Asian Trends Monitoring Bulletin 9: Welcome to the trade game

The Asian Trends Monitoring Bulletin is a project sponsored by the Rockefeller Foundation, New York, the Centre for Strategic Futures, Singapore and the Lee Kuan Yew School of Public Policy, National University of Singapore. The Lee Kuan Yew School of Public Policy gratefully acknowledges the financial assistance of the Rockefeller Foundation and the Centre for Strategic Futures, Singapore.

The Asian Trends Monitoring Bulletin focuses on three areas of strategic concern to Asia’s well-being and future development: trade and investment facilitation; health systems; and energy security.

The Asian Trends Monitoring Bulletins are designed to encourage dialogue and debate about critical issues that affect Asia’s ability to reduce poverty and increase awareness of the implications for pro-poor policy and policy development.

Disclaimer The opinions expressed in the Asian Trends Monitoring Bulletin are those of the analysts and do not necessarily reflect those of the sponsor organisations.

Frequency The Asian Trends Monitoring Bulletin will be produced ten times a year. All issues are available for free at www.asiantrendsmonitoring.com/download.

Subscription Subscription is free. Please enter your details at www.asiantrendsmonitoring.com/subscribe.

Production Manager, Production & Research Dissemination Chris Koh Editorial Trade & Investment Facilitation Darryl S.L Jarvis Johannes Loh Health Systems Phua Kai Hong Nicola Pocock Energy Security Benjamin K. Sovacool Anthony D’Agostino Image credits, with thanks Image on page 3 is copyrighted by foxxyz*.

Image on page 19 is copyrighted by Brooks Elliott*.

Image on page 24 is copyrighted by Phil Dragash*. *These images can be found on www.flickr.com Contact details of the editorial team are available on the last page of this publication.

Permission is granted to use portions of this work copyrighted by the Lee Kuan Yew School of Public Policy. Please acknowledge the source and email a copy of the book, periodical or electronic document in which the material appears to chris.k@nus.edu. sg or send to Chris Koh Lee Kuan Yew School of Public Policy 469C Bukit Timah Toad Singapore 259772

ContentS 1

AT A GLANCE

2

OVERVIEW

3

COMING SOON TO A STORE NEAR YOU.

11

TURNING WATER INTO GOLD.

19

TRADING HEALTH FOR WEATLH?

29

EDITORIAL TEAM

1 | AT A GLANCE

Economic ministers from ASEAN emphasised the need to step up efforts in closing the development gap between its members. While Thailand’s per capita income shot above US$4,700 in 2010, Laos registered only US$980. If the gap between the poorer and the richer members becomes too large, further integration will be at risk, said Indonesian deputy trade minister Mahendra Siregar.

Vietnam, Cambodia, Laos and Myanmar struck an agreement on regional trade promotion, information exchange and human resource development. The 16-point action plan outlines specific measures to boost economic and trade relationships among the four countries this year.

The balance of Foreign Direct Investment (FDI) is slowly shifting away from China towards other economies in the region according to the Financial Times. Trends for 2010 show substantial increases in net FDI inflows for Malaysia (+400%), Indonesia (+161%), and Singapore (+123%), while they grew steadily in China and Vietnam (+10%).

Only 60 million of Indonesia’s total population of 240 million have bank accounts.

A branchless banking program targeting potential consumers with no access to branches will be launched in Bali this year.

The program will be implemented jointly by the International Finance Corporation, Bank Sinar Harapan, and cellular operator AXIS. The prospering of Indonesia’s domestic economy is troubled by poor logistics infrastructure. At the Merak port, a central ferry crossing route from Java to Sumatra, shortage of ferries caused a 12-kilometre backlog of trucks which lasted for days. The bottleneck arose because 14 out of 33 ferries normally serving the route went out of service due to disrepair.

Singapore will conduct a prefeasibility study of nuclear energy, despite the catastrophe at Japan’s Fukushima Daiichi complex. Government officials maintain that an official decision on nuclear plans has not been made.

Brunei is drafting a Public Health Emergency Contingency Plan at its airports in compliance with revised International Health Regulations. The plan will outline how the government deals with public health emergencies like infectious disease outbreaks.

The President of the Philippines inaugurated a 164MW coal plant on Panay island, while declaring the need to develop alternative energy sources. The plant will ease the region’s electricity supply problems.

Indonesia is struggling to contain the spread of HIV/AIDs, due to social taboos, widespread ignorance and the government's inability to campaign effectively against it for fear of accusations by conservatives of promoting promiscuity. Although HIV prevalence in Indonesia is low at 0.2%, newly confirmed cases more than doubled to 4,158 between 2005 and 2010.

Indonesia’s state electric utility PLN plans to install solar home systems for 340,000 new customers this year. Monthly costs for participating households will be 60% less than average outlays on kerosene which will be displaced with the shift. PLN will provide the units free of charge.

The Philippines’ National Renewable Energy Board has capped renewable energy additions to the grid at 830MW over the next three years.

In response to rising oil prices, the Philippines’ fuel card program which previously covered only jeepney and tricycle drivers will be extended to farmers and fishermen. The assistance is expected to keep food prices relatively stable.

Ho Chi Minh City’s Hiep Phuoc Power Co., Ltd. increased power rates from US$0.05 to US$0.17 for enterprises in the Hiep Phuoc Industrial Zone owing to an oil supply shortage. Buyers that chose to accept the new rate, to avoid a power cut-off, plan on passing the increased cost to its customers where possible.

The Asian Development Bank looks ready to ink an agreement that would provide US$500 million in loans to the Government of Indonesia to develop three geothermal power plants with a capacity of 165MW.

A new Thai government panel was set up to reform the management of the three health financing schemes in the face of rising expenditures. Chaired by PM Abhisit Vejjajiva, the panel will also focus on increasing the number of medical personnel, as there is a shortage of medical workers in state hospitals. The panel will take three years and spend about Bt320 million to re-develop healthcare financing.

Health experts in Vietnam have called for more political and financial support to improve community awareness about tuberculosis (TB) prevention. In 2009, more than 98,000 cases of TB were reported, including more than 51,000 new patients and 26,000 recurring cases. However, the health sector only managed to treat around 60% of TB patients due to a lack of human resources, especially in the provinces.

Sin tax advocates in the Philippines have called for reforms in tobacco sin tax collection. A global adult tobacco survey showed that the total costs of illnesses for four smoking-related diseases studied were estimated at between US$2.86 billion to US$6.05 billion in the Philippines.

Latest on www.asiantrendsmonitoring.com #Oil prices a worry for #Asian neighbors, by #NUS researcher http://bit.ly/lVpF4Y

Building up farming in the world's poor countries could be the key to rolling back world hunger http://bit.ly/en3D0v #LDCIV

#Vietnam: Farmers unable to benefit from #rice price hike.

Only Traders reap the benefits due to strategic stockpiling http://bit.ly/ilft4c Future issues for free www.asiantrendsmonitoring.com/subscribe

OVERVIEW | 2

welCoMe to the trade gaMe I am delighted to bring you the latest issue of the Asian Trends Monitoring Bulletin (ATM). In this issue we look at the enduring problems surrounding trade, trade enhancement and facilitation, and the benefits and downsides of trade in the energy and health sectors.

While trade is often approached as a problem of inter-state politics and centred on multilateral and bilateral efforts to reduce tariffs and formal obstacles (quotas and non-tariff trade barriers) to trade, this issue of the ATM highlights how the difficulties of deepening trade relations rest equally with informal barriers. Intra-state regional protectionism, poor infrastructure, or demands for informal payments, can all have a restrictive impact on the free movement of goods and services within economies. Indonesia, for example, Southeast Asia’s largest economy, does not enjoy a national transportation system able to connect key economic centres, pushing up the cost of domestic shipping rates such that, in many instances, it is cheaper to import perishable goods from abroad rather than source them domestically. At the same time, for Indonesian farmers and manufacturers, getting goods to international markets represents not just a matter of negotiating the transaction hurdles of crossing borders but the added domestic bottlenecks that push up the price of domestically produced goods, often compromising their competitiveness in the international market place.

Rather than simply a problem of inter-state trade agreements, trade enhancement in Asia is situated in a much more complex series of domestic inefficiencies, poor infrastructure capacity, inefficient customs practices, slow goods clearing times and procedures, and discretionary customs decision making that often frustrates the movement of goods and services.

As this issue of the ATM also highlights, however, not all trade is good. Indeed, trade in some health services can

generate migratory problems that actually lower domestic health delivery capacity. Trade agreements that facilitate the free movement of goods, services, and human capital, for example, can denude domestic capacities as skilled labour migrates toward better paying economic centres or as richer economies cherry-pick labour talent to fill critical skills shortages. For richer economies in the region this represents a cheap policy option to address skill gaps, but for poorer economies that absorb the full cost of labour training and expensive educational investments, the migration of skilled labour represents a perverse international cross-subsidisation in which poorer economies support the skills capacity available to richer nations.

These same types of perverse outcomes can also be observed in the trade in energy. The development of hydroelectricity in the Greater Mekong Subregion, for example, while beneficial in terms of the fiscal resources it delivers to producer states and regions, also comes at a high cost. Producer states and regions bear the full social and environmental costs associated with the development of hydroelectricity, including massive social dislocation and resettlement, interruption to domestic livelihoods, as well as a series of environmental impacts whose costs have to be absorbed for generations to come.

The implications for Asia’s poor and marginal communities from enhanced trade facilitation are thus not uni-directional, not always optimal, and sometimes counter-intuitive. As this issue of the ATM explores, trade and the resulting patterns of economic activity can generate positive and negative outcomes.

We invite you to share the ATM Bulletin with interested colleagues. The ATM Bulletin is also available for download at www.asiantrendsmonitoring.com, where you can subscribe to future issues. We also invite you to explore our web page where you will find a variety of information related to trade.

Darryl S.L. Jarvis Associate Professor National University of Singapore

CoMing Soon to a Store near You. Finding oranges from Kalimantan, one of Indonesia’s leading production centres, in a supermarket in Jakarta can be a difficult task. Many supermarkets prefer to sell oranges from China due to significant price differences. While the Indonesian consumer may actually choose Indonesian produce over foreign produce given equal prices, domestic transport prices make Chinese oranges more competitive.

