asia Financial Crisis Response Trust Fund was established following a decision of the 

ASEM  Summit  held  in  London  on  3‐4 April  1998.  It was  part  of  the  2‐prong ASEM  response  to  the 

economic  crisis  that  hit  Asia  in mid‐1997.  The  second  prong  was  the  trade  pledge.  In  the  Summit 

Statement on the Financial & Economic Situation in Asia it was noted inter alia that ʺLeaders welcomed 

the creation of an ASEM Asia Financial Crisis Response Trust Fund at  the World Bank  to help  finance 

9 See http://europa.eu.int/comm/external_relations/asem/intro/index.htm  

53

technical assistance and advice both on restructuring the financial sector and on finding effective ways to 

redress poverty, drawing on European and Asian expertise.ʺ The Fund became operational at the end of 

June 1998. 

8 The  first ASEM Asia Financial Crisis Response Trust Fund  (ASEM TF 1  ‐ US$43,811,055) had  the 

central objectives of facilitating the recovery of countries affected by the financial and economic crisis in 

East  Asia  and  specifically  to  support  reform  programs  agreed  upon with  the  international  financial 

institutions. It aimed to make available timely and practical support and technical advice to seven crisis 

affected East Asian  countries,  focusing  on  two  critical  areas:  1)  social welfare  and  safety nets;  and  2) 

financial and corporate restructuring.  

9 The  second ASEM Asia Financial Crisis Response Trust Fund  (ASEM TF2  – US$40,833,350) was 

established  in March  2001  and will  be  completed  by  end  2006. ASEM  TF2 maintains  the  focus  of  its 

predecessor on  financial and corporate  restructuring and on social welfare and  safety nets. ASEM TF2 

support shifted focus from the design of policy reforms to implementation issues. 

 

1.4  The scope of the evaluation 10 The  scope  of  the  evaluation  as  defined  in  the  terms  of  reference  (see  annex  1  for  full  terms  of 

reference)  is  to review  the relevance and effectiveness of actions  financed by ASEM TF1 and 2 and  the 

efficiency, sustainability and visibility of actions financed by ASEM TF2 alone.  It is also intended to draw 

conclusions and provide recommendations as to whether a possible future ASEM cooperation initiative is 

desired and, if so, give recommendations in this regard.  

 

1.5  Effectiveness and Impact evaluation methodology, findings and conclusions 11 ASEM TF 1 was established as a rapid response instrument to address a crisis; as such it sensibly 

minimised  as  far  as  possible  bureaucracy  and maximised  flexibility. ASEM TF2 maintained  the  same 

approach – with some modifications. Objectively verifiable indicators are not defined at programme level 

and  those defined  in project proposals  are not  linked  to  the  achievement of higher‐level  indicators of 

success at programme level. A qualitative approach to evaluation is therefore the only feasible approach. 

12 We have sought  to assess qualitatively the extent  to which  technical assistance  financed  from  the 

ASEM Asia Financial Crisis Response Trust Fund Programme has contributed/is contributing to identify 

financial, economic and social reforms. We have done this by undertaking a reasonably detailed analysis 

of each ASEM TF 1 and 2 project in order to assess the link between the specific results of each ASEM TF 

54

project  and  the  extent  to which,  in  our  view,  these  have  had  an  impact  on  the  broader  social  and 

economic reform process espoused by ASEM. 

13 Several projects have not been completed under ASEM TF 2. The problems that have resulted in the 

current non‐completion of such projects are discussed under Section 3.3 of the main report. These have 

been categorised as having “no impact” as at present they do not.  In some cases we are concerned that 

the remaining timetable for completion of projects is such that they are unlikely to be successful or have 

impact; in other cases when completed projects are likely to have impact but that cannot be assessed at 

present. 

14 50% of all economic and financial projects have been ranked as having high or reasonable impact. 

Whilst  nearly  25%  of  economic  and  financial  projects  have  been  ranked  as  having  “no  impact”  a 

reasonable percentage are like to have some impact in the fullness of time.   

15 47.8% of all social projects have been ranked as having high or reasonable impact.   Whilst 30% of 

social projects have been ranked as having “no  impact” a  reasonable percentage are  like  to have some 

impact in the fullness of time.   

16 In our view  the effectiveness achievements are acceptable and reflect reasonably on both  the WB 

and the implementing beneficiaries.  

 

1.6  Relevance evaluation methodology, findings and conclusions 17 Our evaluation of relevance has two dimensions: firstly, a qualitative determination of the extent to 

which the different projects in each of the two sectors of intervention (economic, financial and corporate 

sector and social sector) under ASEM TF1 and TF2 have contributed to the achievement of the ASEM TF 

objectives; secondly, a determination of whether the ASEM TF objectives remain relevant in the light of 

current policy objectives of  the ASEM partners  (beneficiaries and donors) and  the needs of  the ASEM 

beneficiaries. 

Relevance of individual project objectives to ASEM TF objectives

18 The first element of reviewing the relevance criterion (the qualitative determination of the extent to 

which  the different projects  in each of  the  two  sectors of  intervention under ASEM TF1 and TF2 have 

contributed to the achievement of the above‐mentioned objectives) has been addressed by a project‐by‐

project review to assess relevance to the objectives of economic or social reform and the extent to which 

the project is in line with national priorities for reform (as defined in national development plans, poverty 

reduction strategies, etc).   

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19 We conclude that the WB and the beneficiary governments have done an excellent job in ensuring 

that  projects were  relevant:  nearly  95%  of  economic  and  financial  sector  projects  and  69%  of  social 

projects were rated by us as being very relevant. No economic and financial sector projects were rated as 

irrelevant and only 5.2% in social sector. 

Relevance of ASEM TF Objectives to current circumstances

20 The  second  element  of  reviewing  the  relevance  criterion  (the  determination  of  whether  the 

objectives stated above remain relevant in the light of current policy objectives of the ASEM Partners and 

the needs of the ASEM beneficiaries). 

 

The needs of the ASEM beneficiaries 

21 ASEM TF1 was designed  to meet  the crisis needs of  those Asian countries which had been most 

affected  by  the  financial  and  economic  crisis  in  East  Asia.  ASEM  TF2  maintained  the  focus  of  its 

predecessor on  financial  and  corporate  restructuring  and on  social welfare  and  safety nets  to  try  and 

prevent further such crises and ensure adequate social safety nets. 

22 The financial and economic crisis is now nearly a decade in the past and significant reforms have 

been achieved with the support of the two ASEM Asia Financial Crisis Response Trust Funds aimed at 

preventing a recurrence. 

23 Longer term national development plans have been put  in place by the national authorities  in all 

five  beneficiary  countries  often  with  the  support  of  the  aid  donor  community  to  ensure  the 

implementation of national strategies for development and poverty reduction (in line with current trends 

in aid harmonisation – see below).   

24 The primary development aid need of each beneficiary country  is support  in  implementing  their 

national development plans. The European Commission and European Union Member States which are 

donors  to  the beneficiary countries are,  in accordance with  the Paris Declaration on Aid Effectiveness, 

providing  support  to  strengthen  partner  countries’  national  development  strategies  and  associated 

operational  frameworks  and  the  increasingly  aligning  their  aid  to  the  partner  countries’  priorities, 

systems  and  procedures  and  helping  to  strengthen  their  capacities.  This  support  is  being  provided 

through  the  bilateral  aid  programmes  that  the  European  Commission  and many  EU Member  States 

operate  in partnership with  the beneficiaries. At  the  same  time  the WB has access  to other  significant 

grant resources – although the availability varies from country to country. 

 

Policy statements arising from ASEM meetings 

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25 The  Tianjin  Initiative  on Closer ASEM  Economic  and  Financial Cooperation  foresees  a  funding 

modality  playing  an  important  role  in  facilitating  the  two  regions  to  respond  to  the  new  challenges 

brought  about  by  globalisation.  It  envisaged  that  the  new  funding modality  should  be  an  effective 

platform  in order to benefit both regions  in the  long term and that the active participation of both Asia 

and Europe  in a new partnership should be considered based on new emerging needs.     At  the ASEM 

Review Meeting  in Washington DC  (18 April  2005)  the  EC  “noted  that ASEM  TF1  and  2  had  been 

supportive in helping Asian ASEM partners to overcome the financial crisis of 1997, providing technical 

assistance  for  the  introduction of  the  long‐term economic and social policies and reforms, and now  the 

affected countries seem to have  largely recovered and be better prepared for the future.   Therefore any 

possible  future cooperation  should have a new set of objectives under  the ASEM  strategic partnership 

platform”. 

