Transcript Slide 1

Industrial Master Plans and
Action Plans
Policy Design and Formulation in Developing
Countries
Proactive Industrial Policy



Even under globalization, industrial policy is both necessary and
possible. In fact, many countries already practice industrial policies
consistent with WTO, regional integration and bilateral FTAs.
But new policy must be different from old ones: planning, laissez-faire,
infant-industry promotion (Korea), FDI-led industrialization with slow
integration (ASEAN4).
Proactive industrial policy must satisfy the following:
 Promotion of markets and international integration
 A strong and wise state to guide the private sector
 Retaining sufficient policy tools for catching up
 Dynamic capacity building of both government and private sector
through concrete actions & projects
 Internalization of skills & technology
 Effective public-private partnership
 Deep industrial knowledge shared by government and businesses
Policy Learning




International best policy practices (and failures) must be collected and
compared systematically. East Asia abounds in good examples, but we
can also learn from other regions.
Using them as references and building blocks, government must
acquire general capability to create a policy most suitable for a
particular country, time and sector.
Do not copy other countries uncritically, or reject their experiences as
irrelevant. Learning (knowledge collection) and thinking (adaptation
to your country) must be combined.
Learning steps:




Collect and analyze policy documents of other countries
Seminars & advice by invited foreign officials and experts
Policy missions to foreign country governments (write reports)
Discuss how foreign experiences can be used in formulating policies
What to Be Learned?
Basics
 Policy
 Policy
 Policy
 Policy
content
procedure
organization
documentation
More advanced
 National leadership
 National movement for mindset change
 Developmental state (politics & development)
 Exit to an advanced society
Standard Policy Making Procedure
(Five Necessary Conditions)
5. A secretariat with sufficient authority and
responsibility to coordinate the entire process
Top leader
1. Vision
2. Consensus building
3. Documentation
Brainstorming
Studies
& surveys
Set broad
goals &
direction
Drafting
work
Comments
& revisions
(Drafting may
be outsourced)
Stakeholder
consultation
4. Substantive
stakeholder participation
Ministries
＆agencies
Businesses
Academics &
consultants
Regions &
localities
Finalize
& approve
Taiwan: Statute
for Industrial
Innovation, 2010
Brainstorming;
agreeing on goals
& directions
Task force
under
Ministry of
Economic Affairs
Minister providing
vision & key ideas
The 3-year process was
managed by Chung-hua
Institution for Economic
Research (a think tank
winning competitive bidding).
Stakeholder
consultations
Documentation
Private sector
hearings
with six sectoral
business
associations
Interministerial
meetings
Drafting
by MoEA
official with
lawyer’s
help for
wording
Further
revision &
approval
by National
Assembly
with MoEA chairing
Dissemination
(“Island Tour”)
Thailand:
Automotive
Industry Master
Plan 2007-2011
Brainstorming;
agreeing on goals
& directions
“CEO Forum”
FDI & local firms
Exporters
MoI, MoST, MoEdu
Professors’ team
(Chulalornkorn Univ)
Business
Gov’t
Experts
(Informal)
The whole process (1
year) is managed by
Thailand Automotive
Institute (TAI) 
Set up formal
committee for
drafting M/P
M/P Steering
Committee
Organized by MOI
Subcommittees
study identified
issues
Human resource
Productivity
M/P
Drafting
By TAI staff
Businesses
Officials
Experts
Business
Gov’t
Experts
(Formal)
Marketing
Engineering
Investment
& linkage
Comment &
dissemination
Implementation
Vietnam: Traditional Policy Drafting Process
Prime
Minister
Review for
approval
Order
Submit
Drafting
Team
Minister
Interministerial
review
Submit
MPI & other
Ministries
Data
Internal
review
MPI & other
Ministries
Government
Appeal letter to
Prime Minister when
problems arise
Contact
Ministry when
necessary
Interviews,
symposiums
(sometimes)
Technical
assistance
(sometimes)
International
experts
Business Community
No permanent channel for continuous policy dialogue
(case-by-case, temporary, ad hoc)
Alternative Policy Organizations
Who will draft and execute policies, and how? The
following approaches are not mutually exclusive;
some countries use more than one.
 Technocrat group directly under PM or President
 National Councils or Committees
 Super-ministry
 Sector/issue-specific institute acting as a hub
 Strong leader without institutionalization
Technocrat Group Approach
- Elite technocrat group
with full planning authority
given by top leader
- Members are selected
officials, business leaders
& experts with good
education & experience
Korea – Econ. Planning Board
Malaysia – Econ. Planning Unit
Thailand – NESDB
Taiwan – Kuomintang Elites
Indonesia – BAPPENAS
Chile – “Chicago Boys”
PM or President
Direction, full
authority for
policy making
Faithful
execution and
reporting
Technocrat Group
(Policy Maker)
Policy,
guidance and
monitoring
Businesses
Academics
Experts
Faithful
execution
and reporting
Ministries (Policy Implementers)
National Council/Committee
Approach
PM or President
Chair, give mandate
Businesses
Academics
Experts
National Council
or Committee
Plan
Support
working groups or task forces
for specific issues and sectors
Ministries and agencies
Implement
Singapore Now: New Productivity Drive
Economic
Strategies
Committee:
Report
Chaired by Deputy PM
Members from ministries/agencies,
business, unions
Joint secretariat: MTI, MOM
(ministers)
National Productivity and
Continuing Education Council (NPCEC)
Review & submit
Oversight
Review & approval
Led by MTI, MOM (PS level)
Inter-agency coordination
Working Committee for Productivity and
Continuing Education (WCPCE)
Sectoral “Productivity Roadmap”
for the next 10 years
Draft & propose
Financial Incentives
Scrutiny
National
Productivity
Fund
Productivity Skills Dvt. Fund
& Innovation Lifelong Learning
Credit
E.F.
Sector working groups (12 priority sectors)
Construction
BCA
Unions
Industry
Electronics
EDB
Unions
Industry
Cross-cutting issues
Low wage workers
Research & benchmarking
Infocomm and logistics
Precision Eng. Transport Eng. General Mfg.
EDB
EDB
SPRING
Unions
Unions
Unions
Industry
Industry
Industry
F&B
SPRING
Unions
Industry
Retails
SPRING
Unions
Industry
My Proposal for Vietnamese Government
Prime Minister
Direct, give mandate
Plan
National Competitiveness Council
Commission
studies, reports
Chaired by PM (or DPM)
Secretariat: Government Office
Members: Heads of concerned
ministries
Support, report, draft
Working groups for specific issues or sectors
SMEs
Supporting
industries
Clusters
TVET
Higher Educ
Secretariat:
MPI
Secretariat:
MOIT
Secretariat:
MOIT
Secretariat:
MOLISA
Secretariat:
MOET
Ministries,
businesses,
experts
Ministries,
businesses,
experts
Ministries,
businesses,
experts
Ministries,
businesses,
experts
Ministries,
businesses,
experts
Ministries and agencies
Implement
Super Ministry Approach




