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Asian experience on industrialisation and policy support by Japan

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Toru Homma

Senior Advisor on Private Sector Development Japan International Cooperation Agency (JICA), and JICA Investment Promotion Advisor Directorate of Investment and Company Administration (DICA), Myanmar South Africa, March 2015

Contents

1.

Some Asian experience on industrialisation

(Singapore, Malaysia, Cambodia, Myanmar, Overall) 2.

Examples of policy support by Japan

(Overall, Ethiopia, Indonesia) 3.

Implication

4.

Appendix

2

1.

Some Asian experience on industrialisation

(Singapore, Malaysia, Cambodia, Myanmar, Overall) 3

Singapore

Founding Father Lee Kuan Yew May rest in peace What he left

100 times growth of GDP per capita: around $500 (‘65)  $55,000 (‘13) (surpassed Japan in 2007) Poor small city state became Asian most rich country Most favourable business climate (9 years continuously No.1 in Doing Business) etc. through… 4

Singapore

Through Attracting foreign direct investment Efficient and effective administration – smooth doing business procedure Targeted approach – specific industries and anchor factories Competitive industrial zone (ex. Jurong Island for petrochemical industry) “Asian Hub” : Financial center, logistics hub (port and airport), Asian HQ and… 5

Singapore

…and

Productivity Movement

6

Singapore’s Productivity Movement

• Singapore’s interest in productivity dates back to the 1960s (early days of independence).

• In the early 80s, the govt. launched

Productivity Movement

, aiming at

mindset change

at all levels.

• Key to success: – Strong commitment of top leadership (Prime Minister Lee Kuan Yew himself: Made speeches every November) – Massive campaign (awareness raising), later combined with company-based consultancy – Tripartite cooperation among the govt., industry, & labor unions – Developing management consultancy capability in the private sector, by designing systems and incentives to mobilize those trained under the JICA project

Source: Ohno, I. (2010), modified by author.

7

Evolution of Productivity Movement

Awareness stage

1981-85

Action stage

1986-88

Follow-up stage

1989-90s 90s Create widespread awareness of productivity among companies and the workforce Translate “Awareness” into specific programs To improve productivity At the workplace Encourage ownership of

Productivity Movement

by private firms Start international cooperation

JICA-supported Productivity Development Project (PDP: 1983-90)

Training of NPB staff  NPB staff (with JICA experts)  Private management Massive campaign conduct company visits, consultants model company project, etc.

Source: Ohno, I. (2010).

8

Malaysia : Evolution of Industrial Policy

(Source) Ohno K. (2012)

Learning Industrialize: From Given Growth to Policy-aided Value Creation

, Routledge 9

Malaysia : Third Industrial Master Plan (IMP3) (2006-20) – Framework

 [Ch.1] Performance & challenges : trends in last period  [Ch.2] Macro-framework of the IMP3 : target, priority sector, strategy, policy, implementation mechanism  [Ch.3] External trade, [Ch.4] Investments  [Ch.5] SME Development [Ch.6] Branding  [Ch.7] Growth areas in the manufacturing sector : target industries  [Ch.8-13] Non-resource based industries (6 industries) : performance, prospects, challenges, strategies and policies  [Ch.14-19] Resource based industries (6 industries) : performance, prospects, challenges, strategies and policies  [Ch.20] Growth areas in services  [Ch.21] Development of Halal industries  [Ch.22] Enhancing domestic capability  [Ch.23] Human resource requirements  [Ch.24] ICT and other technology developments  [Ch.25] Logistics 10

Malaysia : Third Industrial Master Plan (IMP3) (2006-20) – Target Industries

 Non-resource based target industries (6) 1. Electrical and electronics: semiconductors, smartphones, PDAs, audio & visual products, PV fabricated wafers 2. Medical devices: hospital & laboratory equipment etc.