 

Trends in aid harmonisation 

26 The  High  Level  Forum  on  Harmonisation  Ownership  and  the  Paris  Declaration  on  Aid 

Effectiveness  call  for  a  rationalisation  of donor  actions  to  reduce  overlap  and  the  number  of  support 

instruments. 

27 It  is  clear  that  the  financial  crisis  that  caused  the  initiation  of  the ASEM Asia  Financial  Crisis 

Response Trust Fund is no longer an issue, but it is equally clear that the process of economic and social 

reform is far from complete in the ASEM beneficiary states. 

28 The resultant query is therefore should the objectives of the ASEM Asia Financial Crisis Response 

Trust Fund be changed simply to de‐link them from the financial crisis, but still continue to embrace the 

process of economic and social reform. This is addressed in our recommendations. 

 

1.7  Efficiency methodology, findings and conclusions Project identification and design 

29 The  overall  framework  for  a  country’s  projects  under ASEM  TF2  is  provided  by  its ASEM  TF 

Country Strategy. The  identification of  the need  for a project  to address an  identified  issue  is normally 

achieved  through a  joint process  involving  the staff of  the beneficiary government and  the staff of  the 

World Bank.   

30 The WB utilises a standard format for ASEM Project Proposals.  The current ASEM TF 2 format is 

not ideal for the post‐crisis, more stable situation and leads in occasions to weak definition of objectives 

and  indicators. Project  timetabling  is  frequently unrealistic and  the result  is significant need  for project 

extensions. 

57

31 Several projects were  identified to be   overly complex with multiple components (often managed 

by different stakeholders) and complex institutional  implementation and coordination arrangements. In 

several  cases  procurement  of  technical  assistance  support  is  also  frequently  fragmented with  a  large 

number of very  small  consultancies  rather  than a  single  coordinated  technical assistance  contract. The 

complexity of such projects makes implementation very difficult and is another key cause of delay.  

 

Project prioritisation and selection 

32 The process of project prioritisation and selection seems to be clear and transparent. 

 

Project implementation 

33 The clearest sign that all is not well with implementation is the very slow disbursement rates. Some 

of the reasons for slow disbursement are related to poor project design (as described above); others relate 

to implementation issues. 

34 The  main  implementation  mechanism  decided  for  ASEM  TF2  is  that  trust‐funded  projects  in 

support of recipient activities should be executed by the recipient. Recipient execution normally increases 

ownership  but  has  a  high  direct  transaction  cost  with  respect  to  having  to  learn  and  utilise  WB 

procurement  procedures  and  operate  in  English.    The WB’s Grant Monitoring Reports  on  individual 

ASEM TF2 projects highlight as the major implementation problem that grant recipients have to learn to 

utilise  the WB’s procurement procedures  and  this  is  clearly  a major  factor  in  the  significant delays  in 

disbursement  that have occurred. We agree  that recipient‐execution  is  the desirable approach, but note 

that  the WB has not devised an effective system  for reducing  the burden of procurement on recipients 

and thus minimising the negative side of an overall very positive approach. 

35 A further issue relating to implementation is with respect to the non‐financing of taxes utilising the 

ASEM Asia Financial Crisis Response Trust Funds. The implications of this vary from country to country 

depending upon the tax levied. The issue was raised very strongly by the authorities in the Philippines, 

Thailand and Vietnam. This may seem a minor  issue, as  the non‐financing should not have a  financial 

implication on the beneficiary. In practice it has a very severe impact as the beneficiary has to finance the 

tax element and then seek to claim it back from the national budget (which is frequently impossible).   

36 We  fully  understand  that  the  payment  of  taxation  is  effectively  the  award  of  a  small  general 

budgetary support grant, but believe that the transaction costs of pre‐financing and then reclaiming the 

taxation on  the  recipients mean  that  the ASEM TF grant  is not as cost effective as possible and causes 

significant implementation delay.  

 

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Project extensions/amendments 

37 We  have  noted  already  that  most  ASEM  TF2  projects  required  an  extension  and  many  an 

amendment;  some  required more  than  one  extension.  Frequent  extensions  have  been  awarded which 

often involve significantly reduced implementation timetables, changes in activities and deliverables. 

38 The ICSC has originally prioritised and reviewed each project; it would be desirable that extensions 

in the closing date and addenda (which involve an action plan often introducing new activities, timetable 

and deliverables – and almost certainly a change in the scale and likelihood of objective achievement) are 

referred back to all the members of the ICSC for consultation of the action plan prior to the WB Country 

Director agreeing to formalise such an extension. 

 

Project monitoring 

39  Monitoring of project performance is undertaken by the Project Task Team Leader who is required 

to prepare bi‐annually a Grant Monitoring Report. The Grant Monitoring Report grades subjectively the 

extent of  achievement of grant objectives  and  the progress  in  implementation.  In  accordance with  the 

World  Bank  disclosure  policies,  the  ratings  section  in  the  GRM  is  not  shared  with  donors  and 

beneficiaries.  This  seems  to  negate  the  value  of  a  valuable monitoring  tool  in  that  neither  the  ICSC 

(responsible for monitoring) nor the beneficiary (responsible for implementing the project) are permitted 

access to the full GRM in accordance with WB policy. 

 

ASEM Asia Financial Crisis Response Trust Fund overall management 

40 We  have  been  very  impressed  by  the  level  of  competence  and  commitment  of  the  ASEM  TF 

Coordinators in the beneficiary countries.  They have an unsurpassed knowledge of the programme and 

its actions in the country for which they are responsible. Our ability to understand the issues in play in a 

very short period time owes a tremendous amount to their skill and professionalism.  

41 We would  like to praise  in particular the high degree of openness and transparency exercised by 

the WB in the management of their ASEM Asia Financial Crisis Response Trust Fund website10.   

 

Efficiency conclusions 

42 In our view problems of  efficiency  represent  the greatest weakness of  the ASEM Asia Financial 

Crisis  Response  Trust  Fund.   Weak  project  design  creates  implementation  problems  and  results  in 

disbursement delays.   This  is exacerbated by weak monitoring and a  lack of firm oversight by all ICSC  10 www.worldbank.org/asemtf  

59

members to ensure that projects which are slipping behind schedule undergo effective corrective action. 

Finally,  the WB has not  identified an effective means of reducing  the  transaction costs and  time delays 

which result from recipient execution of projects.  

 

1.8  Visibility evaluation methodology, findings and conclusions 43 Our approach has been to establish the achievement of visibility commitments through a mixture of 

documentary review and interviews. Under ASEM TF2 the WB has consistently ensured a high profile for 

ASEM TF2 (and in some countries for the EC). 

44  This has not always had the desired effect of raising the profile of ASEM or its European and Asian 

members.  Many recipients seem still to view ASEM as simply a programme operated by the World Bank. 

Increased visibility means more than the simple display of logos; it means increased awareness of ASEM 

and its policy objectives and the transfer of knowledge and experience between the ASEM partners. 

45  This has not occurred  through ASEM TF 1 or 2; one  stakeholder  stated  that he  read  the ASEM 

political process discussions and he read the ASEM TF country strategy notes and he could see absolutely 

no linkage between the two. 

46  This is not a fault of the WB; the mandate for the WB with respect to ASEM TF 1 and 2 was not to 

link to the ASEM political process, but to address the financial crisis.  However, the limited profile of the 

European Union  and  the ASEM  process  has  been  an  ongoing  source  of  concern  for European Union 

Member States and the Delegations of the European Commission in the recipient states. 

47  The ASEM TF2 Donor’s Agreements requiring the WB procurement to “make every effort to seek 

in the first instance to seek consultants and experts from countries participating in the ASEM process”.  It 

should be noted that and achievement in this respect is purely serendipitous as no systems are in place to 

achieve the commitment to use ASEM member state consultants and experts. Few grant beneficiaries that 

we spoke  to advised  that they had received clear advice of  the need  to give preference  to ASEM states 

organisations during their procurement (as this requirement is not carried over from the Administration 

Agreement into the individual grant agreements). Nevertheless, the procurement results provided by WB 

at the end of 2005 show that 90% of the procurement belongs to ASEM countries. 

48 We  conclude  that  the WB  has  strictly  adhered  to  the  visibility  requirements  as  defined  in  the 

Administrative Agreement.  

 

1.9  Sustainability evaluation methodology, findings and conclusions 

60

49   The determination of the sustainability of the achievements of ASEM TF2 is premature given that 

about 25% of  the projects activities have yet  to be completed –  let alone have an  impact which may or 

may not be sustainable. 

