East Asia and Pacific Fast Facts, Countries eligible for World Bank borrowing

Poverty at the $2-a-day level is estimated to have fallen to its all-time lowest levels—to about 40 percent for the region as a whole. Most countries have experienced declines in poverty, including countries such as Indonesia, the Philippines, and Thailand, where poverty rates had risen after the 1997–98 financial crisis, but where they have now fallen back to or are approaching precrisis levels.

In 2003 the recovery in the region has been buffeted by a number of unexpected shocks: the outbreak of the sudden acute respiratory syndrome (SARS) virus, uncertainty associated with the Iraq war, higher oil prices, and renewed weakness in the developed world. However, with the SARS epidemic having been controlled and the number of new cases having trailed off by the end of the second quarter, regional growth should still reach or exceed a relatively robust 5 percent in 2003. For the longer term the outlook for the region remains positive, provided countries continue to focus on improving public security and rule of law, maintaining sound macroeconomic management, and strengthening governance. In addition, countries need to complete the restructuring agenda left over from the crisis, improve financial sector supervision and regulation, and undertake broader reforms to strengthen the investment climate.

BANK ASSISTANCE

During the fiscal year, the World Bank supplemented policy advice and technical support with $2.3 billion in new loans. The Bank continues to focus on:

BUILDING THE CLIMATE FOR INVESTMENT

The Bank is working in a number of areas to help create the kind of environment necessary for sustainable growth and poverty reduction.

Investment Climate Assessments, under way in Cambodia, China, Indonesia, Malaysia, Mongolia, the Philippines, and Thailand, aim at improving the institutional environment for private investment and identifying reforms that will lead to higher productivity, more efficient firms, and ultimately more job creation. In Mongolia a legal reform project is supporting the establishment of an administrative court system, capacity building for legal and judicial information, and legal education. In China a team of Bank experts is advising senior officials on financial sector reform, including bank restructuring, capital market development, finance for small firms, and rural finance. And the Bank is using its semiannual reviews of the region’s economic prospects, trends, and issues to increasingly add to the policy debate throughout the region.

The Bank is emphasizing innovative activities throughout East Asia. To assist the region in meeting high-tech challenges of an increasingly competitive world, a new study, Innovative East Asia: the Future of Growth, offers a set of policy measures for developing and strengthening innovative capabilities. The Global Development Learning Network (GDLN) provides regional and country-specific knowledge programs in 14 centers throughout Asia. And a new initiative, InfoCity, has been building electronic networks among city governments in the Philippines—and expanding to China and Indonesia—to foster partnerships and exchange the latest practices and innovations for city management.

The Bank addresses governance issues through supporting programs that decentralize government and build government capacity; at the same time, the Bank supports programs emphasizing public sector transparency and greater stakeholder participation. It is currently studying e-government initiatives to assess the role those initiatives might play in decreasing corruption through greater transparency and enabling greater citizen interaction with government. Two capacity-building projects in Cambodia and the Lao People’s Democratic Republic are helping strengthen government capacity in a number of areas: management practices, policy development and implementation, public expenditure management, human resource management, governance, and public administration. And in Indonesia the Partnership for Governance Reform continues to make advances on anticorruption initiatives and reforms in the civil service and in the legal and judicial sectors.

EMPOWERING POOR PEOPLE

The Bank focuses on policies and institutions that help households manage social risks, build an effective social policy framework, and enable poor people to participate in the benefits of growth. A key point of its strategy in low-income countries is assisting the government in developing a Poverty Reduction Strategy Paper (PRSP)—a country-owned framework of macroeconomic, structural, and social policies and programs needed to promote growth and reduce poverty. Another important element is a rural development initiative aimed at increasing incomes and opportunities in rural areas, given that well over three-quarters of East Asian poor people live in rural areas.

Social programs have increasingly emphasized community empowerment and demand-driven approaches to promote efficiency, transparency, and effectiveness. In Timor-Leste the First Agriculture Rehabilitation Project has helped communities receive farm animals and farm tools, has repaired small irrigation schemes and roads, and has trained agriculture staff. The Second Kecamatan Development Project is benefiting 25 to 30 million rural Indonesians by giving villagers tools for developing their own community through investments in basic infrastructure such as feeder roads, drainage canals, markets, water supply pipes, and microcredit schemes.

The Philippines Social Fund for Peace and Development Project is working to foster lasting development in Mindanao by providing support to implement community projects and by involving the groups most affected by the ongoing conflict. In Mongolia the Sustainable Livelihoods Project is helping tackle poverty among the country’s rural nomads (41 percent of the population) by expanding their access to financing, providing small-scale investment in infrastructure, and assisting with pastoral risk management. And in China, where tuberculosis is the leading infectious cause of death, the Bank is helping finance an expansion of the national tuberculosis control program to reach more of the poor, who are disproportionately affected by the disease.

GLOBAL PRIORITIES

The Bank’s East Asia and Pacific region is focusing activities on the following global priorities.

Improving the Environment

The Bank integrates environmental components into much of its lending in rural, urban, water, and energy sectors. Furthermore, the Bank has forestry management programs under way in Cambodia, China, Papua New Guinea, and the Solomon Islands, and provides policy advice to Indonesia. The Bank is assisting China’s water management goals, including lending for flood prevention, irrigation system development, comprehensive river basin management, and water conservation in water-short agricultural areas of northern China. And the Bank is using the environment monitor series—annual country-based reports that track environmental issues of key concern to client countries—in most East Asian countries to keep environmental issues on the agenda of policymakers and public alike.

Fostering Trade

The Bank is advising countries and the region through research on the effects of trade and ways to improve integration in the region to benefit the country’s growth and achieve poverty reduction goals. Besides working with China on trade issues, the Bank is helping Cambodia and Lao PDR build in-country capacity to analyze the impacts of trade integration and to implement pro-poor trade policies. And the Bank also is advising Vietnam on World Trade Organization accession issues and providing assistance on the kinds of reforms Vietnam needs to undertake for accession. (See box 5.3.)

Helping Countries Reach the Millennium Development Goals

In addition to ongoing policy and lending work aimed at reaching the MDGs, the Bank is assisting countries, such as Cambodia, Lao PDR, Mongolia, Thailand, Timor-Leste, and Vietnam, with improving data collection and analysis and with building their capacity to monitor trends in poverty and social indicators.

Also Available:

Table 5.2: World Bank Lending to Borrowers by Theme and Sector
Figure 5.3: IBRD and IDA Lending by Theme
Figure 5.4: IBRD and IDA Lending by Sector