Shipping a standardised container from Padang, West Sumatra to Jakarta costs US$600 while transport of the same freight across the sea from Jakarta to Singapore amounts to only US$185.1 Inadequate infrastructure of roads and ports combined with tedious import and export regulations represent serious impediments to trade flows, not only in Indonesia. Southeast Asian countries are in need of extensive trade facilitation measures

in order to drive forward the complex process of regional economic integration and keep pace with increasingly globalised production networks.

Four years ago, the political leaders of the ten countries forming the Association of Southeast Asian Nations (ASEAN) signed the ASEAN Economic Community (AEC) blueprint. The AEC is the most ambitious trade and economic initiative of the ten ASEAN member countries. It envisions the free flow of goods and services, much freer movement of labour and investments, and harmonised standards and border procedures, to be realised by 2015. Half-way to the 2015 deadline the region does not fare well on many of these dimensions of economic integration. So what are the main practical obstacles for the realisation of these ambitious goals in the region?

TRADE & INVESTMENT FACILITATION | 4

Despite enhanced connectivity, regional trade integration is not taking off

Figure 1: Average trade costs, Australian imports to ASEAN, 1990–2007

While improvements to transport and communication infrastructure have significantly reduced costs for trade between ASEAN countries over the last two decades (see Figure 1), progress in recent years and particularly in soft trade facilitation measures (e.g., level of customs efficiency, regulatory environment and government transparency) has been meagre. Except for Thailand, which has reduced the time and costs required for shipments in and out of the country by almost 50% since 2007, ASEAN members have not made significant steps forward in improving the ease of trading across their borders (see Figure 2).

Since January 2010, Singapore, Indonesia, Malaysia, Thailand, Brunei Darussamlam and the Philippines have effectively eliminated import duties on 99.65% of all traded tariff lines.

The remaining member states, Laos, Cambodia, Myanmar and Vietnam have succeeded in lowering tariff duties within ASEAN to 0%–5% for 98.86% of their traded tariff lines.

With tariff regimes nonexistent or approaching zero percent, large gains from traditional trade liberalisation within ASEAN have become unlikely. However, the region still faces a number of impediments to trade that have enjoyed less attention in international discussions.

Source: Pomfret, R. and P. Sourdin (2009). "Have Asian trade agreements reduced trade costs?" Journal of Asian Economics 20(3): 255-268.

Figure 2: Trading across borders country ranking (the lower the better)

Inefficient customs procedures, substandard quality of port and airport infrastructure, and opaque regulatory frameworks together drive up Trade Transaction Costs and form serious impediments to freer trade flows. Transaction costs arise at every step of the trading process and capture commercial, financial, transport, and regulatory processes (see Figure 3).

A good example is the export of rice: A typical rice exporter has to address 15 different parties, complete 24 documents, handle approximately 700 data elements, and needs up to 22 days to comply with all the procedures. According to estimates by the United Nations Conference on Development, the average customs transaction involves 20–30 different parties, 40 documents, 200 data elements (30 of which are at least repeated 30 times) and duplicate entry of 60%–70% of all data.2 Direct and indirect costs associated with such procedures are estimated to be about 7%–10% of the value of global trade.3 The time required to prepare the customs documentation within ASEAN and proceed with the import can be as little as four days in Singapore or as long as 50 days in Laos (see Figure 4). This extreme variance poses one of the biggest challenges to the ambitious goal of the free movement of goods between Southeast Asian nations as part of the AEC by 2015, and is seen as a major impediment to further gains from trade liberalisation. A study by the Asia-Pacific Economic Cooperation (APEC), for example, estimates that a reduction of merely 5% in trade transaction costs can cause an increase of 0.9% in GDP for APEC countries.4

Data: World Bank (2010). Doing Business Reports 2007–2011. Country tables.

Most potential in soft trade facilitation infrastructure The OECD defines trade facilitation as “the simplification and standardisation of procedures and associated information flows required to move goods internationally from seller to buyer and to pass payments in the other direction.”5 Trade facilitation can be grouped into hard and soft infrastructure.

The former includes the development and quality of the

5 | TRADE & INVESTMENT FACILITATION

Figure 3: Components of trade transaction costs

physical infrastructure (e.g., ports, cargo terminals, airport capacity) and the application of information and communication technology (ICTs) to the extent that they reduce transaction costs. The latter comprises border and transport efficiency as well as the business and regulatory environment.6 It is in the latter category in which ASEAN countries have huge potential for gains through trade facilitation.

In a study on logistics restrictiveness in ASEAN+6, Hollweg and Wong (2009) found that the regulatory environment in many ASEAN countries represents a serious impediment to freer trade, 7 for example:

The consequences manifest in a series of inefficiencies leading to much higher trade transaction costs than necessary.

Taking Singapore’s clearance process as the yard stick, other Southeast Asian countries need to step up reform efforts to simplify and speed up their customs clearance. By 2015, the ASEAN Single Window is supposed to link all customs agencies and allow for immediate data exchange on cleared import and export cargo.

Swift progress in Thailand

• In East Malaysia, customs facilities operate only during the week but not on weekends creating congestion at the Singapore–Malaysia border crossing; and

Prior to 2007, Thailand’s customs procedures were slow, complicated, prone to irregular payments and shipping goods was considered expensive. Subsequent reforms have cut shipping costs by 25% and reduced the number of documents and the amount of time needed for import and export by more than 50%. The implementation of a National Single Window benefited traders by integrating the exchange of data among involved border agencies through a single data entry point.

• In Indonesia, investments by foreign companies are forbidden in the transportation sector, but not in warehousing and distribution.

Room for improvement in customs clearance procedures exists in Laos, Cambodia and Indonesia, as shown in the Logistics Performance Sub-index on Customs Clearance in Figure 6,

• Vietnam restricts port services exclusively to Vietnamese companies and allows shipping under foreign flags only to gateway ports;

TRADE & INVESTMENT FACILITATION | 6

Figure 4: Time needed to import (days)

Figure 5: Thailand trading across borders (2007–2011)

Source: World Bank (2010). Doing Business: Trading across Borders 2011: Time to import (days)

Source: World Bank (2010). Doing Business: Trading across Borders 2007–2011: Thailand

which spans from one (very low) to five (very high). While the Philippines and Vietnam are somewhere in between, Thailand and Malaysia have both implemented national single windows and are on track to meet the 2015 deadline. Deficiencies in border administrations in most ASEAN countries represent the major bottleneck to freer trade.8

Figure 6: EďŹƒciency of the customs clearance process

Trade facilitation creates a win-win situation for governments, businesses and consumers. The largest benefits can be expected in countries with the lowest level of efficiency and substandard infrastructure (e.g., ports and inland connectivity).

Obstacles to trade that can be targeted through policy interventions include slow port landing and handling, poor governance, unofficial payments, and high freight costs.

Discretionary powers that allow for rent seeking activities by officials, information asymmetries and institutional bottlenecks (e.g., administrative, legal, financial, regulatory, and other logistics infrastructure) impose additional costs.9 There is also room for domestic policy reform to achieve broader benefits in areas such as competition policy, harmonisation, standardisation, and transparency. By engaging in reforms to tackle the above issues, trade and transport facilitation policies can help to transform the trade process from a vicious cycle into a virtuous cycle (see Figure 7).

Bottlenecks in trade finance hit SMEs, and then the poor The financial crisis in 2008 exacerbated the credit situation in many Asian countries. Due to tighter lending criteria, many emerging economies were placed in higher risk categories and access to credit became more limited. Globally, the lack of

Data: Logistics Performance Index (2010). Efficiency of the Clearance Process.

trade finance contributed to a 12% decline in trade volumes in 2009, the largest contraction since World War Two.10 Smalland medium-sized enterprises (SMEs), particularly in poorer countries, were most affected by this trade finance crunch.

An evolving trend shows that large firms are demanding more sophisticated and faster trade finance instruments rather than relying on traditional facilitation instruments (e.g., letters of credit) from their trading partners.11 Unfortunately, SMEs often lack access to or cannot afford these new financing arrangements, such as open account payments, as they require advanced ICT systems and involve higher risks for the exporter

(see Figure 8). As a consequence, the market gap between trade finance for large firms and SMEs has increased even further.

Credit Guarantees for Small Exporters in Thailand In Thailand, the Small Business Credit Guarantee Corporation (SBCG) guarantees credit worth Bt30 billion (US$1 billion). The scheme can guarantee loans to more than 15,000 SMEs with a focus on the tourism and export sectors. It provides loans together with commercial banks guaranteeing 25%–30% of the credit line but never more than Bt20 million (US$650,000) per SME. In case of non-performing loans the SBCG shares the losses with the bank. Assuming each SME hires about 10–20 employees, the scheme could help to secure 150,000 to 300,000 jobs.

On a larger scale, the Siam Commercial Bank has expanded its SME lending business to Bt300 billion (US$10 billion). Part of this amount is allocated to specialised products and services in trade finance for small enterprises with annual revenue starting from Bt10 million (US$330,000). Enterprises with revenues below this threshold remain barred from these financial services.

SME Centres of the Bank Rakyat Indonesia In Indonesia, the state-owned Bank Rakyat Indonesia (BRI) has been acknowledged for its innovative approach of servicing rural SMEs and extending microfinance to the working poor. The average outstanding loan amount in 2003 was US$540 while 60% of loans were below US$300. The bank is structured into four strategic business units: The Microbanking Unit offers loans in rural areas; the Retail Banking Unit providing full services to SMEs; the Coporate Unit for large corporate loans; and the Treasury and Investment Unit.

In its branch offices across the country BRI has established SME Centres to bridge the information asymmetries arising from lack of access to information and communication technology. Entrepreneurs can use the centres to connect to global markets, explore business opportunities and learn about trade finance facilities. Unfortunately, the SME Centres do not provide capacity-building in management and accounting skills or teach entrepreneurs about export and import regulations.

SMEs are the largest providers of employment in all ASEAN countries. In the Mekong region, SMEs represent 99% of all enterprises, providing employment to 44%–70% of the workforce.12 They account for approximately 50% of the manufacturing output — however only a fraction of them are engaged in cross-border trade. Several market obstacles prevent SMEs from becoming exporters, among them a lack of trade negotiation capacity and inadequate knowledge about cross-border trade. Typically, SMEs are major employers especially in rural areas where they make valuable and necessary contributions to poverty alleviation. Unfortunately, financial institutions are biased towards large firms due to high information and transaction costs involved in lending to SMEs and even more so to micro-enterprises.