50   In  our  view  the  only way  to  assess  the  likely  future  sustainability  is  to  assess  the  degree  of 

ownership of  the project.   The best proxy  for such ownership  is  that  the project  is an  integral part of a 

government’s national development plan; if a government has stated that it is its intention to implement a 

plan and the project is part of that plan then it seems reasonable to assume the project’s impacts will be 

sustained. 

51 In our assessment of relevance we have already sought to assess the extent to which projects are in 

accordance with  national  development  plans.    From  this we  can  conclude  that  the  vast majority  of 

projects are  in accordance with national development plans and therefore should have  local ownership 

and  therefore  should be  reasonably  sustainable when all project activities are  completed at  the end of 

2006. 

 

1.10  Recommendation: The need for a new ASEM facility  52 It  is  clear  that  the  financial  crisis  that  caused  the  initiation  of  the ASEM Asia  Financial  Crisis 

Response Trust Fund is no longer an issue, but it is equally clear that the process of economic and social 

reform is far from complete in the ASEM beneficiary states. 

53 The EU Member States and the EC already give substantial bilateral and multilateral support to the 

process of economic and social reforms in the ASEM beneficiary countries. 

54   Aid donors  are  seeking  to harmonise  their  aid  in order  to  eliminate duplication  of  efforts  and 

rationalise  their activities  to make  them as cost‐effective as possible. Such cooperative actions are wide 

spread  amongst  donors  supporting  the ASEM  beneficiary  countries  and  often  involve  cooperation  in 

multi‐donor trust funds managed by the WB.  

55   There are therefore significant opportunities for the European ASEM donors to contribute to the 

economic  and  social  reform process with  each of  the ASEM beneficiary  countries  either  through  their 

existing bilateral programmes or through the new type of aid‐harmonised facilities.  

56 If the future aim of European ASEM donors was simply to continue to support the economic and 

social  reform process  then  it would seem most  logical and  in accord with aid harmonisation  trends  to 

extend  their  bilateral  support  to  each  of  the  beneficiary  countries;  ideally  using  either  sector/general 

budgetary support or support through a multi‐donor trust fund facility  in line with best practice in aid 

harmonisation. 

61

57  The question therefore that needs to be posed when determining the objectives for a possible new 

ASEM Asia Financial Crisis Response Trust Fund  facility  is  “what  added value  could  a new  regional 

facility  offer  that  cannot  be  addressed  by  existing  facilities  and  which  would  justify  the  increased 

transaction costs on aid recipients inherent in a stand‐alone facility?” 

58 The  answer  lies  in  the  shared  challenges  arising  from  globalisation  facing  both  the Asian  and 

European  partners  within  ASEM:  more  open  trade  economies,  regional  economic  and  monetary 

integration,  energy  and  natural  resources  conservation  challenges,  vulnerabilities  to  external  shocks, 

regional disparities,  immigration and aging populations, social  integration and good governance, etc.    . 

There  is  a  significant  opportunity  for  mutual  sharing  of  experiences  in  order  to  overcome  such 

challenges.   

59 We therefore strongly recommend that there should be a further ASEM development cooperation 

facility  and  that  its  focus  should  be  the  policy  development  dialogue  and  exchange  of  experiences 

between Europe  and Asia  to  address  the  shared  challenges  arising  from globalisation  facing both  the 

Asian and European partners within ASEM11.  

11 We provide possible  recommendations as  to  the operational nature of a  future ASEM development cooperation  instrument  in 

annex 4. 

62

Annex 3: ASEM TF2 - List of Grants

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

1 Country China Social Security Reform

The objective of this grant would be to: (i) provide expert advice in establishing a strategy for the development of management systems and information technology for public pension systems using two provinces as pilots for national policy; and (ii) undertake surveys, analysis and related training on pension policy reform options utilizing liability modeling techniques.

777,000

1 Country Developing Government Securities Market

The proposed technical assistance project would assist the MOF to build the capacity as a leading force in developing the GS market by focusing on active government cash management. Recognizing the magnitude of the reforms, the project is designed to be a first step in the development of active cash management in China. It would focus on conceptual design and implementation strategy.

310,000

2 Bank Technical Support for the State Council Office for Reform of the Economic System (SCORES)

The technical assistance will provide support to the State Council Office for Reform of the Economic System (SCORES), a key institution under the State Council to assist the Premier in designing, developing and evaluating economic reform strategies and programs. The project objective is to support the government in developing policies and strategies for financial sector reform, and in implementing those reforms. The principal areas of focus will be to provide policy advice and capacity building to assist the SCORES in formulating and implementing strategies on commercial bank reform, especially the four large state owned banks (SCBs), and banking supervision.

600,000

2 Country Technical Support to the Chinese Securities Regulatory Commission (CSRC)

The technical assistance will involve provision of support to CSRC by international experts in ensuring the adoption of world-class risk management policies in the securities and futures markets. The project will focus on the regulatory framework, supervisory procedures and reporting system. It constitutes the first phase of a longer term strategy that will involve the adoption for the overall securities markets of risk management policies in procedures and information systems by CSRC headquarters and branches, futures and securities exchanges, financial firms and other market players in China. It will support adoption of complementary legal and regulatory standards, and implementation of ongoing, continuous supervision of risk management practices by market players. During this first stage, the project will focus on developing the regulatory framework for the securities and futures markets and the concrete implementation in the futures segment, while implementation of the framework on the over all securities industry will be covered subsequently.

850,000

Sep-02

Country Building the Public Debt Recording, Monitoring and Analyzing System in China

This proposed TA project aims at supporting the ongoing endeavor of the Chinese authorities towards enhancing their public debt management capacity by consolidating the debt-related databases into one single integrated information system and develop and train relevant staff to use key analytical tools on a regular basis so as to support public debt management decision-making in China. It is also a first step towards monitoring the fiscal risks emanating from the Government’s contingent liabilities. This is being undertaken by the authorities with a view towards reducing the risks of fiscal crises, control debt costs, and improve market perceptions of financial risks in China.

500,000

Sep-02

Country Study on Public Service Unit Reform

The proposed TA project aims to assist the Government in developing sound strategy and guidelines for the PSU reform. By providing the needed technical assistance, it will help ensure that the proposed reform strategy and guidelines are developed within the right theoretical framework, reflect the full complexity of the PSU sector, and build on a wide range of relevant international experiences. The proposed technical assistance will have 2 components: (i) investigation into the current situation of PSUs and case studies of selected sectors; (ii) comparative study on international experiences.

780,000

Sep-02

Country Strengthening Public Health Programs in Rural Poverty Areas

The proposed TA will seek to (a) rationalize the health services through functional coordination and through the implementation of the regional planning policy already adopted by the Government; and (b) improve health status of the populations living in the poorest areas of the country by improving access and quality of the services and by increasing service utilization.

564,000

CHINA

63

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

4 Country Promoting Rural Financial (RF) Markets

The objective of this grant would be: 1. Studying pertinent issues in Chinese rural financial markets· Surveying demand for and supply of rural finance, both formal and informal· Providing recommendations on optimal corporate governance of RFIs and appropriate regulatory framework

2. Knowledge sharing for capacity building· Seminars and training workshops to disseminate research methodologies and findings· Seminars and training workshops to disseminate RF best practices in regulating RF markets· Guided study tours to select countries known for their implementation of best practices in rural finance

14,684

4 Country Labor Market Policy Development: Addressing Unemployment and Developing Human Resources for the Future

This proposed TA will support Chinese governments (central, provincial, municipal) in pushing forward a reform agenda that (a) promotes the integration of the national labor market, (b) develops sustainable and effective social protection instruments for workers, and (c) institutes a human resource development strategy for the longer-term development of the workforce. To assist policy-makers in the discussion and formulation of this labor market reform agenda, a two-year technical assistance program focusing on policy development and capacity building is being proposed. The program includes three components: (1) labor market analysis and policy development; (2) assistance in applied and operational issues related to the employment support programs; (3) capacity building of officials through training and seminars.

450,000

4 Country Building Capital Flow Vulnerability Analysis and Early Warning System in China

The proposed TA will support the ongoing efforts of the Chinese authorities towards enhancing their risk management capacity by incorporating capital flow-related databases into an early warning system, and developing and training relevant staff to do vulnerability analysis on a regular basis so as to support external risk management decision-making in China. It will also monitor the external risks emanating from increasing capital liberalization in the post-WTO period, and towards enhancing exchange rate-monetary policy-fiscal coordination. The main components of the proposed TA include: (a) putting in place a monitoring system for short-term capital flows; (b) estimating international investment positions in China; (c) establishing an early warning system; and (d) providing training for SAFE staff on the recording, monitoring, management and analysis of cross-border capital flows and exposure to international best practice.