One ministry with broad authority for industry
(sectors, trade, technology, training, standards, SMEs,
FDI, IPR, regional development…)
Performing multiple tasks—planning, interface with
politicians, working with businesses and other
stakeholders, trade negotiation, drafting laws and
regulations, monitoring, dissemination….
Highly motivated and capable officials and extensive
information networks are needed.
No charismatic leader is needed for this approach to
work.
Organizational Structure of Japan’s Ministry of
International Trade and Industry, 1960s
MITI
Minister
Politically appointed VM
Administrative VM
Deputy VMs
Special assistants
Main Bureau
Minister’s Secretariat
(incl. Research & Statistics)
Int’l Trade Policy Bureau
Int’l Trade Admin. Bureau
Industrial Policy Bureau
Industrial Location &
Environment Protection Bureau
Basic Industries Bureau
Machinery & Information Industries
Bureau
Consumer Goods Industries Bureau
Deliberation Councils
Industrial Structure
Export Insurance
Textile
Petroleum
Electrical Works
.........
Attached Organizations
and External Bureaus
Agency of National Resources
& Energy
Patent Office
SME Enterprise Agency
Agency of Industrial Science
& Technology
Trade & Investment Training
Other
(*) Industrial Structure Council:
influential in the 60s (18 special
committees): industrial pollution,
int’l economy, consumer economy,
heavy industry, chemical industry, etc.
Int’l Trade Transaction
Industrial Location & Water
Product Safety & Household Goods Quality Indication
Aircraft & Machinery Industry
Traditional Crafts Industry
...................
Special Institute as a Hub