3. Textiles and apparel: packaging) primary textile and apparel, including garments and clothing accessories (labels, buttons, zippers and 4. Machinery and equipment: handling equipment, specialised machinery, packaging machinery, fuel cell power generators metal working machine tools, materials 5. Metals: stainless steel plates, cold-rolled coils, wire products, welding wires, galvanised iron and sheets 6. Transport equipment: passenger cars, speciality vehicles, engines, transmissions, automotive electronics components, vessels for coastal shipping, aircraft parts  Resource based target industries (6)  Petrochemicals, Pharmaceuticals, Wood-based (primary, secondary, tertiary, pulp/paper), Rubber-based (latex, tyres, industrial&general, footwear), Oil palm-based, Food Processing 11

Common Asian Experience on ‘Sustained Growth Acceleration’ • • •

From “JICA and JBIC (2008), Report of the Stocktaking Work on the Economic Development in Africa and the Asian Growth Experience”

Virtuous cycle of employment expansion and growth:

work-age population boost intensive industries absorption

domestic investment

 

labour increased savings

Central policy in this process was Export-

Oriented Industrialisation

Government played an important role in supporting long-term economic growth

12

Asian Governments’ role in supporting long-term economic growth

Many Asian governments: 1.

underwent industrialisation under development- oriented governments / leaders with long lasting stable governance 2.

promoted agricultural/rural development - ‘Green Revolution’ – before industrialisation

3.

controlled inflation at an adequate level through several policies and created high savings rates  investment in industry

Source: JICA and JBIC (2008).

13

Asian Governments’ role in supporting long-term economic growth

(continued)

4.

Many Asian countries: invested in education  high quality human capital for the industrialisation process 5.

6.

7.

invested in infrastructure (transport and electrification) using budgets and ODA from Japan etc.  foundation for industrialisation were integrated in the Flying Geese industrialisation pattern and regional trade/investment network Strategically shifted the industrialisation policy: 1 st ISI  1 st EOI  2 nd ISI  2 nd EOI

Source: JICA and JBIC (2008).

14

Industrial structural change in Asia

‘Flying Geese’ development pattern

[1] Shift of Leading Industry in Japan [2] Shift of Textile Industry in Asia [3] Division of Labor among Asian Countries

Time

Source: Ohno and Sakurai (1997) cited in JICA and JBIC (2008).

15

Diversified Asian Experience on Industrial Development Strategies

Diversity among countries

 Domestic capital dependent approach (South Korea, Taiwan, Japan) vs. foreign capital dependent approach (ASEAN 5)  Natural resource-rich countries (Indonesia, Malaysia, China) vs. natural resource-poor countries (Singapore, Thailand, South Korea, Taiwan, Japan)   Interventionalism vs. liberalism

Diversity among generations and other dimensions

  Shift in policy orientation over time: 1) ISI  Response to globalisation EOI, 2) Diversity in leading industries: Flying Geese formation  network based on dispersed manufacturing processes 16

Source: JICA and JBIC (2008).

Lessons learnt from the Asian Experience on Industrialisation

 Consideration must be given to uniqueness of individual economies and their sub-sectors.  Market interventions by governments at a level appropriate for one’s institutional capacities can be justified to address market failures.

 The importance of identifying future economic structures under a long-term vision of growth and the appropriate selection of pathways towards these goals.

Source: JICA and JBIC (2008).

17

Policy recommendations under an ‘Industrialisation Strategy’

1.

2.

3.

4.

Industrial development policies including trade and investment promotion (SEZs, SMEs) Development of fundamental growth-driving functions (infrastructure, HRD, credit markets) Agricultural and rural development as a basis for industrial development (cereal productivity, commercialised farming) Development of regional and extra-regional markets (cross-border infrastructure, tariff system, RECs)

Source: JICA and JBIC (2008).

18

What is Industrial Policy ?

• • •

The policy mix including targets and measures

which is (in a narrower sense): to be implemented in order to increase economic welfare level to be meant to achieve it by intervening inter industry/sector resource allocation or industrial organisation of individual industries to be implemented when market failure is observed in resource/income allocation in competitive market function

Source: modified from Ito, Kiyono, Okuno and Suzumura (1988)

19

Renewed interests in Industrial Policy

Common debates:

 Should not be intervened, let the market work

(Washington Consensus)

 Typical renewed counter-arguments  

“If industrial policy is so bad, how is it that in every era the fastest growing economies happen to be those with a strong industrial policy?” “Instead of debating whether we should target, we should debate what the optimal degrees of targeting are for different types of policies.” (Ha-Joon Chang, 2010)