640,100

4 Country Enterprise, Privatization, Restructuring and Governance

The objective of this grant would be: 1). Privatization – Survey and analysis of Chinese privatization experience; comparisons with OECD and East European experience; and recommendations on pre-sale enterprise preparation and organization of enterprise sales; 2). Restructuring – Survey and analysis of Chinese SOE restructuring experience and recommendations on treatment of key restructuring issues (e.g, priorities among claimants); 3). Management performance monitoring and compensation – Survey of practices among large private companies and SOEs in China; recommendations for enhanced performance monitoring and compensation of key Ownership Agency staff and SOE directors; 4). Financial and risk management procedures – Case studies on best practices and problem areas in China; international comparisons; and recommended procedures manual; 5). Corporate governance procedures – Case studies on best practices in China; international comparisons; and recommended procedures manual.

650,000

CHINA

64

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

4 Country Insolvency Reform Consultants will develop up to ten case studies comparing likely results and legal and implementation issues from SOE bankruptcy or court-supervised reorganization under two alternative scenarios: (i) application of the new draft insolvency law or (ii) continued use of the 1986 SOE bankruptcy law. Based on findings from these case studies as well as relevant international experience, the Consultant would provide recommendations on additional insolvency reform to the Committee. The Consultant’s analysis would pay particular attention to the following issues: eligibility for submitting an SOE insolvency petition; commencement criteria for SOE bankruptcy or court-supervised reorganization; role of the administrator; the role of SOE workers in reorganization/bankruptcy cases; and potential financial sector and social costs under each scenario. Training workshops for judges, trustees, and other insolvency professionals would focus on key elements of the relevant insolvency legislation plus training in basic financial analyses and business issues likely to arise in insolvency cases.

300,000

Nov-03

Country Establishing a Professional Association of Government Financial Managers

The main purpose of this technical assistance project aims at establishing a Professional Association of Government Financial Managers (“the Association”). The Association will be an educational organization dedicated to the enhancement of public financial management. It will serve government accounting professionals by providing quality education, fostering professional development and certification, and supporting standards and research to advance government accountability. The TA provides for: (i) establishing initial bylaws and operating procedures for the Association governance; (ii) establishing an Implementation Committee (IC) providing advisory services to members of the IC; (iii) supporting the development of Journal of Government Financial Management (iv) providing leadership training; and (v) institutional support.

300,000

Final Country Capacity for Regional Research on Poverty and Inequality

To support a new generation of coherent policies addressing poverty & regional inequality, this activity will deliver empirical tools & training to a prominent national Chinese research inst. & its regional counterparts. As several of China’s provinces are now among East Asia’s largest economies, more detailed insight into their own growth challenges & their role in national dev. is essential for the government. This new capacity will enable the State Council & other Chinese agencies to better understand detailed incidence & facilitate more equitable growth, extending its benefits to the low-income majority of the country. The project will include original data dev., research capacity dev., collaborative prototype studies, & regional training & dissemination workshops. These state-of-the-art data & modeling methods developed will establish a coherent framework for more sustainable, detailed & rigorous policy analysis. It should be noted that these methods can also be transferred to support policy research elsewhere, particularly in other East Asian economies targeted by ASEM initiative.

315,605

China Country Total 4,944,784 2,106,605 7,051,389% 70% 30%Number of Activities 10 4 14

CHINA

65

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

1 Country Supporting Pro-Poor Policy Development in a Decentralized Indonesia

The proposed TA will be used to support the development and activities of a body being created to assess the nature of poverty in Indonesia and to develop a medium- to long-term strategy to reduce poverty, including defining a role for national policies in a decentralized government, and establishing policy and program priorities.

207,500

1 Country Improving Fiscal Policy Analysis (Expansion of activities funded under ASEMI TF022661)

The proposed technical assistance would further improve fiscal policy in Indonesia by supporting MOF’s capacity to analyze macroeconomic effects on the budget, and effects of budgetary policy on the economy.

200,000

1 Bank Building Debt Management Capacity in Government

This project would support the multi-year process of building the capability in the Government of Indonesia to manage the country’s public debt along the lines of international sound practices along with other donors (such as AusAID, IMF, ADB and USAID) over the period July 2001- June 2004. It would supplement the technical assistance from other donors, such as AusAID, by facilitating the dissemination of additional international sound practices in sovereign debt management from other ASEM member countries.

250,000

2 Split Building Investor Confidence by Promoting Good Corporate Governance

The technical assistance (TA) is intended to raise awareness of the need for good corporate governance and strengthen corporate governance practices among regulators and corporations, including State Owned Enterprises (SOEs). The goal is to encourage more transparency, accountability, fairness and responsibility in the management of corporations in Indonesia – factors crucial in restoring investor confidence and in turn, developing a dynamic capital market. A developed capital market, in addition to bank financing, is vital for growth and a robust private sector driven economy.

501,000

Sep-02

Bank A Methodology for Regional Civil Service Reform

The proposed TA will develop methodologies for regional governments to address civil service issues. The methodologies will be developed in cooperation with selected regional governments under the guidance of a national steering committee, and building on international good practice. The TA will:(i) Identify key regional civil service issues..(ii) Identify key constraints on regional civil service management stemming from central regulation and policies.(iii) Develop key building blocs for civil service reforms; and(iv) Develop a civil service reform implementation plan.

547,200

Sep-02

Country Housing Finance Policy Reform

The proposed technical assistance will provide support to the housing finance policy reform program being developed by the Indonesian Government with the support of the World Bank. It will focus on the following two areas of assistance: 1. Assistance to the “interdepartmental team” on housing policy and financing options 2. Training seminars on housing program and finance options for bankers and market participants.

289,000

Sep-02

Country Poverty Reduction through Collective Action

The proposed TA will provide for a study on the determinants of the capacity for collective action of the urban poor in Indonesia. It will be carried out in the context of a community driven dev. (CDD) project, the Second Urban Poverty Project (UPP2) that was signed with the government in Sep. 2002. It will involve the collection of data prior to and following project implementation (at the mid-term) & will combine qualitative and quantitative analysis. Another unique feature is the inclusion of control groups in the qualitative analysis. As such, this will constitute a pioneering piece of work in the area of CDD projects in the Bank since such a comprehensive analysis has not been carried out on Bank-financed CDD projects to date. The expectation is that the results of this study will not only inform our understanding of CDD approaches, but also feed into the design of government-sponsored community driven dev. activities in urban areas in the future. The study is closely linked with GOI’s mid-term evaluation of the UPP2 & will form a critical input into the evaluation.

297,700

INDONESIA

66

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

Nov-03

Country Developing a Diversified Financial Sector in Indonesia: Strengthening Capacity of the Capital Market and Non-Bank Financial Institutions

The TA is intended to substantially further the process of developing a diversified financial sector in Indonesia by strengthening the regulators of the Indonesian capital market and non-bank financial institutions (NBFIs) through promoting international standards and best practices among the regulators. The proposed TA will provide assistance to five beneficiary agencies: the Capital Market Supervisory Agency (BAPEPAM), Jakarta Stock Exchange (JSX) and other self regulating organizations (SROs), Directorate of Insurance, Directorate of Pension Funds and Directorate of Banking and Other Financing Services. The beneficiaries can be grouped under two categories: Capital Market and NBFIs. Each of the five beneficiary agencies is proposing assistance to improve its standards and regulations as well as surveillance and enforcement. International experts would be sought to assist the agencies in these areas on longer term basis (nine months). Additionally, an extensive program for capacity building of the agencies’ staff is proposed as encouraged by the Bali Initiative (ASEM meeting in July 2003).

1,716,600

Nov-03

Country Environmental Governance and Sustainable Cities Initiative

The main purpose of this Grant is to provide technical assistance to the Ministry of Environment (KLH) to improve the overall scope, quality, and implementation of its Good Environmental Governance Program and related activities, and by doing so, ensure that the long-term benefits of decentralization are achieved. The proposed technical assistance will have four components: (i) Strengthening Public Environmental Awareness; (ii) Enhancing Monitoring and Evaluation Systems to Measure Environmental Performance; (iii) Capacity Building to Develop Strategic Environmental Plans (i.e. on sanitation, solid waste collection, water quality); and (iv) Financing Mechanisms for Urban Environmental Services

457,350

Nov-03

Country Institutional Strengthening for Department of Community and Village Development

This technical assistance proposal consists of three activities :

(i) assessment of PMD,s revised mission, organization, staffing, budget structure and managerial capacities by a professional management consultant;(ii) a participatory assessment by PMD regional and national offices of PMD's revised structure and functions under decentralization;(iii) Preparation of an organizational improvement plan for PMD/Ministry of Home Affairs management review, to be issued as a Ministerial decision.