Surveys have shown that SMEs in transition economies perceive the cost of trade finance and insurance as one of the major impediments to entering international trade. Other growth obstacles faced by small companies are uncertainty about regulatory policies, macroeconomic instability, and customs and trade regulations.13 SMEs have nowhere to turn when looking for solutions to finance their business exchanges on a small scale. They have thus no means to protect themselves against defraying the costs of non-payment of their business partners or likewise to gain access to pre-export credit facilities to complete production for larger, more profitable, orders from abroad. Banks are often cautious about lending to SMEs because owners can provide only limited documentation about the profitability of the firm. While this gap in trade finance could be filled by international finance institutions and national governments, only a few countries have programmes in place to close the gap for SME trade finance. Laos and Cambodia, for example, lack credit information institutions while the Philippines, Vietnam, and Indonesia have only limited credit information systems in place.14 The Global Trade Financing Programme developed by the International Finance Corporation, for example, does not cover four out of ten ASEAN states: Thailand, Laos, Malaysia and the Philippines. An expanded role of export credit agencies, development banks and multilateral agencies could offer tailored products to SMEs or act as an additional guarantor of loans from banks. The Asian Development Bank supports banks in Asia through its Trade Finance Programme by providing 100% risk protection against non-payment to participating banks, which in turn enables them to offer a broader range of trade finance facilities to SMEs. Similar models of risk-sharing schemes between banks and national governments could bridge the gap to extend trade finance to smaller SMEs.

TRADE & INVESTMENT FACILITATION | 8

Figure 7: From a vicious cycle to a virtous cycle

Graph based on Arvis J., et al. (2007). The Cost of Being Landlocked: Logistics Costs and Supply Chain Reliability. Policy Research Working Paper 4258. Washington DC, World Bank: 63.

Intervention strategies Points of intervention for policymakers should focus on increasing customs efficiency and thus lowering the trade transaction costs for importing and exporting firms alike. Moreover, empowering more SMEs to become exporters and broadening their access to trade finance can make a significant contribution to the provision of employment and ultimately to poverty reduction.

provide advice on financing facilities available in the respective country and offer capacity-building courses for small businesses. The training portfolio should range from basic ICT familiarisation, management skills and specialised information on export-import regulations. A pilot phase in representative locations could be used to identify the most common deficiencies and help adjust the SME centre design before scaling up the model to the country level.

SME Centres

Customs modernisation

Government financial institutions, commercial banks and non-governmental organisations should cooperate in building a network of regional centres equipped with up-to-date ICT technology and knowledgeable staff. The centres will

Due to the rapid integration of networked information technology in almost all aspects of the international supply chain, ICT, infrastructure, and services are frequently mentioned as important facilitators of trade. While the

9 | TRADE & INVESTMENT FACILITATION

Figure 8: Risk of payment methods

Source: Trade Finance Guide: A Quick reference for U.S. Exporters. U.S. Department of Commerce, International Trade Administration. 2008. International Trade Administration, Washington, DC, United States.

implementation of e-Customs services can greatly reduce the time and documentation required for customs clearance, it has to be accompanied by further measures. Customs officers need to be trained in the application of new ICTs to ensure that cumbersome paper documentation can be replaced. In light of the 2015 deadline for the ASEAN

Single Window all border agencies dealing with export and import procedures have to be involved in a concerted reform effort to harmonise the data requirements and bring down the overall number of data points to complete the clearance process. As the case of Thailand illustrates, the savings in trade costs can be enormous.

When customs can be a bad playmate: a toy importer’s story

the use of the HS-9503 classification (toys), for the same product for import purposes in the United States, Europe and several Asian countries.

The freight of the Dolphin III included two containers filled with plastic toys that a logistics company wanted to import for a launch event hosted by a highly reputable company. As the port of destination had no integrated electronic customs system, the logistics provider had to declare the cargo to the local customs office on paper. The provider used the classification code for toys: HS-9503.70.

However, the toy importer ran into trouble when the customs officer denied the import and challenged the HS classification. He claimed that the product had to be re-declared under another classification code, HS-3926.90, for ‘other articles of plastics’. He was adamant that the cargo did not fall into the classification of ‘toys’ as indicated by the importers. Why was this an issue? The category ‘other articles of plastics’ required import duties, and this was not acceptable to the importer.

Additionally, the launch event was to be held only a few days later and time was critical.

What did the logistics company do? They contacted the client firm and within one day produced a letter illustrating

However, the customs officer again rejected the import under HS-9503. Consequently, the logistics company was forced to re-declare the cargo under HS-3926.90 (plastics) and cleared the cargo ‘under protest,’ with no choice but to pay the import duties in this category. However, the company pursued the matter. But only after several months of protracted negotiations was the company able to secure a refund on the duty paid after it was able to convince the customs officials that the correct classification code for the imported goods was HS-9503.

The lack of comprehensive online information on customs regulations and the inability to inquire about the correct HS classification in advance led to two days of delay. The element of arbitrary, subjective assessment by the customs office created uncertainty and increased information costs for the provider. Electronic clearance and an online database for HS-Classifications applied at the port of destination could have saved valuable resources for both the importer and the customs office.

References

ASEAN trade logistics project

1. Sandee, H. (2011, March 7). Indonesian Trade needs to find a better way. Jakarta Globe. Retrieved March 12, 2011 from http://www.thejakartaglobe.com/ opinion/indonesian-trade-needs-to-find-a-better-way/426965.

The Lee Kuan Yew School of Public Policy has launched a landmark study on regulatory barriers to trade logistics services in ASEAN and between ASEAN and China, with a focus on customs efficiency. The project is led by Marn-Heong Wong and Darryl Jarvis. A key output is the Customs Efficiency Index, updated on a half-yearly basis, which will provide ASEAN policy markers with timely feedback on the impediments that need to be addressed. For the compilation of the index, logistics service providers in each ASEAN country and in China are surveyed.

2. Fortin, C. (September 21, 2005). Opening Statement. Expert Meeting on Trade Facilitation as an Engine for Development. Geneva, 2005.

3. Asian Development Bank (2009). Designing and implementing trade facilitation in Asia and the Pacific. Mandaluyong City, Metro Manila, Philippines, Asian Development Bank.

4. Layton, B. (2007). Chapter 5: Trade Facilitation: A Study in the Context of the ASEAN Economic Community Blueprint. Deepening Economic Integration in East Asia - The ASEAN Economic Community and Beyond H. Soesastro, ERIA Research Report. No.1-2: 76-100.

5. See reference #3.

6. Portugal-Pérez, A., J. S. Wilson, et al. (2010). Export performance and trade facilitation reform hard and soft infrastructure. Washington, D.C., World Bank.

7. Hollweg, C. and M. H. Wong (2009). "Measuring Regulatory Restrictions in Logistics Services." ERIA Discussion Paper Series(2009-14): 1-37.

8. World Economic Forum (2010). Enabling Trade in the Greater ASEAN Region Findings from the Enabling Trade Index 2010. Geneva, World Economic Forum.

9. Brooks, D. and S. Stone (2010). Accelerating Regional Integration Issues at the Border. Tokyo, Asian Development Bank Institute.

10. Reuters (2010, October 22). Many poor states still cut off from trade finance. Retrieved March 15, 2011 from http://blogs.reuters.com/jonathan-lynn/page/13/.

11. The Philippine Star (2010, November 15). New trade financing trends need enhanced SME support.

12. Centre for SME Studies and Indian Institute of Foreign Trade (2007). "Capacity Building of SMEs in Vietnam." Retrieved 20 February, 2011, from http://bit.ly/gQXQ01.

13. International Trade Centre (ITC) (2009). How to access trade finance a guide for exporting SMEs. Geneva, ITC. 14. Duval, Y. and W. Liu (2009, June 19). "The global financial crisis: A wake-up call for trade finance capacity building in emerging Asia." Retrieved March 4, 2011, from http://www.voxeu.org/index.php?q=node/3667.

Logistics providers with operations in ASEAN and China are invited to take part in the study by filling out the survey online. There are two sections to the survey: • Section A focuses on the regulatory environment for trade logistics in ASEAN and China at a broad level (www.surveymonkey.com/s/logisticsurveyA); and • Section B focuses on changes in detailed restrictions and/or regulations in border administration (www.surveymonkey.com/s/logisticsurveyB).

For more information on the project, please email Johannes Loh at johannes.loh@nus.edu.sg

turning water into gold.

Southeast Asian countries engage in a variety of intraregional and extra-regional energy trade flows, from Indonesian coal exports to China, to the Yadana-Ratchaburi gas pipeline linking Myanmar and Thailand, to Malaysian oil field exports to Japan. One of the more dynamic areas of energy trade occurs in the Greater Mekong Subregion (Cambodia, China, Laos, Myanmar, Thailand and Vietnam) in the form of cross-border hydroelectricity sales. Given the abundant and relatively undeveloped hydropower potential of the region, cross-border trade has emerged as a cost-effective means of expanding energy access. While commanding a strong list of motivating factors, hydropower development has its share of detractors. Downstream impacts, disrupted livelihoods, and the potential loss of endangered species are common criticisms, though dam backers believe these risks can be mitigated and affected parties given sufficient compensation.

Though the current status of power trading in the region is a patchwork of bilateral contracts, heads of state and power industry leaders from the Greater Mekong Subregion (GMS) countries have been actively working to realise the ambitions of the GMS Power Trading scheme. Under this Asian Development Bank-supported project, power generation plants will become connected through a regional network of cross-border interconnections and wholly competitive buying and selling markets. The GMS network will then compose one of the three ASEAN Power Grid (APG) subsystems which will integrate all ten ASEAN countries by 2015, via fifteen overland and subsea interconnections. The current face of power trading may be predominantly hydroelectric in nature, but the future will see greater diversification when the APG connects to nuclear and thermal generation plants.