20

“Proactive Industrial Strategy”

by Professor Ohno, National Graduate Institute for Policy Studies (GRIPS) 1. Strong commitment to global integration and private sector driven growth 2. A wise and strong government guiding private sector 3. Securing sufficient policy tools for latecomer industrialization 4. Constant policy learning through concrete projects and programs 5. Internalization of knowledge, skills and technology as a national goal 6. Effective public-private partnership 7. Collection and sharing of sufficient industrial information between government and businesses Followings also should be considered:  Time limit and graduation rule  Competitiveness and value creation  Clear selection criteria for priority sectors 

Source: Ohno, K. (2010)

Master Plans and Action Plans with an effective implementation mechanism 21

Standard policy menu regularly seen in East Asia (example)

Source: JICA and GRIPS (2011)

Intellectual Partnership for Africa: Industrial Policy Dialogue between Japan and Ethiopia.

22

Standard policy menu regularly seen in East Asia (continued)

Source: JICA and GRIPS (2011)

Intellectual Partnership for Africa: Industrial Policy Dialogue between Japan and Ethiopia.

23

Standard policy menu regularly seen in East Asia (continued)

Source: JICA and GRIPS (2011)

Intellectual Partnership for Africa: Industrial Policy Dialogue between Japan and Ethiopia.

24

Geographical Economics

(especially Great Mekong Subregion)

China India Myanmar Laos Vietnam Cambodia Bangladesh

KEYWORDS China+1 Thailand+1 Connectivity

Thailand Japan

25

Cambodia: open and welcoming approach

High concentration on light manufacturing esp. garment  Labour-intensive, Low labour cost  Typical feature: “CMT (Cut-Make-Trim)” garment/footwear  Caution of rapid increase of minimum wage: $61  $80(‘13.5)  $100(‘14.2)  Becoming a part of global supply chain (GSC)  “Thailand+1 approach”: horizontal division of labour at manufacturing process level  Quality investment  Foot-rooting, employment creation, responsible inv.

  Japanese investment is welcomed as Quality Investment  Individual approach by high-level for key/core investment Investment climate   Open investment policy, high focus on SEZs Now 2nd stage of Japanese investment rush by Aeon Mall  First super mall for Cambodia; 49/190 tenants are Japanese  From manufacturing sector to other sectors 26

Cambodia

Source: JICA Study Team (2011).

27

Various actions to be done by Investment Promotion Agency (CDC: Council for the Development of Cambodia) recommended

Actions for Investment Information Services

Action 1 Periodical update of investment guidebook Action 2 Periodical update of website Action 3 Periodical update of QIP manual for investors Action 4 Establishment of a library of investment-related information & data

Actions for PR Activities

Action 5 Set-up of units specialized in investment promotion of target countries Action 6 Improvement of investment seminar management Action 7 Training of provincial governments on investment promotion

Actions for Investment Consultation and Aftercare Services

Action 8 Upgrading of reception desk (Investors Desk) Action 9 Introduction of an investment approval tracking system Action10 Establishment and capacity development of aftercare service

Actions for Policy Advocacy

Action11 Formulation of a proposal for investment climate improvement

Actions for Organization and Management

Action12 Preparation and implementation of organizational reform Action13 Preparation of job description & job flow to enhance inv. Promo. function Action14 Introduction of task management system for effective provision of service Action15 Introduction of annual planning and budgeting mechanism Action16 Planning and implementation of training program Source: JICA Study Team (2010) 28

MYANMAR

Diversification of investment sectors

FDI inflow to Myanmar tripled in 2013/14

Diversification of investment sectors: increase of manufacturing 2013/14 (Latest)

(Unit: US$ Million) Total 1419

Total 4107 (2.9 times)

Note: 2013/14 = Myanmar fiscal year that starts on April 2013 and ends on March 2014 Source: DICA (2014); Homma (2014) 29

CMP (Cutting, Making and Packing)

Myanmar’s garment sector as its leading manufacturing industry is based on a system on processing charge-basis: Typically known as “CMP” in Myanmar -

Cutting, Making and Packing

• The CMP System is a form of production on consignment in which the main raw materials (fabrics and ancillary materials such as interlining cloths, lining materials, buttons and fasteners) are provided by overseas buyers and imported free of charge, then cut, sewn and packed in the domestic factories, after which all of the finished products are exported. (Kudo, 2012) • CMP consignment processing business emerged when the Asian Financial Crisis hit the Southeast Asian countries including Myanmar whose foreign exchange position deteriorated rapidly in 1997.