602,900

Nov-03

Country Strengthening Fiscal Policy Analysis Capacity In Ministry of Finance

The primary objective of the proposed grant involves working with the core MODFI staff on an important modeling addition and reinforcing the use of the model and training on its dissemination during an important transition to a new structure at the Ministry of Finance. The second key extension objective is to reach wider user-groups in and outside the MoF (especially university and research institutions). Finally, to meet the growing need for improvement in the policy analysis capacity in finance and financial institutions.

360,000

Nov-03

Country Designing Effective Community Empowerment Programs

The purpose of this TA is to help the Indonesian State Ministry for National Development Planning (Bappenas) improve its capacity to analyze, program, and evaluate its community development projects. The proposed TA will develop and implement methodologies, databases, and standardized analytical approaches that allow Bappenas to assess and compare the costs and benefits from different kinds of community development projects. The TA will also help Bappenas develop job descriptions and standardized reporting formats for Bappenas decision-makers so that the capacities developed through the ASEM grant can be sustained after the project is complete.

450,000

INDONESIA

67

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

Nov-03

Country Rural Investment Climate Survey (RICS)

This activity will undertake a rural investment climate survey. The survey instrument would complement the general, urban-focused, investment climate survey underway beginning mid-2003 with the ADB and the WB supporting survey implementation by the Central Bureau of Statistics (BPS). The rural survey will draw on the methodological framework and survey instrument recently developed in the Agriculture and Rural Development Department of the WB and currently being piloted in Sri Lanka. Coverage will be both on- and off-Java, and will include (but not be restricted to) Districts (at a minimum twenty and up to sixty) currently included in the Initiatives For Local Governance Reform Project (ILGRP) under preparation. Apart from the usefulness of the analytical outcome and policy recommendations of this activity, it would also give Government experience with this diagnostic tool, and give it the capacity to implement it periodically in the future as part of guiding its policies and programs in support of rural economic growth.

200,000

Final Country Economic Benefits of Community Investment Projects

The study will cover three activities: (a) Calculation of Economic Internal Rate of Return which will sample approx. 200-250 rural infrastructure projects in approx. 100 villages in three major islands in Indonesia: Java, Sumatra and Sulawesi; (b) Calculation of Economic Impact of Rural Infrastructure on Villages, which will also examine the overall impact of infrastructure in project villages; and (c) Comparison of Village-Level Infrastructure, which will compare infrastructure with other village infrastructure. A Study Team Leader will be hired as a consultant to manage and direct this study. The Study Team Leader will oversee the work of a team of eight to ten engineers to be hired through the project. Two data entry operators will also need to be hired on a short-term basis. All MIS data and infrastructure reports will be made available to the study team through the executing agencies.

350,000

Final Country Human Resource Capacity Building of the Anti Corruption Commission

Indonesia’s National Dev. Programme 2001-2005 accords a high priority to fighting corruption & the national strategy includes the establishment of the Corruption Eradication Commission (KPK) which has the potential to be an important avenue in taking legal action & prosecuting corruptors as well as implement a comprehensive programme of prevention actions. KPK has been supported through Partnership for Governance Reform that brings together Government agencies with Dev. partners incl. WB & civil society organizations; however there is no capacity building provided once staff has been employed. The recruitment of permanent staff is scheduled to start in June 2004 & is expected to be completed by Oct. 2004. To build up KPK to ensure that it is solid institution that has integrity takes time & while all the above-mentioned strands of support contribute to the same overall goals, KPK remains hamstrung as regards the implementation of a comprehensive & flexible human resource dev. programme that will allow senior mgmt. to quickly respond to training & other related needs.

350,000

Indonesia Country Total 3,316,600 3,462,650 6,779,250% 49% 51%Number of Activities 6 9 15

INDONESIA

68

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

1 Country Knowledge Enhancement of Key Issues in Corporate Governance

The technical assistance aims to complement the ongoing efforts in the Philippines by the government, private sector, civil society and the World Bank to improve corporate governance. The TA is designed to continue to address capacity building in institutions following the financial crisis by building upon current momentum in addressing important issues in corporate governance through improved learning programs and the dissemination of information on key issues in corporate governance.

444,000

Sep-02

Split Pension Reform The proposed TA will support the following activities aimed at improving the systemic deficiencies of the system: (a) rationalizing the existing pension schemes: SSS, GSIS, and Armed Forces of the Philippines Retirement and Separation Benefit System (AFP-RSBS); (b) improving pension management; (c) improving pension fund investment governance and management; (d) defining pension eligibility, and, (e) assessing the related fiscal transition costs and possible sources of funding. At the same time, this grant will facilitate the definition of structural pre-requisites needed for a new pension system.

992,500

Sep-02

Split Sustainable Poverty Reduction and Good Governance

The proposed TA will provide institution-building technical assistance to strengthen macroeconomic stability and reduce poverty and vulnerability to future crises, focusing on priority areas not covered by other sources of technical assistance. The grant will finance the following activities: (1) Strengthening the management of fiscal risks; (2) Strengthening local government units’ effectiveness in poverty alleviation and service delivery; (3) Enhancing the pro-poor impact of public expenditures through more effective oversight arrangements; (4) Improving judicial effectiveness by supporting civil society involvement in judicial appointments; and (5) Grant implementation, coordination and audit arrangements.

819,000

Sep-02

Bank Closing the Productivity Gap

The proposed TA aims to establish key policy actions that would strengthen firm-level productivity growth by deepening linkages between foreign trade and investment on the one hand and domestic economic activity on the other. Improved productivity growth in turn would complement corporate restructuring efforts by increasing the private sector’s resilience to future crisis, as well as deliver greater poverty reduction benefits by boosting income growth. Starting from Philippines’ strengths, the proposed work would focus on the following two questions: 1. How can trade and FDI inflows be better linked to domestic firms, resulting in an upgrading of domestic technological capabilities?2. How can the relatively high education levels in the country be better leveraged to both attract knowledge-intensive FDI and improve the domestic absorptive capacity for receiving technological spillovers?

300,000

4 Split Poverty Monitoring and Analysis

The goal of the technical assistance is to enhance impacts of poverty analysis in policy-making to ensure that decisions of the government are based on informed analysis, and resources are allocated for interventions with maximal impacts on poverty reduction. Building on the strong caliber of its staff, the government has requested Bank’s assistance to aid government agencies in improving the methodology for estimating official poverty statistics and in enhancing their analytical tools in poverty monitoring and analysis. Thus, the technical assistance will take the form of capacity building activities in improving the quality of poverty measurement methodology and analysis as well as enhancing quality of data.

755,250

4 Country Strengthening Capacity for Bank Supervision

The proposed technical assistance builds upon the activities already undertaken with resources from previous grants and policy dialogue with the Government following the Financial Sector Assessment Program (FSAP) in 2001. Specifically, this grant will provide technical advisory support to strengthen the central bank’s capacity to supervise the banking sector under the following components: (1) Development of information technology (IT) supervision capacity; (2) Strengthening capacity for risk based consolidated supervision; and (3) Grant implementation.

479,650

PHILIPPINES

69

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

Nov-03

Country Strengthening the Implementation and Enforcement Capacity of Procurement Institutions for Sustainable Good Governance

To provide technical assistance to strengthen the capacity of the Government Procurement Policy Board (GPPB) to enforce and implement the Government Procurement Reform Act and its implementing rules and regulations (IRR). The Grant will finance the following activities: 1. The customization and pilot testing in four specific government agencies of the finalized generic procurement manual;2. Training of government agencies, including the local government units (LGUs), suppliers, consultants & contractors, in the implementation of standard bidding documents, contracts & forms;3. Ensuring the proper implementation and enforcement by procuring entities of the Law and its IRR, including the LGUs;4. Implementation of Bids and Awards Committee Observer Guidelines;5. Provision of grant implementation arrangement to support the GPPB-Technical Services Office (TSO).

716,000

Final Country Strengthening the Institution of the Office of the Ombudsman for Good Governance

The objective of the Grant is to support the Office of the Ombudsman in its anti-corruption activities and improve public sector governance through selected technical assistance and capacity building activities, including:1. Strengthening the knowledge and skills of field investigators in case preparation and prosecution.2. Support the design of a case monitoring and tracking system. 3. Support the design of a data banking system for the Statement of Assets and Liabilities, and Net Worth (SALN) of public officials. 4. Grant implementation arrangements that will support the proper execution of the Grant.