Government creates/designates a special institute for
promoting a specific sector or a specific issue.
This institute becomes a hub of policy making and
implementation (secretariat function)—as well as a
service provider for consultation, training, testing, etc.
The institute works closely with relevant ministries,
businesses and experts/researchers.
The institute prepares a policy draft.
Thailand: Special Institute
Name
Thailand Productivity Institute
(around the time of Asian Financial Crisis)
Start-up date
Jun. 1995
Thai-German Institute
Organizations
Originated from MOI industry promotion dept. 20
Board members, 161 staff.
Nov. 1995
Financial cooperation from KfW, GDC. Technical
training (CNC, CAM/CAD, etc.), 12 Board members,
79 staff, 5 German experts.
Jun. 1997
Based on MOI industry promotion dept. and industry
association. 20 Board members, 27 staff.
Oct. 1996
Based on MOI industry promotion dept. and industry
association. 20 Board members, 27 staff.
Mar. 1999
Originated from Thai Industrial Standard Institute
(TISI). 14 Board members, 55 staff.
Apr. 1999
Supporting industry development. 20 Board
members, 28 staff
Electrical & Electronics Institute
(EEI)
Feb. 1999
Supporting industry development. 29 Board
members, 28 staff.
Foundation for Cane & Sugar
Research Institute
Apr. 1999
Originated from Cane & Sugar Research Institute.
13 Board members.
Jun. 1999
Modeled on Japan’s SME Univ. Operated by
Thammasat Univ. in cooperation with 8 local
universities. 21 Board members.
Thailand Textile Institute
National Food Institute (NFI)
Management Systems Certification
Institute (MSCI)
Thailand Automotive Institute (TAI)
Institute for SME Development
The Iron & Steel Institute of Thailand
Aimed at joint marketing promotion of four steel
Dec. 1998
(cabinet approval) companies (oversupply)
Thailand under Thaksin Administration
(2001-2006)
Strong PM, quick decision, running the country like a business corporation
Prime Minister
Visions to be
concretized
Instruct
Thailand should become:
-“Detroit of Asia”
-“Hub of Tropical Fashion”
-“Kitchen of the World,” etc.
Report
Direct
access
Private
sector
Relevant
ministry
Industry-specific
committees
High level
coordination
Specialized
institute
Operational level
coordination
Experts
Documentation




DraftingImplementationResults.
Producing documents is the means, not the end.
Generally speaking, short & concise is better than long
and complex. Large documents are usually not read.
Only include information and arguments necessary for
the policy actions proposed.
Drafters can be officials, consultants, academics or a
mixed team. As long as key contents are agreed and
necessary studies have been prepared, anyone can
draft policy documents.
Comparison of Master Plan Structure
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Malaysia: Third Industrial
Master Plan
Thailand: First Automotive
Industry ES
Thailand: Second
Automotive Industry ES
Thailand: Second
Automotive Industry
Vision
Thailand: Small and Medium
Enterprises
Thailand: Supporting
Industries ES
Targets
Situation analysis
Policy issues
Thailand: Food Industry ES
Thailand: Leather, leather
goods, footwear ES
Indonesia: National Industrial
Dev. Policy
India: National Strategy for
Manufacturing
India: Industrial Policy of
Maharashtra State
Action plans
Action Plan Template


The following template is actually used in Vietnam-Japan
Industrialization Strategy (2011-ongoing).
Only essential items are included to save time & energy;
total about 5 pages.
1. Situation analysis (about 2 pages, essential facts only for promoting
this industry)
2. Vision for 2020 (one sentence)
3. Targets (3-5 items, one phrase each)
4. Policy issues (3-5 items, one phrase each, policy efforts required for
targets above)
5. Action plan (who, what, by when, success criteria in table format)
6. Monitoring mechanism (1-2 sentences, common for all industries)
Thailand Automotive
M/P 2007-2011
Drafting team at Thailand Automotive Institute