• The only payment required for this process is the “processing charge” (“CMP charge”) from the overseas buyers to the garment factories in Myanmar.

• The system made possible for the local garment manufactures to import raw materials without export earnings. The system provided a way to avoid foreign exchange settlement, which is the most difficult issue involved in importation in Myanmar Source: Interviews by the author from CMP enterprises and MGMA; Kudo T. (2012) “How has the Myanmar garment Industry evolved?” 30

CMP (Cutting, Making and Packing)

the way how it works Overseas buyers (Japan, Korea, China etc.) Supply raw materials free of charge (import tax exemption allowed) Export finished products Payment of CMP charge (8-10% of FOB value) No need to

X

prepare foreign currency for buying materials CMP businesses (factories)

Cutting, making & packing

Source: Homma 31

Garment export (almost all as CMP) expanding with drastic transition of major players

- Import value of main Myanmar garment importing countries Million USD 1000 800 600 USA Japan Total Japan S Korea EU China USA Others 400 EU South Korea 200 0 Source: MGMA (2014) based on Global Trade Atlas, processed by author

Note: 2013 data is incomplete and some EU countries’ and others contain only 10-11 months data

32

MYANMAR

Thilawa SEZ Development

Under development by both public and private sectors of both Myanmar and Japan. First Phase (211ha) of Class A Area (396ha) has been started to be sold. Total area is 2400 ha. New SEZ Law was enacted in January 2014.

located on the outskirts of Yangon

Source: JICA (2014) 33

2.

Examples of policy support by Japan

(Overall, Ethiopia, Indonesia) 34

Japan’s policy dialogue with developing countries

(selected list: in relation to industrial development)

Country Period Head/key players Purpose and content Argentina Thailand Vietnam Vietnam Indonesia 1985-1987 1994-1996 (folow up) Saburo Okita (former foreign minister) 1999 Shiro Mizutani (former MITI official) Comperehesive study on agriculture and livestock farming, industry, transport and export promotion Study on the master plan for SME promotion policy 1995-2001 Shigeru Ishikawa (professor) 2003-current 2000 Japanese embassy, JICA, JETRO, JBIC Shujiro Urata (professor) Large-scale joint study on macroeconomy, industry, agriculture, enterprise reform, crisis management, etc.

Bilateral joint initiative to improve business environment and strengthen competitiveness through 2-year monitoring cycle of action plans Policy recommendation for SME promotion Indonesia 2002-2004 Takashi Shiraishi and Shinji Asanuma (professors) Policy support for macroeconomic management, financial sector reform, SME promotion, private investment promotion, democratization, decentralization and human resource development Source: JICA and GRIPS (2011)

Intellectual Partnership for Africa: Industrial Policy Dialogue between Japan and Ethiopia.

Laos 2000-2005 Yonosuke Hara (professor) Study on macroeconomy, finance, state enterprise, FDI and poverty reduction, etc.

Myanmar 1999-2002 Konosuke Odaka (professor) Study on agriculture, rural development, industry, trade, finance, ITC, etc.

Mongolia Ethiopia 1998-2001 Hiroshi Ueno and Hideo Hashimoto (World Bank economists and professors) 2009-2011 GRIPS Development Forum and JICA Study on the support for economic transition and development Kaizen, basic metals and engineering, productivity movement, policy procedure and organization, etc.