716,600

Philippines Country Total 2,932,150 2,290,850 5,223,000% 56% 44%Number of Activities 5 3 8

PHILIPPINES

70

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

1 Split Capacity Building and Strategy for Poverty Reduction

The work to be undertaken in this project will be the second, and pivotal phase that would build on earlier work supported by an ASEMI grant for poverty alleviation and social protection (TF021242) and the regional ASEM grant on Social Indicators (TF023261).

582,000

2 Country Out of Court Mediation Capacity Building Project

The proposed ASEM project will provide technical assistance to the Dispute Resolution Office within the Office of the Courts of Justice. The objectives are to strengthen its institutional capacity to administer out-of-court mediation for financial disputes, and in particular non-performing loan cases (NPLs), and to promote public understanding and awareness of an out-of-court mediation process. Effective mediation is a useful alternative mechanism to resolve financial disputes and NPL cases, reduce the current backlog in the Civil Courts where mortgages are enforced, and in some cases, to expedite corporate restructuring. This additional institutional capacity and dispute resolution framework will help the Thai authorities, debtors and creditors to accelerate recovery of the financial and corporate sectors, and will provide a better framework for new bank lending going forward.

400,000

Sep-02

Country Strengthening Governance and Social Service Delivery through Public Sector Reform

The proposed TA will support the Thai Government’s implementation of the on-going reforms to strengthen governance and improve social services delivery so as to facilitate the achievement of the Millennium Development Goals (MDG) and MDG+. The technical assistance will focus on three areas: (1.) Improving resource management for poverty reduction; (2.) Enhancing service delivery and strengthening governance; (3.) Strengthening external monitoring and evaluation of the public sector.

996,600

Sep-02

Country Strengthening Social Protection for the Working Population, the Poor and the Vulnerable in Thailand

The proposed TA through CDP-SP is intended to help Thailand develop a balanced social protection strategy through complementing the currently existing informal risk coping mechanisms with a more diverse set of public and market-based risk reduction, mitigation and coping mechanisms. In the relevant priority areas, CDP-SP seeks to improve the targeting, efficiency, cost-effectiveness and equity of social protection services. This process is aimed at assisting Thailand to develop policies and interventions in a manner that will promote inclusive, equitable and flexible labor markets and offer the poor and unemployed better social protection services.

985,000

Sep-02

Country Strategy and Implementation for a Competitive Financial Sector

The objectives would be to: (1.) Strengthen supervision and regulation of financial institutions in preparation for an FSAP currently planned by the authorities for FY-04. Strengthen quality control over auditors. ( 2.) A medium term strategy for the financial sector (blueprint) will be prepared by the authorities in consultation with the industry and outside experts. (3.) Transition from the current blanket government guarantee of deposits to a limited deposit insurance program and other aspects of a transition towards greater market discipline. (4.) Establish derivative products needed by firms to hedge basic risks, starting with interest rate futures. Remove tax distortions, which stymie product innovation in the financial markets. Promote a more balanced financial system by training institutional investors on bonds and portfolio management. Promote the development of institutional investors and products in the debt market. (5.) Formalize a regulatory and institutional framework for efficient micro finance.

990,000

4 Split Capacity Building and Strategy for Poverty Reduction II

The proposal will support the implementation of the second stage of CDP-PAM. The technical assistance will be in the form of capacity building activities, policy reform and social movement activities to support the efforts to successfully implement the poverty reduction strategy based on the Ninth Plan. The focus will continue to be to assist on a selective basis policy reforms of the government’s poverty reduction agenda through improved data, analysis, actions, and monitoring and evaluation. A central topic will be to enhance the knowledge of, and to design appropriate poverty strategies to reduce, spatial differences in poverty, inequality, and other social indicators. Despite Thailand’s impressive progress with poverty reduction, pockets of deprivation still exist and regional disparities are high. A better understanding of poverty at the local level is not just important for ensuring adequate monitoring in the context of the ongoing decentralization, but also for formulating appropriate policies to accelerate growth and poverty reduction in lagging regions.

920,000

THAILAND

71

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

4 Country Education Reform The proposal will support a series of activities for the implementation of the Government’s education reform program in three key areas, namely: i) education finance reform, ii) education decentralization and school-based management, and iii) teacher development. Specifically, one objective of the technical assistance would be to support review of the current funding arrangements for education in Thailand. This review would help identify the impact of these arrangements on the efficiency and equity of education service delivery and support the design of a new funding formula to improve the situation in the future. The technical assistance would also support the development of a model for decentralized school-based management as well as improvements in quality and professional development among in-service teachers in core curriculum areas.

850,000

4 Country Participatory Watershed Management for Ping River Basin

The purpose of this technical assistance is to build a participatory approach to water integrated watershed management in the Ping River in Northern Thailand. The development objective of this TA is to improve environmental quality in the Ping River Basin, which will contribute to achieving enhanced livelihood and health outcomes for the communities. This will be archived by: (a) developing a participatory micro-watershed management model that provides access to all stakeholders (communities, local government agencies and private sector enterprises) in the decision making process, and demonstrating its implementation; (b) enhancing capacity of stakeholders, especially local government and community groups, to participate in the planning, implementation and monitoring of interventions; (c) strengthening regulatory and incentive mechanism to modify behavior of watershed users; and (d) developing a results framework to monitor environment, health and livelihood outcomes.

700,000

Nov-03

Country Skills and Competitiveness for Poverty Reduction in Northeast Thailand

The development objective of the technical assistance is to reduce poverty in Northeast Thailand by: (a) increasing the productivity of skill and educational institutions;(b) Analyze the factors that influence the productivity of educational and training institutions in Thailand, particularly in the Northeast;(c) Facilitate competition and transparency among skill providing institutions;(d) Strengthen Thailand’s capacity for technological innovation;(e) Promote efficient use of public and private resources for ICT education.

These objectives will be addressed through three project components:1. Productivity Assessment of Skill Delivery Institutions. 2. Benchmarking portal of skill delivery institutions. 3. Capacity building and E-learning component.

370,300

Nov-03

Country Thailand’s Preparation for Financial Services Liberalization

The project would help the authorities to develop and disseminate Thailand’s strategy towards financial services liberalization in the following areas: (i) data analysis and costs and benefits of the strategic options for Thailand’s financial services liberalization and of the strengths and weaknesses of Thai financial institutions by business line; and (ii) workshops for stakeholders to disseminate the strategy and outcomes of the negotiations, including the effect on the local financial institutions and the Thai financial system.

218,000

Final Country Stimulating VCT and Early Recruitment into ART in Thailand

The objectives of this TA are to: (a) study how to stimulate demand for voluntary counseling and testing services (VCT) and facilitate early recruitment into antiretroviral therapy (ART) for people living with HIV/AIDS (PHAs); and then on the basis of said study, (b) design a set of pilot demand-side interventions to support the scale-up of the government’s program to ensure large-scale access to treatment for HIV/AIDS.

260,000

Thailand Country Total 1,608,000 5,663,900 7,271,900% 22% 78%Number of Activities 3 8 11

THAILAND

72

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

1 Country Strengthening Community Driven Development

The grant would establish for a period of about two years a small professional team to coordinate learning of lessons from community driven development (CDD). Lessons and findings would be discussed and disseminated through the Partnership to Assist the Poorest Communes (PAC), a forum established in 1999 to bring government, donors and NGOs together to support (CDD). The team would support PAC’s secretariat. The expected outcome would be the timely availability of data on CDD activities, lessons based on experience, improved government/donor coordination, shared guidance on effective CDD, potential cooperation of donor activities, and feedback for future CDD policy reform.

419,000

2 Country Support for the Operation and Monitoring of the Social Safety Net for Redundant Workers

The proposed project will support the government of Vietnam to implement the Social Safety Net (SSN) for State Owned Enterprise (SOE) workers and monitor the SSN Fund’s operation. It will provide technical assistance to build an efficient monitoring system right from the inception of the SSN Fund. The project will help to train government staff who are in charge of assisting the redundant SOE workers better understand the Fund’s procedures. A survey of retrenched workers will also be supported so that the government can monitor the SSN Fund’s performance using proper methodological guidelines as required by the PRSC.