ENERGY SECURITY | 12

But what, if anything, does this mean for the poor? The answer is unclear, as we reveal in this bulletin devoted to one of the most contentious issues affecting regional energy security. Furthermore, the poor in Cambodia will fare differently than those in Vietnam, and even more so from minority communities in Laos living on the edge of the Mekong.

While the development gains that hydroelectricity trade can bring are obvious, the negative impacts on livelihoods and environmental damage are also too real. To clarify these matters, we feature an interview with Dr. Teresita Cruz-del Rosario, Visiting Associate Professor at the Lee Kuan Yew School of Public Policy. Dr. Cruz-del Rosario has been following hydropower development in Laos for more than five years and has recently completed a case study on governance arrangements surrounding Xe Katam, a 61MW hydropower project in southern Laos.

Figure 1: Thailand's electricity imports and exports (GWh/year)

Drivers and motivations of power trading The economic justification for power trading is multi-faceted and compelling in its own right. Countries with low generating reserve margins and growing electricity demand may find that importing electricity from neighbouring countries with excess capacity may be more cost-effective than building new capacity. This rationale is even stronger when private capital cannot be attracted because of anticipated low rates of return, or because influential environmental lobbies have captured the policy process.1 Both of these reasons apply to Thailand which imports a small, but growing percentage of its electricity from Laos, whose hydropower potential exceeds 20,000MW, but whose national demand is under 400MW.2 When such trading agreements are formed, relationships often become bi-directional because of seasonality or geography. Laos imports electricity during the dry season when its reservoir levels are low, and in border areas where domestic transmission infrastructure is lacking, which totalled US$50 million in 2010.3 In some cases, the local customer base is too small to justify infrastructure investment.

However, adding foreign customers (commercial and residential) to the deal may achieve financial viability. And as with exports of other goods and services, exporting countries enjoy an improved balance of payments as well as royalties and/or taxes on natural resources that may otherwise not be accessed.

The energy security implications of power trading, however, are less clear-cut. On one hand, regional spot market trading offers greater flexibility in responding to dynamic demand levels, but these gains need to be weighed against other losses in versatility. As Professor Peter Hartley at Rice University’s James A. Baker III Institute for Public Policy notes, “If your gas supply gets cut off, you can make electricity in other ways.

But if you are importing electricity and that gets cut off, you have blackouts.”4

Source: Thailand Energy Policy and Planning Office, Ministry of Energy. 2011.

Vietnam faces a similar situation, since it resolves its domestic shortfall with imports from China. While Electricity of Vietnam, the state-owned utility, has been continuously receiving electricity from the Chinese supplier, the contract terms have yet to be agreed upon and as of March the supplier has threatened a 15% price increase.5 Though Chinese imports account for only 4% of Vietnam’s total electricity demand, it is a necessary contribution in a country that continues experiencing supply shortages. The contrary applies to Thailand, where electricity imports actually diversify its energy mix6 and reduce supply shock exposure to natural gas, the fuel source for nearly 70% of its electricity.

Social and environmental impacts While these drivers present a compelling case for hydropower development, and power trading more broadly, infrastructure projects and relocation raise significant social and environmental effects that must be addressed. These effects are specific to the infrastructure design and at least partially can be mitigated through appropriate pre-implementation design. Since power trading in the GMS has thus far been hydropower-based, we focus on the most common impacts associated with hydropower infrastructure. However, universal to all major projects is the central theme of cost-benefit mismatch. Some constituencies will reap windfalls at the expense of the most vulnerable when governance safeguards are weak or compromised.

On the social side, riparian communities from areas to be inundated are most affected. There is no guarantee the project wins their free, prior and informed consent, and they may possess few legal tools to ensure their rights, if any, are

13 | ENERGY SECURITY

Figure 2: ASEAN powergrid interconnection map, as of 2008

#

Where

To complete by

1

Penisular Malaysia–Singapore

Existing

2

Thailand–Penisular Malaysia • Sadao–Bukit Keteri

Existing

• Khlong Ngae–Gurun

Existing

• Golok–Rantau Panjang

Newly proposed

3

Sarawak–Penisular Malaysia

2013

4

Penisular Malaysia–Sumatra

2012

5

Batam–Singapore

2015

6

Sarawak–West Kalimantan

2012

7

Philippines–Sabah

2015

8

Sarawak–Sabah–Brunei

2015

9

Thailand–Laos • Roi Et–Nam Theun 2 • Udon–Nabong • Mae Moh–Hong Sa

2009 2011 Under negotiation

10

Laos–Vietnam

2010

11

Thailand–Myanmar

2014

12

Vietnam–Cambodia

2009

13

Laos–Cambodia

2010

14

Thailand–Cambodia

15

Sabah–East Kalimantan

Existing Newly proposed

Source: ASEAN Centre for Energy, 2011

protected. Their relocation may result in the loss of ancestral lands and a shift to potentially less fertile areas where traditional livelihoods and agricultural practices are unsuitable. Existing development proposals may result in some Cambodian households being relocated for the second or third time in just fifteen years.7 Accompanying the economic impacts such dislocation creates in the absence of compensatory mechanisms are social and psychological stressors. Added health risks may arise if resettlement areas lack clean water and sanitation access, resulting in infectious disease outbreaks.

Downstream communities are also severely impacted.

Changes in river dynamics and water chemistry affect fisheries productivity with potentially adverse effects to protein availability and income generation from catch. Susceptibility to new disease vector dynamics may be another concern, such as greater malarial risks because of expanded mosquito

breeding habitat. Downstream farming communities will be affected by changes in irrigation availability and timing, which could reduce agricultural productivity and prompt reliance on other water sources.

Environmental impacts are also multi-faceted due to ecosystem complexity, whereby imbalances in plankton populations alone can be enough to modify the river’s biogeochemistry and predator-prey dynamics. Both flora and fauna species losses typically occur and endangered species native to the area may be at risk.8 Sedimentation loads will exert longerterm effects on ecosystem equilibrium and are compounded by landslides and siltation discharge from human activities in riparian areas. Less often discussed, but potentially significant, are the methane emissions from reservoir-based microorganisms and other greenhouse gas emissions released from rotting vegetation.

ENERGY SECURITY | 14

Figure 3: The pros and cons of hydropower-based power trading

Export revenues fund development

Biodiversity loss / loss of fisheries

Improved balance of payments

Higher risk of landslides, siltation, sedimentation

Potential gains in agricultural productivity

Possible macroeconomic imbalances

Additional electricity access

Resettlement of vulnerable communities

opportunities

Power trade as pro-poor intervention Is it possible for negative impacts such as these to be mitigated and for benefits to be harnessed? Can hydropower trading become a pro-poor vehicle? In general, the jury is out. While several papers have addressed power trading impacts in North America and in European power pools,9 little scholarly work has investigated cross-border effects on the poor in developing contexts. The most thorough treatment of this relationship appears in a 2008 UNDP report which states that, “if there is any linkage with poverty, it is based on the premise that by promoting economic growth, poverty will be reduced.”10 The authors add that impacts depend on “the prior policy environment, installed infrastructure and the specific focus of policy measures.” They find the poor are rarely consulted on the specifics of energy trade agreements, as one might anticipate, and that consultations are limited to groups affected by the infrastructure project itself.

In some cases there are clear pro-poor benefits. Exporting countries may use the extra revenue to cross-subsidise local users, in both their connection fees and tariff schedules, though this depends on pre-existing policies or the passage of new resolutions accompanying the power trade agreement. For example, the Greater Mekong Subregion Northern Power Transmission Project, with support from the Asian Development Bank (ADB) and the South Korean government,

risks

will extend interest-free credit for 18,800 Laos households to access grid electricity for the first time.11 Complementarily, the addition of low-cost electricity production through cross-border trade can drive down domestic tariffs. The ADB anticipates that integrating Cambodia into a regional market encompassing Laos and Vietnam could reduce their electricity costs from diesel generation by two-thirds. In turn, affordable electricity can stimulate productivity gains by enabling the use of labour-saving machinery and equipment, like irrigation pumps, which can yield significant returns for the poor.

Another means of ensuring the poor benefit from power trading is by earmarking export revenues for social development projects, as has been implemented in Laos where schools, education, and healthcare access will be underwritten by electricity trade revenues. With such arrangements, policymakers will exercise discretion over whether such social development projects are targeted at communities affected by power trade projects (e.g., displaced in the construction of a dam) or the population at large.

Then there are the knock-on effects, some positive and others negative, of how gains in electricity access or economic growth are distributed across the population. These secondary effects stem from the industrial expansion induced by greater electricity access, through firms establishing new

15 | ENERGY SECURITY

Figure 4: Laos’ electrification rate (1993–2009)

Source: Bambawale et al. 2011. “Realising rural electrification in Southeast Asia: Lessons from Laos.” Energy for Sustainable Development, 15 (1) 41-48.

operations and existing firms entering new markets. This expansion may create job opportunities for the poor and enlarge the country’s tax base which can be drawn on to fund social development projects.

Governing the battery of Asia Though Laos has engaged in power trading with Thailand since 1971 with the first Nam Ngum plant,12 hydropower exports took on new dimensions of public visibility with the ground-breaking of the 1,070MW Nam Theun 2 (NT2) plant.

NT2 is the country’s largest completed project to date and the Laos government anticipates receiving more than US$2 billion from it over the 25-year concession period.13 A portion will be earmarked for social development and infrastructure construction, including electrification expansion in line with Electricite du Laos’ targets of 80% of all households by 2015, and 90% by 2020.14 As Dr. Cruz-del Rosario notes in her interview, the NT2 project established the institutional environment and assessment requirements of future projects. Under the 2005 National Policy on Environmental and Social Sustainability of the Hydropower Sector in Laos, all hydropower projects exceeding 50MW in capacity and inundating more than 10,000 hectares are to execute both environmental and social impact assessments in full. Compliance consists of carrying out Environmental and Social Impact Assessments,

Environmental Management Plans, Social Development Plans, Resettlement Action Plans, and Ethnic Minority Development Plans.