Country Period Head/key players Purpose and content Argentina Thailand Vietnam Vietnam Indonesia Indonesia Laos Myanmar Mongolia Ethiopia Cambodia Ethiopia (Phase 2) 1985-1987 1994-1996 Saburo Okita (former foreign minister) (folow up) 1999 Shiro Mizutani (former MITI official) Comperehesive study on agriculture and livestock farming, industry, transport and export promotion Study on the master plan for SME promotion policy 1995-2001 Shigeru Ishikawa (professor) 2003-current 2000 Japanese embassy, JICA, JETRO, JBIC Shujiro Urata (professor) Large-scale joint study on macroeconomy, industry, agriculture, enterprise reform, crisis management, etc.

Bilateral joint initiative to improve business environment and strengthen competitiveness through 2-year monitoring cycle of action plans Policy recommendation for SME promotion Takashi Shiraishi and Shinji 2000-2005 Yonosuke Hara (professor) Policy support for macroeconomic management, financial sector reform, SME promotion, private investment promotion, democratization, decentralization and human resource development Study on macroeconomy, finance, state enterprise, FDI and poverty reduction, etc.

1999-2002 Konosuke Odaka (professor) Study on agriculture, rural development, industry, trade, finance, ITC, etc.

1998-2001 Hiroshi Ueno and Hideo Hashimoto (World Bank economists and professors) 2009-2011 2011-12 2011-15 GRIPS Development Forum and JICA Study on the support for economic transition and development Kaizen, basic metals and engineering, productivity movement, policy procedure and organization, etc.

JICA: Professor Shinji Asanuma as advisor FDI attraction, Global Value Chain, linkage with SMEs, supporting industries etc.

GRIPS Development Forum and JICA Export promotion, FDI -linked tech. transfer, light manufacturing, industrial park etc.

Source: JICA and GRIPS (2011)

Intellectual Partnership for Africa: Industrial Policy Dialogue between Japan and Ethiopia.

Author added some latest dialogue programmes

36

Major features of the Japan’s economic/industrial policy dialogue

Combination of intensive dialogues and complementary support such as field study, seminar and capacity building project  Comprehensive policy areas with some detailed topics  Interactive and dynamic/flexible topic selections  Role of policy intervention by the government often discussed  Aimed at inputting into mid-term national/sector policy plan/strategy  International comparison bringing success and failure from many countries’ experience based on JICA’s development support experience (not only Japan) 37

Ethiopia: Industrial Policy Dialogue Phase 1 (2009-11) & Phase 2 (2012-15)

Three Layers of Periodical Dialogue with Ethiopia

Dialogue with Prime Minister High Level Forum

with Ministers and State Ministers

Operational Level

Ministry of Industry (MoI) MoFED, MoARD, MoE, MoUDC , etc.

Every 3 months (Phase 1) Every 6 months (Phase 2)

Policy Dialogue Themes (example) 1. Policy Visions

Democratic Developmentalism, Agriculture Dev.-led Industrialization (ADLI), Light Manufacturing

2. Five Year Development Plans

GTP (10/11-14/15), GTP2 (15/16-19/20)

3. Sector Policies/Strategies

 Basic Metal & Engineering Industry  Industrial Development Strategy

4. Thematic Issues (Phase 2)

 Export Promotion / Champion Product Approach  FDI Promotion / FDI-linked Technology Transfer  Industrial Zone / Handholding

5. Cross-cutting Issues

 MSE Development Strategy  Policy Making Process and Organizations  National Movement of Productivity

Japan EOJ G R IPS JICA

National Graduate Institute for Policy Studies: Professors Kenichi Ohno & Izumi Ohno

Source: JICA (2013) modified by author.

38

MoI MPDC MoI - Kaizen Unit & EKI

Supplementary Firm-Level Study of Basic Metal and Engineering Industry (2010)

KAIZEN Project Phase1 (2009-11) & 2 (2011-14) JICA JICA Taskforce Team

Champion Product Approach (2012-)

JICA

GTP: Growth and Transformation Plan, MPDC: Metal Products Development Center, MoFED: Ministry of Finance and Economic Development, MoARD: Ministry of Agriculture and Rural Development, MoE: Ministry of Education, MoUDC: Ministry of Urban Development and Construction

Ethiopia: Industrial Policy Dialogue Phase 1 (2009-11) & Phase 2 (2012-15) With Former PM Meles at PM Office High-level Forum 39

Champion product approach

for export promotion in Ethiopia Candidates of Ethiopian Champion Products  Both Ethiopian and Japanese Prime Ministers are together at the African Fair 2013 in Yokohama, Japan in June 2013 at the Ethiopian booth which displays the Champion Products.

