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ANE Regional Activities
>> Regional Overview >> ANE Regional Activities Overview ACTIVITY DATA SHEET
PROGRAM: Asia and the Near East Regional
TITLE AND NUMBER: Accelerating Economic Recovery in Asia, 498-001
STATUS: Continuing
PLANNED FY 2001 OBLIGATION AND FUNDING SOURCE: None.
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: None.
INITIAL OBLIGATION: FY 1999 ESTIMATED COMPLETION DATE: FY 2001Summary: Much work remains to be done to help countries most affected by the Asian Financial crisis that have yet to resolve the deeply rooted systemic problems that paralyzed their economies in 1997 and 1998. In the 1990's Southeast Asian economies grew 7% to 8% a year on average. Projected gross domestic product (GDP) growth in 2001 for Southeast Asia is 4.2%. Gains in regional equity prices and currency values posted in 1999 were largely wiped out in 2000 due to the downturn of the American economy, and the rapid fall-off in the growth of electronics demand, which account for as much as 37% of regional GDP. Not only have currency inflows to Southeast Asia shrunk from $13 billion in 1999 to $9 billion in 2000, but there was a net outflow of $22.5 billion in 2000, most of it in debt repayment. Slow progress in corporate restructuring will continue to be a drag on economies in the medium term. Although progress was made to restructure corporate sector banking in 2000, much remains to be done. For example, many non-performing loans were removed from banks' books only to be transferred to publicly owned asset-management companies where they are still sitting. Moreover, politics in Southeast Asia in the last year have grown more volatile in the Philippines, Indonesia and Thailand, which raises the risk premium on investments.
USAID's Accelerating Economic Recovery in Asia (AERA) initiative has focused its five-year "relief-recovery-reform" approach initially on Indonesia, Thailand, and the Philippines. This past year, efforts were extended to Vietnam. AERA has three key objectives: (1) creating and saving jobs; (2) improving the targeting and coverage of safety nets; and (3) improving economic governance.
Key Results: The AERA program initiated activities in Indonesia and the Philippines in July 1999, and in Thailand in October 1999. AERA-funded activities provided technical assistance to the governments of Indonesia and the Philippines in drafting and enacting legislation that support reform packages negotiated with international financial institutions. In Indonesia, resistance to deeper reform has impeded significant progress on bank and enterprise restructuring. Nonetheless, USAID technical assistance to the Jakarta Initiative Task Force facilitated the execution of debt restructuring deals for about 18 companies valued at $625 million. USAID activities also contributed to the objectives of improved corporate and public governance. In the Philippines, AERA activities supporting the strengthening of the Securities and Exchange Commission resulted in the adoption of procedures for securities investigation, as well as new rules for adjudication of corporate recovery. In Indonesia, USAID-funded activities contributed to the adoption of four key laws, decrees and regulations in 1999. These measures include: the critical competition law that defines rules for competitive behavior by firms; anti-corruption law; arbitration law; and secured transactions law. This last law provides a previously lacking legal basis for registering secured interests in assets used as collateral.
Performance and Prospects: AERA activities are closely linked and coordinated with World Bank and Asian Development Bank crisis response efforts. The AERA program focuses on the technical assistance and training that complement ongoing structural adjustment loans funded by the International Monetary Fund or multilateral development banks. This close coordination will enable the program to have a significant impact, particularly in the areas of competitiveness, economic governance, financial and corporate debt restructuring. The program is working in a number of key areas in Indonesia, the Philippines, and Thailand. For example:
- The program established a center in Bangkok in December 1999 that advises small and medium sized enterprises (SME) on debt restructuring and restarting their operations. This organization has assisted more than 200 Thai businesses to diagnose and resolve their business problems.
- AERA funded commercial bank training for approximately 3,000 executives and staff from 12 Thai-owned banks has taken place. This training will help them reform and strengthen its bank supervision and on-site examination policies and procedures.
- With AERA assistance, Indonesia and the Philippines have undertaken legislative reforms in areas such as competition law, government procurement, consumer protection, arbitration and secured transactions.
- An AERA-funded grant to the U.S. Chamber of Commerce developed a U.S.-Thai SME matching facility that has generated over 3,600 matches, and over $50 million in negotiated business.
Possible Adjustments to Plans: Starting in FY 2001, funds will be obligated and activities will be reported under the new regional strategic objective "Encourage Economic Growth" (498-023).
Other Donor Programs: The World Bank, Asian Development Bank, International Monetary Fund and other bilateral development agencies have pledged more than $58 billion to help Indonesia, Thailand and the Philippines recover from the crisis. Most of these resources have taken the form of cash transfers to help the countries meet foreign exchange obligations. Although these resources have provided critical assistance and have supported essential policy and legal reforms, they have not delivered the necessary technical assistance and training to help the countries implement the policy changes. Thus, the AERA initiative complements other donor assistance by providing the technical expertise and training that will be essential to fully implement the reforms needed for economic recovery.
Principal Contractors, Grantees, or Agencies: AERA activities are being implemented through procurement instruments with; the Kenan Institute Asia, U.S. Department of Treasury, U.S. Chamber of Commerce, U.S. National Committee for Pacific Economic Cooperation, Deloitte Touche Tomatsu, Development Alternatives International, Robert Nathan Associates, KPMG Peat Marwick, American Center for International Labor Solidarity, U.S. Department of Commerce and The Asia Foundation.
Selected Performance Measures:
Baseline(2000) Target(2001) Target(2002) Cumulative value of debt workouts completed by the Jakarta Initiative Task Force (percentage increase in real terms) 3 billion 6 billion TBD Reduction in bank non-performing loans in the Philippines (as % of total loan portfolio) 12.48% TBD TBD Number of key legislative and/or administrative reform measures in corporate and financial governance enacted or amended -- Indonesia 4 7 -- Philippines 7 7 U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999 14,210 DA 3,553 DA 10,657 DA 9,200 CSD 2,300 CSD 6,900 CSD 3,141 ESF 785 ESF 2,356 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Fiscal Year 2000 10,965 DA 11,152 DA 3,367 CSD 2,492 CSD 8,465 ESF 6,230 ESF 0 SEED 0 SEED 0 FSA 0 FSA 0 DFA 0 DFA Through September 30, 2000 25,175 DA 14,705 DA 10,470 DA 12,567 CSD 4,792 CSD 7,775 CSD 11,606 ESF 7,015 ESF 4,591 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Prior Year Unobligated Funds 598 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 0 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 598 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 0 DA 0 DA 25,773 DA 0 CSD 0 CSD 12,567 CSD 0 ESF 0 ESF 11,606 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA
The FY 2001 and future activities and funding related to this SO have been moved to SO 498-023.
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Last Updated on: May 29, 2002 |