The governance mechanisms monitor long-term compliance with sustainability requirements and do not cease at project completion. In the case of NT2, an Environment and Social Panel of Experts annually visits the site area and identifies recommended and required changes to be implemented by the executing agency and other bodies. Their most recent report cites concerns over the impact that unpoliced illegal logging and gold mining in the Nakai Nam Theun National Protected Area is causing, leading to siltation which will eventually compromise NT2’s productivity and earned income. They also found that the deterrence mechanisms stopping illegal rosewood harvesting and wildlife poaching are currently weak, and that outsiders (non-resettled families) are chiefly responsible for the area’s resource exploitation. These observations reveal the long-term challenges associated with hydropower plans and resettlement, and the difficulties balancing current livelihoods needs against sustainable natural resource management. Towards that end, follow-up funding from the World Bank has been secured through the Laos Environment and Social Project. The project will further strengthen the country’s institutional capacity to ensure the sustainable use of Laos’ natural resources in a manner that generates both social and environmental benefits.

ENERGY SECURITY | 16

Figure 5: Hydropower projects in the Lower Mekong Region, existing, under construction and considered (over 10MW), as of Feb 08

Source: Mekong River Commission 2005.

Around the corner Laos has already signed Memoranda of Understanding with Thailand that supports the development of more than 7,000MW of power capacity for trading, and another 5,000MW with Vietnam. Combined, that is more than ten times the capacity of NT2, indicating strong growth expectations in the sector. According to an October 2010 report commissioned by the Mekong River Commission, Laos could receive US$2.6 billion per year if the 12 mainstream projects proposed for development on the Mekong come to fruition.15 Since NT2’s commercial operations only began in March 2010, it is too early to tell whether its revenues will be properly managed and

disbursed. If so, then revenue from the several thousand megawatts of plans already receiving Project Development Agreements could dramatically alter the Laos economy and people’s access to education, healthcare, and transport infrastructure.

But proper management is not a foregone conclusion, especially if the multilateral development banks whose stricter governance requirements are replaced with private equity firms with less interest in social and environmental protection.

The pace of development remains an ongoing cross-country discussion. Leaders of the four Lower Mekong Basin pledged sub-regional consultation and cooperation on riparian development through the 1995 Mekong Agreement, which saw its

17 | ENERGY SECURITY

first-time activation late last year when Laos announced its proposal for the 1,260MW Xayaburi plant. As with previous projects, civil society groups have coalesced in opposition, with 263 groups signing a joint call to regional leaders to cancel the project.16 While the Electricity Generating Authority of Thailand has already agreed to purchase electricity from the plant, which would not see completion until 2019, Cambodian and Vietnamese groups have voiced concern over downstream impacts and proposed postponing decisions on project development for another decade. Postponement would not only allow scientists to better determine the long-term impacts of hydropower construction, but would also postpone the receipt of revenues that could help the 27% of Laotians living on less than US$1 a day climb out of poverty. Ultimately, the current state of power trading entails high-stakes decisions with at least one party losing out, either directly or in the form of lost opportunities.

The Energy Security section greatly benefited from the insights of Beni Suryadi (ASEAN Centre for Energy) and K. Witoon (Mekong Energy and Ecology Network).

References 1. Zhai, Yongping. 2008. GMS Regional Electricity Market and Hydropower Development. Presentation at: Regional Consultation on MRC Hydropower Program. 25 September, Vientiane.

2. Cruz-del Rosario, Teresita and Bounsouk Souksavath. 2011. Living Up to Energy Governance Benchmarks: The Xekatam Hydropower Project in Laos. Lee Kuan Yew School of Public Policy/Centre on Asia and Globalisation: Energy Governance Case Study #03.

3. “Laos to import less electricity this year.” 2011. Lao Voices, March 8.

4. Otis, John. 2010. “Clogged arteries.” Development Asia, July-September. Asian Development Bank: Manila, Philippines.

5. “China attempts to raise electricity price, Vietnam under hard pressure.” 2011.

VietNamNet Bridge. March 16. http://english.vietnamnet.vn/en/business/5936/ china-attempts-to-raise-electricity-price--vietnam-under-hard-pressure.html.

6. Watcharejyothin, Mayurachat and Ram M. Shrestha. 2009. Effects of cross-border power trade between Laos and Thailand: Energy security and environmental implications. Energy Policy 37 (5) 1782-1792.

7. ICEM. 2010. MRC Strategic Environmental Assessment (SEA) of hydropower on the Mekong mainstream. Hanoi, Vietnam. http://www.mrcmekong.org/ish/SEA. htm 8. World Commission on Dams. 2000. Dams and Development: A New Framework for Decision-Making. London and Sterling, VA: Earthscan.

9. See Hoyt, Edward A., Moscarella, John Paul and Joel N. Swisher. 1998. Environmental implications of increased US-Mexico electricity trade. Environmental Science & Policy 1 (2) 99-113; Hauch, Jens. 2003. Electricity trade and CO2 emission reductions in the Nordic countries. Energy Economics 25 (5) 509-526; and de Villemeur, Etienne Billette and Pierre-Olivier Pineau. 2010. Environmentally damaging electricity trade. Energy Policy 38 (3) 1548-1558; 10. UNDP. 2008. Cross-Border Energy Trade and its Impact on the Poor: Synthesis Report. Bangkok: Regional Energy Programme for Poverty Reduction (REP-PoR), UNDP Regional Centre on Bangkok.

11. Asian Development Bank. 2010. “Lao PDR expanding electricity access, boosting power exports.” February 5. Press release: http://www.adb.org/media/ Articles/2010/13153-laos-electricities-projects/ 12. Zhai 2008.

13. Phouthonesy, Ekaphone. 2010. “Nam Theun 2 revenue to fund poverty reduction programmes.” Lao Voices. September 25.

14. “Vietnam provides nearly 70pct of Cambodia’s electricity import.” 2011. Viet Nam Business News. March 23.

15. ICEM 2010.

16. “263 NGOs call on Mekong governments to cancel plans for Xayaburi dam.”

2011. International Rivers: Press Release. 22 March. http://www.internationalrivers.org/en/2011-3-22/263-ngos-globally-call-mekong-governments-cancelplans-build-xayaburi-dam.

to make sure that these are traceable. They

The second round of consultations was in

have done this by setting up a very specific

2004 and there was a global series of multi-

account reporting stream. Instead of revenues

stakeholder workshops that started in Bang-

going into the general budget, there’s an ex-

kok, went to Tokyo, then to Paris, and then to

clusive window in the Treasury Department

Washington, DC. This series of consultations

that identifies revenues exclusively from NT2.

before the formal signing of the concession

Second, they have set up a series of funds. Two

agreement was very, very extensive. Even the

of which I’m familiar with are already opera-

NGOs and the media who were opposing this

tional. The Poverty Reduction Fund was set up

project were invited to attend.

atM: Laos has committed to selling electricity

two years ago with the expectation that NT2

atM: From your fieldwork, would you say that

to Thailand and Vietnam, projecting that up

would go commercial. The other is the Envi-

affected villagers from projects like NT2 recog-

to 10,000MW of generating capacity will be

ronmental Protection Fund, funded by NT2

nise the long-term benefits that electricity

dedicated to regional trade. Where does this

revenues, through which communities can

sales to Thailand could provide Laos?

currently stand?

compete for grants to support biodiversity

Cdr: As far as I can tell, yes. Of course from the

Cdr: Laos’ total hydropower capacity is about

and environmental conservation. There are a

13,000MW, so they certainly have the capacity.

However, based on my discussions with them,

few other funds like the Road Safety and the Forestry Fund, but my research shows they are

villagers’ point of view, their immediate concern was the relocation aspect. How were they going to move, how would the new sites that

the World Bank does not think that Laos’ plans

not yet as operational as the other two.

to fully exploit the 13,000MW are realistic. First

The third governance measure which the

were less concerned with how electricity sales

is their internal capacity. Second, there are

Asian Development Bank is working on is to

revenues were spent, but were worried about

alternatives that are being explored by the

undertake capacity-building with the local

livelihoods that would be displaced, coffee

other countries. Vietnam, for example, is seri-

governments. Even beyond NT2 there are

gardens that would be inundated, whether

ously exploring nuclear power and Thailand

capacity-building programs in accounting,

the new sites would have sufficient access

has natural gas. Third, there’s strong concern

budgeting, and public revenue management.

to water, and of course, how much land they

that hydropower is not the best solution to

This is an overall program to work with the

were going to receive.

satisfy their energy demand because of vari-

Ministry of Finance beyond just this project.

ous negative impacts, least of which are the

Hopefully, when revenue streams come in

atM: Does it appear that lessons learned from

social consequences (e.g., resettlement and

from other hydropower projects, the system

relocation) and the environmental costs (e.g.,

will be ready to accommodate them.

biodiversity loss). From Laos’ own perspective,

atM: Supporting organisations like the World

it also makes sense not to depend on only one source of revenues and to diversify their economic base.

Bank and Asian Development Bank adhered to strict social and environmental impact assessments in the planning phase. How did

were proposed going to benefit them? They

NT2 will be transferred to other planned hydropower projects?

Cdr: Kansei Electric, a Japanese investor who wanted to develop a hydropower project in Champasak, southern Laos, went through the exact same process, but on a limited basis since Xe Katam’s capacity is only 61MW.

atM: The Nam Theun 2 (NT2) hydroelectric

they address criticisms from civil society actors

plant began commercial operation earlier this

about those anticipated impacts?

year. What governance arrangements have

Cdr: They went through a round of very

social sustainability decree, the National Policy

extensive consultations. The ones I reviewed

on Environmental and Social Sustainability of

been instituted to ensure that revenue management is equitable and transparent?

Shortly after the NT2 consultations, the Laos government issued an environmental and

occurred in the very early years — from 1996

the Hydropower Sector in Laos . It requires

Cdr: The major donors, especially the World

all the way up to 2003. That was Phase I, where

that all independent power producers and

Bank and the Asian Development Bank, are

consultations with villagers were conducted,

investors adhere to the standards laid down

working with the Laos Ministry of Finance to

and the International Union for Conservation

by NT2. You can consider the NT2 project as

ensure that revenues from electricity trading

of Nature (IUCN) and the World Wildlife Fund

having established a benchmark for future

fund anti-poverty and development pro-

were engaged. The World Bank and the Asian

governance mechanisms that would apply

grammes. This was the original intention of

Development Bank, especially the World

to all subsequent hydropower projects. In my

the project in the first place. These institutions

Bank, wanted to involve the major interna-

research, Kansai Electric complied, as much

have set in motion three concrete measures.

tional NGOs. One very big project involved

as possible, with the process and the con-

One, they are working directly with the na-

biodiversity conservation by setting up the

tent of the mitigation

tional accounts, so that there is a

Nakai Nam Theun National Protected Area.

measures.

streamlined reporting of

The IUCN agreed so long as the biodiversity

the revenues

areas were conserved.

trading health for wealth?