342,000

2 Country Banking Reform Program (Twinning Arrangement for Bank for Investment and Development in Vietnam - BIDV)

The State Bank of Vietnam (SBV) through prior ASEM grants has define an overall framework for Bank Restructuring and has identified several developmental areas for the State Owned Commercial Banks (SOCBs) that have been incorporated into the individual SOCBs restructuring plans. The implementation of the SOCBs restructuring plans is the next critical step in the banking reform program as evidenced in the Poverty Reduction Support Credit (PRSC). The reform program included as part of this adjustment operation aims at transforming the SOCB’s into modern commercial banks; a task that requires substantial resources and highly specialized technical assistance that is not available locally. As such, this grant will fund the technical assistance for one SOCB through a twinning arrangement[1] with a reputable international banker or financial consultant firm.

694,000

Sep-02

Country Banking Sector Regulation, Supervision and Development

The proposed TA builds upon the activities already undertaken with resources from previous ASEM grants and activities financed with resources from several bilateral donors. Specifically, this grant will support the following activities: (a) a re-evaluation of SBV’s organizational structure aimed at improving its supervisory capacity (b) a review and update of selective banking sector laws and regulations; (c) the definition of measures needed to accelerate the development of the banking sector including, the need to level the playing field and widen access to credit; and, (d) the introduction of an enhanced operational environment based on international best practice to improve the competitiveness and profitability of the banking sector.

944,500

Sep-02

Country Enhancing Poverty Reduction in the Education Budget Processes

The proposed TA builds on the activities undertaken by the government of Vietnam with the support from DFID, EU and UNDP and WB. Specifically, the TF will allow MOET and related government agencies to: (i) review the experience and lessons learnt from the pilot provincial planning and budgeting; (ii) review the pilot education medium term expenditure framework exercises; (iii) study the implications of the Government’s Decree 10 (financial management of revenue-generating public institutions) with respect to efficiency gains as well as the impacts toward the vulnerable service users ; (iv) review the experience of the government trial of block grant financing and its implications for the annual and medium term budget processes; (v) strengthen the link between the annual budget and the public investment program; and (vi) propose revisions and new funding mechanisms in the application of the budget to education that mainstream poverty and efficiency objectives.

450,000

Sep-02

Country Monitoring of SOE New Establishment and Transformations

The proposed TA builds upon previous work undertaken in this area including resources from previous ASEM grants. Specifically this grant will support the work that is being done to consolidate data obtained from over a 1,000 sources so that both the Government and donors will have a clear view of the progress being achieved with State Owned Enterprise reform. This work is important for the specific economic benefits that it will bring and to facilitate the tracking of agreements made with the Government and donors led by the Bank under Poverty Reduction Support Credits.

660,000

VIETNAM

73

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

4 Country Banking Sector - SOCB Audit and BASLE Core Principle Assessment

The proposed technical assistance builds upon the activities already undertaken with resources from previous ASEM grants (TF022399 for Vietnam Banking Sector Restructuring, TF020583 for Banking Reform and Development and TF052046 for Banking Sector Regulation, Supervision and Development) and activities financed with resources from several bilateral donors. Specifically, these grant will support the following activities: (a) the Audits of one State Owned Commercial Bank (SOCB) based on International Accounting and Auditing Standards for a period of two years; and, (b) the completion of the BASEL core principle assessment and implementation of recommendations at SBV.

640,000

4 Country Training of Directors and Management of Enterprises on Corporate Governance

To educate and train directors, managers, and chief accountants of medium to large SOEs and private enterprises on their roles, duties, and accountabilities under the SOE Law and the Enterprise Law. The program will support the Academy of Finance of Vietnam in expanding its training capacity, through the training of trainers and development of a curriculum and training material on modern concepts and techniques of corporate governance. The TA provides for: (i) a training course for the trainers at the Academy of Finance; (ii) development of educational and reference materials; (iii) seminars and workshops to enhance awareness of modern corporate governance and shareholder rights among stakeholders; (iv) provision of research and advisory services to promote corporate governance in Vietnam; and (v) an assessment of corporate governance practices in accordance with OECD principles.

325,000

Nov-03

Country Accelerating Capital Markets Development

This proposed Project under the ASEM Trust Fund aims to assist the Vietnamese Government in increasing the provision of financial services to a broader range of enterprises through capital markets. The diversification of the financial sector will become increasingly critical as the formal financial sector grows because underdevelopment of the capital markets intensifies banking sector risk (due to over-reliance on bank credit) and reduces prospects for improved governance due to the lower market presence of institutional investors. This technical assistance program will include the following components: (a) Improving the SSC capacity in policymaking and securities market regulation; (b) Increasing and promoting the quantity, quality, and diversification of instruments offered in the securities market; (c) Strengthening the operations of securities market intermediaries; (d) Enhancing education, research, and awareness of the securities market; and (e) International exchanges and partnership activities.

650,000

Nov-03

Country Improving Banking Sector Transparency and Reforming Policy Lending

The proposed technical assistance is based on direct requests for assistance from the Vietnam Bank for Social Policies (VBSP), the Development Assistance Fund (DAF), and the SBV Accounting Department. The technical assistance will facilitate the reform of the policy lending institutions through: (a) regulatory and operational framework changes, (b) implementing sound accounting and financial management practices, (c) improving the human resource capacities, strengthening credit risk management functions, fund mobilization, project appraisal, and overall management practices, and (d) assessing the information technology and management information systems infrastructure needs. The project will also assist in the reform of the VAS Chart of Accounts and the VAS financial statement reporting format for banks, based on the requirements of IAS and other international best practices.

975,500

Nov-03

Country Mekong Housing Bank: Diagnostic Review and Preparation for Strategic Partnering/Equitization

The proposed TA is designed to bring the state owned commercial bank (SOCB) Mekong Housing Finance Bank to the point where it is ready to actively seek a strategic partner as an equity investor. Prerequisite steps that will be financed under this grant include an independent financial and portfolio audit of Mekong Housing Bank (MHB) for two years, a diagnostic assessment of its operations and a review of the external policy and legislative environment in which MHB operates. The TA will also help to clarify and align different stakeholder objectives in seeking a strategic partner for MHB, and to define the “type” of strategic investor sought in function of MHB strategic vision and market potential. This grant will also support selected pre-transaction institutional building activities necessary in the area of staff training and strengthening the bank’s internal control systems which are of key importance as MHB continues to grow at an extremely rapid pace. Building on the diagnostic work, the options and methodologies for selecting a strategic partner will be evaluated and potential investor interest assessed.

350,400

VIETNAM

74

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

Nov-03

Country Support for the Operation and Monitoring of the Social Safety Net for Redundant Workers (Phase 2)

The proposed project is to continue support the government of Vietnam to implement the Social Safety Net (SSN) for State Owned Enterprise (SOE) workers and monitor the SSN Fund’s operation in 2004-2005. It will continue to provide technical assistance to maintain an efficient monitoring system of the SSN Fund. This project is help the Government of Vietnam to promote state-owned-enterprise’s (SOE) restructuring program via effective activities of the established social safety net (SSN) for redundant workers caused by SOE’s reform. Following are three main components of technical assistance within framework of the project: 1. Facilitate a smooth operation of SSN Fund to support displaced workers from restructured SOEs;2. Training on SSN policy, regulations and procedures;3. Monitoring and Evaluation.

369,926

Nov-03

Country Support Development of Social Security Law (SSL) in Vietnam

The main objective of the proposed project is to support a task force within the Ministry of Labor and Social Affairs (MOLISA) on the preparation of the new social security law. The analytical work to be undertaken by the project includes the simulation of parametric reforms to assess the financial sustainability of the system, an evaluation of the incentives to participate based on household survey data, an assessment of the impact on labor demand based on enterprise data, and the discussion of changes in the financing of health care on the operation of the system. In performing the above tasks, the project will address several of the key issues: (i) Country-based upstream analysis feeding into "pro-poor" policies; (ii) Downstream policy impact analysis and (iii) Learning activities that build national capacity for macro-level analytical work.

434,500

Nov-03

Country Technical Twinning Arrangement for the Implementation of the BIDV Restructuring Plan

The proposed technical assistance will consist of three broad areas aimed at fully implementing the recommendations under TF050454. The first will be the facilitation of the effective implementation of the change management program, including on credit policies and procedures, asset liability management, and internal audit. The second will facilitate the development of strategic planning capacity, IT strategy to respond to impact of technological changes, and Management Information Systems (MIS) to improve risk management and corporate decision making. The third will be human resource capacity building to increase management and staff competency for sustained development.

874,000

Final Country Support for the resolution of non-performing debt and asset of state - owned enterprises

1. To support the Government to evaluate the current situation of non-performing debt and asset of SOEs in order to prepare a comprehensive strategy of resolution.

2. To support the Government to enhance the operational capacity of its agencies responsible for resolving non-performing debt and asset effectively and timely in order to speed up SOEs reform.