Vision 2011  4 Objectives  5 Strategies  12 Action
Plans
Strong coordination by Mr. Vallop of Thailand
Automotive Institute
Effective stakeholder networking – FDI, local producers,
government, donors
Process-based action mechanism – annual budget and
projects for implementing actions (no matrix)
Thai Automotive Vision, 5 Strategies and
12 Action Plans
Vision—“Asia’s auto production base with value-added and strong parts industry”
Source: Thailand Automotive Institute, The Automotive Industry Master Plan 2007-2011 Executive Summary, p.4.
Vietnam-Japan Joint Initiative



Purpose: Improve Vietnam’s investment climate to
become an attractive investment destination
Background: (1) Japan is the largest implementer of
FDI and largest donor in Vietnam; (2) public private
dialogue; (2) Vietnam joined WTO in Jan. 2007.
Scheme: (1) Action Plan is agreed among Vietnamese &
Japanese governments and Japanese private companies.
(2) Monitor progress and announce final result.
Phase 1, 2003-2005 (44 items, 85% achieved)
Phase 2, 2006-2007 (46 items, 94% achieved)
Phase 3, 2008-2010 (37 items, 81% acheived)
Phase 4, 2011-2012 (70 items, 87% achieved)
Phase 5, 2013-2014 (100 items, ongoing)
Procedure for Action Plan
Vietnam-Japan
1. Japanese Business Associations in Vietnam identify
problems and study support measures.
2. Bilateral dialogue to agree on problems and solutions
(two governments & Japanese FDI)
3. Agree on Action Plan
4. Execute Action Plan
Vietnam—review/adjust laws and regulations
Japan—ODA support
5. Monitor Action Plan
Interim monitoring (one year later)
Final monitoring (two years later)
Organization for Action Plan
Vietnam-Japan (Phase 4)
Vietnamese Side
Ministry of Planning
and Investment (MPI)
Coordinate
Gov’t Office
M of Transp
M of Finance
M of Post/Tel
M of Industry
& Trade
M of Resource
M of Sci/Tech
M of Justice
M of Labor
Japanese Side
J.Embassy,
JICA,JETRO
in Vietnam
Co-work
Coordi
nate
MoFA
METI
Keidanren
Japanese Bus. Assn. (HN/HCM)
WT1 Power supply
WT2 Labor market
WT3 Macroeconomy
WT4 General (SI, IPR, customs)
WT5 Retail distribution
WT6 Infrastructure
A/P Drafting & Monitoring
Vietnam-Japan
Drafting Action Plan
Monitoring Action Plan
Joint Committee
Evaluation Committee
Task Force
Monitoring Committee
headed by
Japanese ambassador
Keidanren chairman
MPI Minister
headed by
Japanese ambassador
Keidanren chairman
MPI Minister
headed by MPI Minister & GD
attended by Japanese Bus. Assn.
headed by MPI Minister & GD
attended by Japanese Bus. Assn.
Japanese Consultants
Task Force
Hearing from companies
Preparing action plan draft
headed by MPI Secretary & DGD
attended by Japanese Bus. Assn.
Action Plan Format Sample:
(Phase I, Item 29) Adoption of international
accounting standard (total 2 pages)
(1) Current status—Explanation of current situation and citation
of relevant laws & regulations (2 paragraphs)
(2) Issues raised by enterprises—Gap between local and global
accounting system adds cost and ambiguity, etc (2 paragraphs)
(3) Views expressed by Vietnamese Gov’t—Statement of
proposed law revisions and future direction (2 paragraphs)
(4) Concrete solution measures:
1. Clarification of all accounting and auditing standards and
integration into international standards.
2. From 2004, PR & implementation of Accounting Law
Common deadline: Action within 2 years
Reasons for Success






Excellent bilateral relationship between VN & JP
High level political involvement
Public Private Partnership
Commitments with a deadline on Action Plan and
monitoring
Support by ODA for implementing Action Plan
Openness and transparency of the result
(Cited from the presentation of Mr. Kyoshiro Ichikawa, Senior
Investment Advisor & JICA expert, Hanoi, Dec. 2007)