Southeast Asia is at the forefront of global trade in health services and goods; the volume of international patients travelling to Thailand increased from half a million in 2001 to 1.3. million in 2007, generating US$1.3 billion in that year alone.1 The health worker trade is flourishing too; Filipino nurse outmigration increased 45% from 9,270 in 2003 to 13,465 in 2009, with top destinations including Saudi Arabia, Singapore and the United Arab Emirates.2 Globally, trade in health services and goods is accelerating, mostly outside of bi/multilateral agreements. Less obviously, trade agreements can have unintended and undesirable effects on health, exemplified by the influx of processed foods in domestic markets that directly affect the chronic disease burden.

Despite growing trade in health services and side effects of trade agreements, trade and health policymakers operate in silos. With poor policy coordination between the WTO and WHO and trade and health ministries, clear conflicts between the goals of protecting and promoting health and generating wealth through trade have arisen, e.g. the potential for medical tourism to exacerbate public to private brain drain in Malaysia and Thailand. A black market trade in organs, especially kidneys, is thriving in the Philippines. This bulletin profiles the implications of the increased trade in health services and products on the poor in this region, as well as the indirect effects of trade liberalization on their health status specifically.

HEALTH SYSTEMS | 20

Trade versus health — a call for integrated policy making At the global level, the WTO has more compliance clout than the WHO due to the legally binding obligations it places on its members, which include the removal of tariff and non-tariffs barriers on goods and services, as well as its compulsory legal dispute mechanism. The WHO in contrast is an advocacy organisation that relies on non-binding agreements. Subsequently, enforcement capacity in cases of non-compliance to WHO agreements is limited.3 We see examples of trade and health policy incoherence, including patents on essential medicines and tobacco promotion in developing countries, permitted by trade agreements.4 The WHO’s Framework Convention on Tobacco Control (FCTC) is the sole example of a legally binding treaty straddling the health-trade domains and is to be applauded — all ASEAN countries except Indonesia have passed laws raising taxes on tobacco products and those that limit tobacco advertisements. The FCTC has directly benefitted public health worldwide, and can provide a template for future health related trade agreements.

Table 1: Trade and health objectives Trade objectives

Health objectives

Economic growth

Improve population health

Efficient resource allocation

Equitable resource allocation

Elimination of free trade barriers

Control risks to health

International specialisation

Universal access to health services

Source: Rangarirai Machemedze, Deputy Executive Director, Seatini, presented at session on “Trade in health services”, Second global forum on human resources for health, Bangkok, Thailand 29 January 2011.

Nationally, trade and health ministries mostly operate as separate entities, although Thailand and Vietnam have specialist teams working with MOHs analysing the implication of the WTO General Agreement on Trade in Services (GATS) for their health systems. Pre-emptively, government ministries should work towards more integrated governance of trade in health services, especially given the highly privatised health system landscape and existing inequities in health systems use and access by the poor.5 Impact on the poor: the main danger is that trade goals are prioritised over health goals in international, regional and national policymaking. At the micro-level, this affects equity of

access for the poor (e.g., medical tourism’s potential to dominate the consumption of specialist surgery, foreign health providers not incentivised to treat poorer locals). The privatisation of health systems is accelerated by trade in health services, officially provisioned for by GATS or otherwise.

Solutions: There is significant potential for WHO and WTO to provide leadership on coordination issues and facilitate joint ministerial meetings. Specifically, the WHO could help to build the capacity of health ministries who are unskilled in analysing trade agreements and Civil Society Organisations (CSOs) who provide technical assistance in low- and middle-income countries. Lobbying by CSOs in Thailand lead to changes in cigarette advertising rules. CSOs frame issues morally, rather than economically, making them well poised to counter trade agreements that do not promote health. 6,7 WTO GATS, ASEAN and trade in health services: challenges and opportunities Trade in health services is officially provisioned for under the WTO GATS. The four modes of supply include: 1. The cross border supply of services or remote service provision (e.g., telemedicine, diagnostics, medical transcriptions); 2. Consumption of services abroad (e.g., medical tourism, medical and nursing education for overseas students); 3. Foreign direct investment (e.g., foreign ownership of health facilities); and 4. Movement of health professionals.8 Countries can choose to make GATS commitments sectorally, which legally bind them to open markets under the auspices and protection of the WTO or via a specific mode. In ASEAN, only Cambodia, Malaysia and Vietnam have made GATS commitments relevant to the health sector.9 A WTO counsellor recently remarked that countries feel unable to schedule commitments in the health sector due to rapidly changing domestic markets and consumer preferences. In addition, the perceived need to schedule commitments is low, as trade in health services is happening anyway outside of GATS, driven by enthusiastic private corporations and investment companies. Countries may be advised however to schedule commitments, as they can limit the degree to which foreign providers can operate in the market.10 In policy terms, this clause can protect health systems from monopolisation by foreign investors in the health sector. Within ASEAN, full liberalisation of health services was envisioned to take place by 2010. In this issue, we focus on policy barriers in mode 4.* * For more information on policy barriers and the impact of increasing trade in modes 1 and 2 on the poor, please see ATM issue 7 on ICT (mode 1), and ATM issue 5 on medical tourism (mode 2). We will feature mode 3 in a future issue.

21 | HEALTH SYSTEMS

Figure 1: Health worker density per 1,000 population (2000–2007)

Source: WHO world health statistics 2009

Mode 4 – movement of health professionals International migration in health workers is arguably the most visible and contentious mode of the trade in health services. Health worker shortages persist to a varying degree in Southeast Asia; five countries record health worker densities below the WHO critical threshold of 2.28 health workers per 1,000 population, including Myanmar, Vietnam, Laos (1.4), Cambodia (1.1) and Indonesia (0.9).11,12 At the 2nd Global Forum on Human Resources for Health (HRH) in January 2011, policymakers, academics and civil society groups discussed the adverse effects of trade in health services on HRH capacity. Experts in a side session on trade in health services elaborated the need for more, not fewer trade agreements governing health worker flows, as bilateral and multilateral agreements can make recruitment procedures more transparent, as well as help with retention and quality control. But debates over individual rights and preferences to migrate persist. To what extent should governments, via trade agreements, explicitly promote or facilitate the flow of health workers into and out of their countries?

Movement of health professionals into the country ASEAN has a mutual recognition agreement to facilitate the movement of health professionals as part of the ASEAN

Framework Agreement on Services. But, onerous government regulations limiting immigration seriously restrict the movement of health workers, particularly due to an unharmonised system of education and qualifications, professional licensing, language and permanent residence requirements. According to one report, Malaysia and Singapore have the most liberal policies towards the import of foreign medical professionals, whereas stringent registration procedures apply in most other countries. Employment of foreign health workers in the Philippines is limited by registration and licensing rules, although specialists are allowed to perform their specialisation if the application of their knowledge is judged to be highly beneficial to the domestic market. Employment of foreign medical practitioners in Indonesia and Thailand is rare due to the registration requirements including a local language proficiency and citizenship or residence. Brunei has explicit preference for medical practitioners from Malaysia and Singapore.

Movement of health professionals out of the country Cambodia and Vietnam are 'unbound' in mode 4, meaning that they do not officially facilitate the export of health workers via GATS. The Philippines government has the most liberal policies towards the export of health workers, with a dedicated professional agency that promotes, facilitates and regulates their movement abroad. The Philippines also scored highest

HEALTH SYSTEMS | 22

Figure 2: Doctors' emigration rates in %, 2004

Solutions: Governments or ministries of health should develop strategies to match production with employment capacity in both public and private facilities within the country.

An ASEAN-wide monitoring system would ensure that movement is only encouraged from countries with health worker surpluses.17 At the micro-level, innovative human resource management can improve rural retention rates.

TRIPS and medicines access: are drugs global public goods?

Source: Bhargava A, Docquier F. The Medical Brain Drain dataset (1991 – 2004). April 2007.

on the outward mobility index constructed for a set of ASEAN countries. Singapore and Thailand recorded low scores, probably because both countries are particularly concerned to preserve their human capital base.13 In addition, nurses must have at least three years’ work experience in the country of origin for the MRA on Nursing Services and five years for the draft MRAs on Medical and Dental Services, even though there is no requirement within member countries. Thus, only experienced health professionals can move to work in other member countries. Overproduction of health workers yet under capacity to employ them in some ASEAN countries14 has resulted in the aggressive export of health workers. An International Council of Nurses report noted that the Philippines produces more than 2,000 medical doctors and 15,000 nurses per year, many of whom migrate to Western countries. Indonesia produces around 18,000–20,000 nurses per year but can absorb less than 6,000 graduates in its public health system. With strong government support, the remainder apply for work in other countries, particularly striking given that Indonesia has the lowest health worker density amongst ASEAN countries.15 The WHO global code of practice on the international recruitment of health personnel,16 launched in May 2010, outlines ethical principles for recruitment of foreign health workers, but as a voluntary code it lacks compliance clout.

Impact on the poor: the outmigration of health workers from poor to rich countries within and beyond ASEAN is actually minimal (excluding the Philippines), due to language barriers and licensing requirements. Figure 2 shows richer ASEAN countries like Singapore and Malaysia, are losing their doctors to OECD countries. Within poor countries themselves, rural to urban HRH migration and public to private HRH brain drain inhibits access to health services by the poor, rather than international outmigration of health workers.

Trade in vaccines and medicines is perhaps the most controversial and visible aspect of trade in health-related products.