Source: JICA (2012) and Ethiopian Export Champion Products Task Force Team (2013) 40

KAIZEN in Ethiopia with JICA

 Strong initiative and request from Late Prime Minister Meles Zenawi (2008) to Japan  Creation of Kaizen Unit in MOIT*

*MOIT: Ministry of Industry & Trade

Phase I

: Study on Quality and Productivity Improvement (KAIZEN) (Oct 2009- Jun 2011)  National Plan making; 30 Pilot Companies; Capacity building of Kaizen Unit of MOIT  Establishment of

Ethiopian Kaizen Institute (EKI)

in 2011; now 76 EKI consultants 

Phase II

: Project for Capacity Building for Dissemination of Quality and Productivity Improvement (KAIZEN) (Nov 2011- Oct 2014)  Scale up – Large/Medium Enterprises (65), Micro/Small Enterprises (190)  Capacity building of EKI etc.

DG Mr. Getahun

41

Case of Indonesia - Industrial policy support -

 A series of policy support programmes in accordance with transition of policy focus:  1995-96: Master Plan Study on Supporting Industries Development  1997-98: Asian Financial Crisis  1999: F/U Study on Supporting Industries  2000: Policy Recommendation for SME Promotion  2002-04: Economic Policy Support Programme  2004-08: Indonesia-Japan High Level Public/Private Joint Forum on Investment (JFI)  … followed by several more frameworks until now 42

Comprehensive Policy Recommendation for SME Promotion

2000: A team headed by Prof. Shujiro Urata with officials from MITI, MOFA, JETRO, JICA was dispatched several times  Intensive dialogues followed by a report on comprehensive package of SME policy recommendation (Urata Report)  Widely acknowledged as comprehensive SME policy documents in particular in Ministry of Industry and Trade and other relevant ministries  All the JICA cooperation on SMEs were linked with its recommendation for a long time  Influenced Industrial Development Policy 2005-25 43

Comprehensive Policy Recommendation for SME Promotion - Brief contents -

Policy recommendation on financial aspects:  Credit guarantee system; public finance; equity finance; linkage between SME capacity building and SME lending systems etc.

 Policy recommendation on non-financial aspects:  SME management consultant, SME training center, production technology/quality improvement, supporting industries development, dynamic cluster creation, SME export promotion etc.

 Policy recommendation on administration:  Coordination mechanism, SME promotion law, local government capacity building etc.

44

Economic Policy Support Programme (2002-04, Indonesia)

 Objective:

to support Indonesian economic reform, concerning to the fiscal sustainability and the international competitiveness in particular, through widening the channels of policy dialogue and achieving closer communication between the two countries.

 Background:

Strong request from the President of Indonesia Ms Megawati to the Japan’s Prime Minister Mr Koizumi for high-level economic policy support to enhance economic recovery from the crisis with multiple issues to be tackled (2001)

 Frequency of dialogues:

6 times in Jakarta, 3 times in Tokyo, Wrap up seminars held in Jakarta and Tokyo each

45

Economic Policy Support Programme (2002-04, Indonesia)

Areas focused

(1) Macro economic policy (2) Financial sector reform (3) Private investment promotion (4) Development of Small and Medium-sized Enterprises (SMEs) (5) Decentralization (6) Democratization 46

Economic Policy Support Programme (2002-04, Indonesia)

 Inputs from both sides  Japanese side: dispatch 6 professors in each area  Indonesian side: set up an economic policy support team by issuing Presidential Decree No. 12 Year 2002  Major outputs    Intellectual inputs for the policy making and influences: for example, Draft New Investment Law making, Follow up of the Comprehensive SME Promotion Recommendation, Revision of decentralisation-related laws Policy advocacy for the major policies discussed through a series of comprehensive and sectoral seminars Input for the next cabinet: one of the members becomes a minister 47

3.