3. To support the Government to assess impacts of non-performing debt and asset resolution on effective operation of restructured SOEs and soundness of business environment for economic activities.

427,594

Final Country State Bank of Vietnam’s (SBV) Road Mapping/Master Planning Technical Assistances to Support of the Implementation of the International Economic Integration Strategy for the Banking Sector

The proposed technical assistance is intended to support SBV’s efforts to define all technical assistance (TA) and capacity building activities needed for the implementation of the “International Economic Integration Strategy of Vietnam’s Banking Sector” (Decision of the Governor of the State Bank of Vietnam No. 663, June 26, 2003) Specifically, this grant will facilitate the creation of a roadmap to integrate all TA needs and better utilize the financial assistance of bilateral and multilateral agencies and to improve the effectiveness and efficiency of the SBV to implement the International Economic Integration Strategy for the Banking Sector.

342,000

VIETNAM

75

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

VIETNAM

Final Country Support for Strengthening Evidence-Based Pro-Poor Policy Making in Vietnam

To achieve the set objective of supporting evidence-based pro-poor policy making, three types of activities are proposed under this TA: (i) to improve analytical skills for Vietnamese researchers and policy analysts, a series of technical training workshops in quantitative and qualitative analytical skills of direct relevance to the theme of pro-poor growth and inclusive development will be organized for Vietnamese researchers and policy analysts; (ii) to facilitate policy dialogues among stakeholders on the theme of pro-poor growth and inclusive development, numerous workshops will be carried out at both central and local levels with a strong focus on targeting policy makers and other stakeholders at the local level; (iii) to improve coordination among various stakeholders, necessary support will be provided to a newly established policy research unit, which will coordinate all international and local inputs into training, research and dissemination activities.

305,640

Vietnam Country Total 6,882,994 2,321,066 9,204,060% 75% 25%Number of Activities 11 6 17

76

Country

Round

Exec. By Project Title TA Summary Financial (US$)

Social (US$)

Total Grant Amount by

Country (US$)

1 Bank Building Capacity for Decentralized Financing and Delivery of Services

The proposed technical assistance will complement decentralization reforms underway through out the region and will strengthen World Bank support in these areas. The technical assistance will focus on three areas: (i) Strengthening the policy framework for decentralization, (ii) Sharing regional and international knowledge and experience in improving local government service delivery and financing, and (iii) Strengthening the capability of local training and professional institutions to train government officials.

1,000,000

1 Bank Poverty Mapping in Indonesia, Thailand and China

The objective of this project is to improve understanding about the geographic incidence of poverty at far smaller levels of spatial aggregation than has been possible so far. The project will provide technical assistance to researchers and staff in national statistical offices to implement the poverty mapping methodology discussed above. It is proposed that the poverty mapping methodology be implemented in Indonesia, Thailand and China in the first instance, with possible extension to other countries in the region, e.g., the Philippines, and Vietnam in the second phase.

985,000

2 Bank Regional ASEM Forum on Public Debt Management

The proposed grant will support the ASEM Forum on Public Debt Management that was endorsed at the December 2000 meeting of ASEM Deputies in Tokyo. This annual Forum, the first of which will be held in November 2001 in Thailand, is aimed at directly facilitating and promoting knowledge sharing and dialogue among those involved in public debt management policy formulation and its implementation in East Asia and other ASEM member countries.

75,000

2 Bank Corporate Dynamics and Restructuring in East Asia, 2000-10

The proposed capacity building under this ASEM project would complement and contribute to the efforts made todate in the area of corporate and financial and policies and institutional changes. This proposal is part of a 2-phase activity, in which the second phase will entail a European workshop to disseminate the project’s findings. Specifically, in the first phase, the corporate restructuring agenda will focus on building local institutions’ ability to link improvements in this area with the demands of a competitive global economy via development and training in methodological tools, including surveys and competitive analysis, and training seminars.

108,000

4 Bank Improving Information and Analytical Capacity for Monitoring and Evaluation of Human Development

The proposed TA will have three major components: (i) Enhancing Monitoring and Evaluation Systems, (ii) Capacity Building, and (iii) Strengthening Policy Analysis. These components will lead to the following outputs: (i) the production of a series of technical assessments (country-specific reports plus a regional comprehensive report summarizing the findings from the country studies), (ii) the formulation of improved data collection instruments, (iii) support of policy analyses that governments and technical agencies can use to guide policy decisions about HD, and (iv) training materials and workshop programs. An important outcome of the work is that it will enable the various countries that will participate to enhance their ability to better measure and monitor MDGs. It will also establish a network of expertise across the region to share information and exchange views that would be maintained through distance learning activities beyond the scope of the TA.

884,500

Nov-03

Bank Promotion of dialogue and sharing of experience between Europe and Asia on Regional Integration Issues with assistance from the Boao Forum Asia Secretariat (Hainan, China)

This project will facilitate dialogue & the sharing of experience between ASEM countries & the BFA Secretariat on social & economic dev. & regional integration issues. This project will also finance the components that draw specifically upon the regional integration experience of Europe & Asia, with exclusive participation in project activities from ASEM members & the BFA Secretariat based in Hainan (China). It would support ASEM beneficiaries’ learning from the EU of regional integration issues through the following: (i) enhanced dialogue through visits by experts teams (which would include the BFA secretariat as well as specialists from the ASEM beneficiary countries) to regional fora/institutes in Asia & Europe & participation of experts teams in their events; (ii) involvement of experts & institutes from ASEM countries in strengthening BFA Secretariat’s prog. of economic studies, with a focus on EU experience; (iii) outreach by the BFA Secretariat, incl. dissemination of information on regional integration experiences & support for extension of newsletter & website activities.

500,000

Regional Country Total 683,000 2,869,500 3,552,500% 19% 81%Number of Activities 3 3 6

20,367,528 18,714,571 39,082,099

52% 48%

38 33 71Total Number of Activities:

REGION

Total Grant Amount:

Total %:

77

2 Country Financial Sector Reform The proposed activities will provide technical assistance & capacity building to the Government of Indonesia in support of the dev. & implementation of its comprehensive medium term financial sector strategy to ensure sustainable reform of financial sector policies & institutions & to enhance the delivery of financial services to the poor. The technical assistance will be delivered in form or overall policy dialogue & workshop(s) on selected topics for policy makers to help the government in the definition & design of the strategy. It will also undertake an in-depth assessment of operations, financial results & market client base of semi-formal & informal rural/micro finance institutions to help to design & develop a program & policies for systemic build-up of the institutional capacity in these institutions. These activities have been divided into the following two components for the purpose of the proposal.

344,500

Sep-02

Productivity Growth and Export Competitiveness

The proposed TA will seek to identify and assess the main constraints to long-term growth in Indonesia by focusing on export competitiveness and productivity. More specifically, the proposal will evaluate how competitive Indonesia's exports are compared with its main competitors; where Indonesian exports stand in the technology ladder; and what the role of FDI is in promoting exports. The TA will also assess productivity of Indonesian firms; what determines the level of their productivity; and how efficient are the supply chains from factory to market. Finally, in light of the current decentralization, the proposal will look at how disparate the investment climate is across regions and which regions are potential "winners"; how decentralizaton is affecting the firms cost of production and the location of future investment; and whether labor policies at the regional level are eroding Indonesia's competitiveness.

330,000

Final Country Policy Reform, Capacity Building and Dev. of Information System on Trade of Wood Products

1. Policy Reform on Trade of Wood Products in Jakarta Provincial Government2. Development of Information System on Trade of Wood Products in Jakarta3. Capacity Building for the Jakarta Provincial Agriculture and Forestry Office in monitoring the trade of wood products in Jakarta.

250,000

PHILIPPINES

Final Country Strengthening Reforms in the Urban Shelter Programs for the Poor

The grant will focus on three broad areas of reform: a) Design of a national housing and shelter program that is truly responsive to the needs and circumstances of the urban poor. Better diagnostics on the demand, affordability and sustainability of financing are the major challenges being addressed ; b) The institutional base of the national shelter and housing program, specifically the CMP, which needs to be strengthen. But apart from looking at the national shelter agencies, better functioning of CMP originators, beneficiary organizations, and even social housing developers will be tackled by the project; c) Processes involved, namely in housing loan applications (numerous, tedious, slow and cumbersome), in loan recovery (while repayment under CMP is relatively high, leaves much room for improvement), and in substitution of approved beneficiaries under the program (system lends itself to leakages, resulting in likely capture by middle-income groups of the what was designed as pro-poor housing program).

500,000

INDONESIA

CANCELLED GRANT