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement has been in force since 1995, introducing global minimum standards for protecting and enforcing nearly all forms of intellectual property rights, including patents, for all kinds of products. In drugs development, TRIPS was intended to ensure a balance between providing incentives for pharmaceutical companies to innovate and providing affordable access to existing medicines. In practice, the debate rages on about how patents limit access to life-saving drugs for the poor, and whether medicines are an international public good. There are however two mechanisms that allow developing countries to promote drugs access under TRIPS — Parallel importing, which allows countries to import drugs from any country where it is sold at the lowest price and compulsory licensing, which allows countries to issue a license to pharmaceutical company to produce generic drugs without the consent of the patent holder, if there is evidence for a public health concern, like HIV/AIDs. Unfortunately, parallel importing is countered by Big Pharma when they institute uniform global pricing. Compulsory licensing requires significant legal expertise as provisions are complex, and as was the case in Thailand, Big Pharma can react negatively by boycotting drug sales in the country.18 Outside of these two mechanisms, there are promising developments that could improve medicines access for the poor: • Progressive development 1: patent pools. Perhaps in response to the controversy about TRIPs, Big Pharma are initiating open access patent pools. GlaxoSmithKline in 2009 sparked the creation of a patent pool to aid the development of new medicines for the treatment of 16 neglected tropical diseases such as tuberculosis and malaria.19 This is promising and timely given that pharmaceutical companies now prefer to develop statins and other chronic disease drugs, not antibiotics (See Figure 3). Why? Partly because of increasing antibiotic resistance, which disincentivizes costly antiobiotics development. Phase III clinical trials — those on large groups of patients — of an antibiotic in a single disease indication cost about US$70 million. Funding for biotech companies — venture capital or government grants — cannot cover this for a drug that will be sold mainly in short courses,

23 | HEALTH SYSTEMS

Figure 3: As bacterial infections grow more resistant to antibiotics, companies are pulling out of antibiotics research and fewer new antibiotics are being approved

Source: Cooper M, Shlaes D: Fix the antibiotics pipeline. Nature, 472 (7 April 2011): 32

and to which resistance may emerge.20 A second reason may be the profitability of developing chronic disease drugs like statins. Because patients are on statins for life (e.g. to control cholesterol), these drugs are continually purchased and consumed, as opposed to “one shot” antibiotics.21 Establishing patent pools could place neglected diseases and antibiotics back on the drugs development agenda.

• Progressive development 2: price negotiators. UNITAID, hosted by the WHO in Geneva, is an international facility for the purchase of drugs against HIV/AIDS, malaria and tuberculosis set up in 2006. UNITAID primarily negotiates low prices for drugs. An innovative development financing mechanism, a solidarity tax on airline tickets, and a growing number of member states (29 as of 2008) has seen UNITAID's budget exceed US$1.3 billion, of which at least 85% must be distributed to low-income countries. Cambodia, Laos and Vietnam are major beneficiaries of funding for HIV/AIDs. • Progressive development 3: India as global pharmacist. Promisingly for Southeast Asian markets, generic manufacturers in India (2nd largest pharma industry globally) and China are gaining ground. India has emerged as a world leader in generic pharmaceuticals production, supplying 20% of the global market for generic medicines

and 80% of anti retroviral drugs in developing countries.22 Singapore recently signed an MOU to facilitate early registration and approval of Indian generic drugs.23 If less developed Southeast Asian countries follow suit, this has potential to significantly improve the supply of affordable drugs, particularly beneficial to the poor.

Trade liberalisation, food, prices and health Health-related risks that arise from trade liberalisation in goods, services and capital have been anecdotally documented. Figure 4 conceptualises the links between trade policy and health outcomes, of which the focus falls on two major risks associated with trade liberalisation and food security: • Risk 1: Availability of cheap processed foods leads to unhealthy diets. As part of trade liberalisation, cheap, processed food manufactured by multinational food conglomerates has flooded domestic markets in developing countries — contributing to dietary changes that have negative epidemiological impacts. This includes greater consumption of calorie dense processed food high in fats, sugar and salt, rising obesity and the resultant increased health risks of chronic diseases like heart disease, diabetes and hypertension. Technological changes in urban

HEALTH SYSTEMS | 24

Figure 4: Links between trade policies and health outcomes

Source: Blouin C, Chopra M, van der Hoeven R: Trade and social determinants of health. Lancet 2009 373: 502 – 07.

Figure 5: McDonald's Big Mac price in US$ at current exchange rate (Jan 2006)

Source: The Economist Big Mac index

25 | HEALTH SYSTEMS

Figure 6: Retail price of rice, regular milled, in Philippines (peso real terms per kg)

Source: Philippines Bureau of Agricultural Statistics, http://countrystat.bas.gov.ph/

Figure 7: Retail prices of rice in Dong Thap, Vietnam (in Viet Nam Dong)

9,500 8,500 7,500 6,500 5,500 4,500 3,500 Feb-09

Jun-09

Oct-09

Rice (20% broken milled)

Feb-10

Jun-10

Oct-10

Feb-11

Rice (25% broken milled)

Source: FAO, Global Food Price Monitor, March 2011

transport, household appliance have precipitated lifestyle changes that exacerbate the chronic disease risks (e.g., urbanisation and sedentary lifestyles). Large scale advertising and marketing campaigns encouraging the purchase of such processed food influences food purchase decision making. Foreign investment by multi-national fast food

chains in developing countries further increases the availability and desirability of unhealthy foods. Figure 5 shows how affordable the Big Mac, a proxy for junk food, is in selected ASEAN countries, compared to where it is cheapest (Qatar, where obesity is now a serious policy concern) and the most expensive (Iceland).

HEALTH SYSTEMS | 26

Impact on the poor: The poor are more sensitive to changes in food prices than middle- to high-income groups, making them more likely to purchase the cheap, processed food that has nefarious impacts on their health. This was observed in the Pacific Islands, where several studies have documented the displacement of traditional diets with high fat imported foodstuffs, notably SPAM, a processed meat product and the concurrent rise in obesity and chronic disease rates.24 Solutions: Governments should promote campaigns for healthy diets and exercise. Sustained corporate and government financial commitments in health promotion activities will also help. Evidence also suggest that sin taxes are one of the most effective ways to nudge people into making healthier decisions.

• Risk 2: Capital liberalisation leads to food price volatility which subsequently leads to pricing out the poor. Recent reports have pinpointed the role of speculative trading in agriculture and commodities markets in driving up food prices regionally and globally since 2008.25 Banks, hedge funds and financiers responsible for the subprime mortgage crisis are now alleged to be taking advantage of de-regulation in global commodities markets, making billions from speculating on food whilst price hikes hit the poor the hardest: “Last year, London hedge fund Armajaro bought 240,000 tonnes, or more than 7%, of the world's stocks of cocoa beans, helping to drive chocolate to its highest price in 33 years. Meanwhile, the price of coffee shot up 20% in just three days as a direct result of hedge funds betting on the price of coffee falling.”26 While the spike in oil prices contributed to the 2008 food price hike, a second (political) reason for price rises of rice has been observed. According to one report, Thailand and Vietnam, key rice producing countries, withheld rice supplies within ASEAN, preferring to supply global food needs at higher prices when rice prices were at their peak (See Figures 6 and 7). This is a key example of distorted trade policy, with countries prioritising short term economic gains over regional food security and ultimately health of citizens in neighbouring countries.27 High food prices are particularly worrying for those lower income groups without recourse to subsistence agriculture (e.g., the urban poor), or alternative, affordable staples to rice in this region.

Food price hikes in 2008 resulted in protests in the Philippines and globally as the price of basic foodstuffs climbed to historic highs, pricing out the poor. In addition to stricter financial regulation in commodities trading that limits food price speculation (in this neoclassical economic era unlikely), the intervention point here is at the government level. Basic foodstuffs should be subsidised particularly

when food prices spike — coupons and voucher systems targeted at lower income groups will ensure that subsidies are not 'leaked' to higher income groups.

Unregulated organ trade: risks to the poor The shortage of organs is a global problem, whereby the development of a deceased organ donation programme is hampered by socio-cultural and legal factors.28 Given organ shortages, the illicit live organ trade has flourished.

This underground trade continues despite WHO issued guidelines in 1991 to avoid the coercion or exploitation of all organ donors. While 192 countries endorsed them, these guidelines are not legally binding and as a result, most of its recommendations have gone ignored. In Southeast Asia, the Philippines is a black market haven for the kidney trade, where 90% of transplants come from living donors, often poor individuals who sell a kidney for US$2,000–US$10,000.

Kidneys sold to foreigners increased more than 60% between 2002 and 2006, to the extent that new government regulation passed in 2008 sought to ban kidney transplants for foreigners.29 A recent conference on incentivising kidney donation has prompted concerns of a revival of the lucrative trade.30 Unless more is done to regulate this burgeoning illicit trade, the poor will continue to be exploited by unscrupulous brokers.31 Impact on the poor: live organ sellers are likely to be low income individuals, who 'donate' out of desperation. This poses Figure 8: Men in Philippines who have donated their kidneys for US$2,000–US$10,000.

Source: Derbyshire D, The Daily Mail: “Inside the transplant tourist trade: The desperate men of One Kidney Island”. 3 December 2007. http://www. dailymail.co.uk/news/article-499486/Inside-transplant-tourist-trade-Thedesperate-men-One-Kidney-Island.html. Accessed 10-05-2011.

27 | HEALTH SYSTEMS

Table 2: How accelerated trade liberalisation leads to 'trickle down' effects on population health status

Channels

Risks and threats

Intervention opportunities

Vision

WTO / WHO, Health

Trade policy prioritised

Break down organisational silos,

Trade liberalisation to

/ Trade ministry

over health policy

via workshops, rotations between

benefit individual and

health and trade ministries

population health

Establish focal point for trade in

Harmonised policymaking

— governance

health ministries Seek legal advice / expertise on implications of GATS for health Health ministries develop mechanism to monitor impact of trade on health General Agreement

May exacerbate develop-

Regulatory policy (redistributive, tax

Integrated public private

on Trade in (Health)

ment of two-tier health

profits and re-invest in the health

cooperation to achieve

Services (GATS)

system (depending on the

system)

universal coverage

— modes

level of privatisation in the country) Inhibits moves towards universal health coverage, privatisation and exclusion of the poor

Trade Related

Expensive medicines and

Establish a regional body like UNI-

Affordable drugs for all,

Aspects of Intellec-

lack of availability

TAID to negotiate lower prices for

available everywhere

tual Property Rights

drugs to cure chronic and infectious

(TRIPS)

diseases Financial support for think tanks or CSOs to research TRIPS

General Agreement on Tariffs and Trade (GATT) — social

Unhealthy diets Food price volatility

determinants of

Encourage farmers' markets and

Health and well-being as

local produce. Health promotional

valued attributes in society

activities and more research in sin taxes in the Southeast Asian context

health

Stricter regulation of commodities

Affordable, fresh healthy food available and accessible for all

markets (food) to prevent severe food price speculation Government subsidies for essential items Organ trade

Demand for organs rises,

Micro-level educational interven-

Safe and sustainable organ

the poor sell organs via

tions targeting vulnerable individu-

donation, non-economi-

unregulated channels in

als in black market havens. Macro-

cally motivated

desperation, health status

educational drive to dispel myths, to

declines

drive up cadaver donation

HEALTH SYSTEMS | 28

health risks to otherwise healthy individuals, whose health status may be compromised by dodgy extraction operations.