Implication

48

Summary and implications

        Plenty of practices and lessons available Proactive industrial strategy and policy menu Policy learning process - different background Various patterns of policy dialogue programme “Quality over speed” vs “Speed over quality” China +1 vs Thailand+1 --- in Africa? Asia as manufacturing base vs market potential South African investment is welcome 49

Thank you

www.dica.gov.mm

www.jica.go.jp

[email protected]

50

4.

Appendix

51

What is JICA?

Japan International Cooperation Agency (JICA)

Strong human network through more than 20,000/year personnel dispatched for training in Japan Human network with local public and private sectors established through more than 50 years cooperation Field network More than 100 overseas offices, 16 domestic offices can provide local information and know how More than 9,000 experts and 1,000 volunteers newly dispatched in FY2011 Expertise Staff and external experts with rich experience and knowledge in developing countries Comprehensiveness / public entity (1) Various cooperation menu; (2) Cooperation with partner governments 52

JICA Network: Offices in Africa

Tunisia Morocco Egypt Senegal Mali Niger Burkina Faso Sudan Sierra Leone Benin Nigeria Liberia Ghana Côte d’Ivoire Cameroon Gabon DRC South Sudan Djibouti Ethiopia Uganda Rwanda Burundi Kenya Tanzania Angola

Total: 34 offices

Zambia Malawi Zimbabwe Namibia Botswana Mozambique Madagascar South Africa

53

KAIZEN

改 善

‘kai’

Change

‘zen’

Better

改善 (Kaizen) simply means ‘Improvement’ 54

Basic features of KAIZEN

        

Quality

and

Productivity

Improvement

Incremental

and

continuous

improvement

Without

additional investment Participatory process and

bottom-up

from factory floors

(gemba)

With strong

commitment

of

top

management Practical

methods/tools

as well as

philosophy

Base of the

success

of well-known Japanese companies such as Toyota and even SMEs; Idea of KAIZEN is

embedded

in work style / daily life Already

spread

in the

world

Also spread from manufacturing to service, public and other

sectors

Source: modified from Masaaki Imai, “Kaizen: The Key to Japan’s Competitive Success”, McGraw-Hill/Irwin, 1986. etc.

55

KAIZEN methods / tools

Example of KAIZEN Tools

5S  Working Environment (see figure below) Muda dori QC 7 Tools QC Circle IE TQM  Elimination of waste  7 types of

muda

 Problem analysis & countermeasures  Small group activity  Industrial Engineering  Total Quality Management

Source: JICA’s World No.28 (2010)

5S

1.Seiri

(Sort) 2.Seiton

(Set) 3.Seiso

(Shine) 4.Seiketsu

(Standardize) 5.Shitsuke

(Sustain) 56

Initial impact of KAIZEN (Example in Ethiopia)

Through KAIZEN...

These need to be sustained = continuous improvement

Source: JICA (2011) and Homma (2013)

57

KAIZEN - spread in the world

Kaizen has already spread in the world! “5S” in many languages

Spanish Hindi French Vietnamese Indonesian Arabic Turkish Amharic Thai Croatia Montenegro Serbia Bosnia Khmer Portuguese English Swahili

Source: JICA’s World No.28 (2010)

58

JICA’s assistance in Kaizen

 Beginning with the project for Singapore in 1983  Spread from Asia America to and now in Eastern Europe, Latin Africa  Basically bi-lateral cooperation; a few regional cooperation (ex. Costa Rica - Central America)  Started for industrial development; and spread to other sector – hospital, electricity, public etc, 59

Basic approach of JICA KAIZEN Government policy Organization in charge of Kaizen dissemination (such as EKI)

Dissemi nation

Target companies / sectors

Services Capacity Development OJT

Support by

JICA

Master plan making, Dispatch of experts, Training program (Lecture, In-company), Pilot consultation for companies etc.

Source: Homma (2013)

60

JICA KAIZEN assistance spread in Africa towards industrial development

Tunisia Egypt LEGEND Project implemented/ing Project to launch Participation in JICA training program in Japan and third countries (2009) Ghana Cameroon Ethiopia Uganda Rwanda Kenya Tanzania Zambia Malawi Botswana Namibia Zimbabwe Mozam bique South Africa Lesotho Mauritius

Source: modified from Homma (2013).

61