Their income earning potential can also be eroded by poorer health status linked to their organ donation. At the micro-level, educational interventions targeting vulnerable individuals can outline the risks associated with live organ donation. At the macro-level, better regulation of the trade, coupled with education aimed at dispelling myths surrounding organ donation, can help to increase official cadaver donation rates.

Conclusion Trade liberalisation poses several indirect health related risks, particularly for the poor, unless corrective policy measures are taken to protect health. Trade in health services looks set to continue officially (via GATS or bilateral agreements) or unofficially. Given this, bringing trade and health policymakers together at the country level is an urgent priority, as is building the health ministries' capacities to critically examine the implications of GATS on health in their respective countries.

References 1. Na Ranong A, Na Ranong V, Jindarak S: Thailand medical hub. A research report in Thai. Thailand Development Research Institute, 2009.

17. Arunanondchai J, Fink C: Trade in health services in the ASEAN region. World Bank Policy Research Working Paper 2007, 4147.

2. Philippines Overseas Employment Administration: OFW deployment per skill and country – new hires for the year 2009. http://www.poea.gov.ph/stats/2009_OFW%20 Statistics.pdf. Accessed 01-05-2011.

18. Marker MA: GATS, TRIPS and global health. MPP term paper, Lee Kuan Yew School of Public Policy. 6 November 2008.

3. Fidler DP, Drager N, Lee K: Managing the pursuit of health and wealth: the key challenges. Lancet 2009, 373: 325 – 31.

19. Pool for open innovation against neglected tropical diseases. http://www.ntdpool.org/. Accessed 24-02-2011.

20. Cooper M, Shlaes D: Fix the antibiotics pipeline. Nature, 472 (7 April 2011): 32.

4. Zeigler D: International trade agreements challenge tobacco and alcohol control policies. Drug and Alcohol Review 2006, 25: 567 – 579.

21. Pang T: insight from presentation at LKYSPP, 27 Sept 2010.

5. Pocock NS, Phua KH: Medical tourism and policy implications for health systems: a conceptual framework from a comparative study of Thailand, Singapore and Malaysia.

Globalization & Health 2011, 7:12.

22. Waning B et al: A lifeline to treatment: the role of Indian generic manufacturers in supplying antiretroviral medicines to developing countries. Journal of the International AIDS Society 2010 13:35.

6. Labonte R, Blouin C, Forman L: Trade, growth and population health: an introductory review. Institute of Population Health, University of Ottawa 2010, 2 (1).

23. Press Trust of India: “Singapore for greater access to Indian generic drugs”. 11 May 2010. http://profi t.ndtv.com/news/show/singapore-for-greater-access-to-indiangeneric-drugs-40805?cp. Accessed 24-02-2011.

7. Lee K, Sridhar D, Patel M: Bridging the divide: global governance of trade and health. Lancet 2009, 373: 416 – 22.

8. Smith R, Chanda R, Tangcharoensathien V: Trade in health related services. Lancet 2009, 373: 593 – 601.

9. WTO GATs services database. http://tsdb.wto.org/default.aspx. Accessed 10-02-2011.

10. WTO GATs introduction. http://www.wto.org/english/tratop_e/serv_e/gats_factfi ction1_e.htm. Accessed 10-2-2011.

11. WHO: World health report 2006. Geneva, Switzerland; 2006.

12. ADB: Health worker densities 2000 – 2007, in ADB Social indicators 2009.

13. ASEAN – ANU Migration Research Team: Movement of workers in ASEAN: Health Care and IT Sectors. June 2005. http://www.aseansec.org/aadcp/repsf/docs/04-007ExecutiveSummary.pdf. Accessed 24-02-2011.

14. Kanchanachitra C, Lindelow M, Johnston T, Hanvoravongchai P, Lorenzo FM, Huong NL, Wilopo SA, De la Rosa JF: Human resources for health in southeast Asia: shortages, distributional challenges, and international trade in health services. Lancet 2011, 377 (9767): 769 – 781.

15. Pachanee C, Wibulpolprasert S: MRAs for health professionals in ASEAN – Initial movements for future freer flow of health professionals in ASEAN? Ministry of Public Health, Thailand for the International Council of Nurses, May 2008. http://ihppthaigov. net/publication/attachresearch/84/chapter1.pdf. Accessed 24-02-2011.

16. WHO: Global code of practice on the international recruitment of health personnel. May 2010. http://www.who.int/hrh/migration/code/WHO_global_code_of_ practice_EN.pdf. Accessed 24-02-2011.

24. Blouin C, Chopra M, van der Hoeven R: Trade and social determinants of health.

Lancet 2009 373: 502 – 07.

25. World Development Movement: Betting on Hunger. June 2010. http:// www.wdm.org.uk/sites/default/files/Betting%20on%20hunger_06.10.pdf.

Accessed 24-2-2011.

26. Vidal J, The Observer Global Development Blog: “Food speculation: people die from hunger whilst banks make a killing on food”. 23 January 2011. http://www.guardian.co.uk/global-development/2011/jan/23/food-speculationbanks-hunger-poverty.

Accessed 24-2-2011.

27. Chandra AC, Lontoh LA. Regional food security and trade policy in Southeast Asia.

International Institute for Sustainable Development, 2010.

28. Shimazono Y: The state of the international organ trade: a provisional picture based on integration of available information. Bulletin of the WH0 December 2007, 85 (12): 901-980. http://www.who.int/bulletin/volumes/85/12/06-039370/en/. Accessed 24-2-2011.

29. Conde C, The New York Times:“Philippines cracks down on illegal kidney trade”. 29 April 2008. http://www.nytimes.com/2008/04/29/world/asia/29ihtphils.1.12427859. html. Accessed 15 - 03 – 11.

30. Uy JR, Philippine Daily Inquirer: “Church warns vs revival of human organ trade”. 11 November 2010. http://newsinfo.inquirer.net/inquirerheadlines/nation/ view/20101113-302973/Church-warns-vs-revival-of-human-organtrade. Accessed 15 - 03 – 11.

31. Jingwei H, Lai Yu-Hung A, Leong C: Living Organ Transplantation Policy Transition in Asia: towards Adaptive Policy Changes. Global Health Governance 2010, 3 (2).

29 | EDITORIAL TEAM

trade & inVeStMent faCilitation Darryl Jarvis is an Associate Professor at the LKY School of Public Policy. He specialises in risk analysis and the study of political and economic risk in Asia, including investment, regulatory and institutional risk analysis. He is an author and editor of several books and has contributed articles to leading international journals. He has been a consultant to various government bodies and business organisations and for two years was a member of the investigating team and then chief researcher on the Building Institutional Capacity in Asia project commissioned by the Ministry of Finance, Japan.

His current research is a large cross-national study of risk causality in four of Asia’s most dynamic industry sectors. He teaches courses on risk analysis, markets and international governance and international political economy.

His email is darryl.jarvis@nus.edu.sg

Johannes Loh is working as a Research Associate at the Lee Kuan Yew School of Public Policy.

He holds a Master’s degree in Public Policy from the Hertie School of Governance in Berlin. His previous research experience includes international student mobility, visual political communication, aid governance and public sector reform in developing countries. Recently, he completed a research project on Success Factors for Police Reform in Postconflict Situations with the German Technical Cooperation.

Prior to joining the Lee Kuan Yew School of Public Policy he has also worked for the United Nations Environment Programme in Geneva, Transparency International Nepal and the Centre on Asia and Globalisation in Singapore.

His email is johannes.loh@nus.edu.sg and you can follow his updates on trade & investment facilitation on Twitter, @seasiatrade.

health SYSteMS Phua Kai Hong is a tenured professor at the LKY School of Public Policy and formerly held a joint appointment as Associate Professor and Head, Health Services Research Unit in the Faculty of Medicine.

He is frequently consulted by governments within the region and international organisations, including the Red Cross, UNESCAP, WHO and World Bank. He has lectured and published widely on policy issues of population aging, healthcare management and comparative health systems in the emerging economies of Asia. He is the current Chair of the Asia-Pacific Health Economics Network (APHEN), founder member of the Asian Health Systems Reform Network (DRAGONET), Editorial Advisory Board Member of Research in Healthcare Financial Management and an Associate Editor of the Singapore Economic Review.

His email address is spppkh@nus.edu.sg

Nicola Pocock is a research associate at the Lee Kuan Yew School of Public Policy. She is also the research manager at aidha, a non-profit financial education and entrepreneurship training school for migrant domestic workers in Singapore.

Prior to joining the LKY School of Public Policy, she was the general manager at aidha. She has interned as a Fast stream trainee in the UK civil service at the Home Office and as a research volunteer at Amnesty International. Nicola has also carried out social work in Marseille, France as a European Union sponsored youth volunteer.

Her research interests span health and social policy, health systems financing, social impact assessment, gender, migration and financial behaviours.

Her email is sppnp@nus.edu.sg and you can follow her work on health systems on Twitter @healthSEAsia.

energY SeCuritY Benjamin K. Sovacool is an Assistant Professor at the LKY School of Public Policy. He is also a Research Fellow in the Energy Governance Programme at the Centre on Asia and Globalisation.

Anthony D’Agostino is a research associate at the Centre on Asia and Globalisation (CAG) with research interests in energy policy, climate change adaptation and environmental decision analysis.

Dr Sovacool has worked as a researcher, professor and consultant on issues pertaining to energy policy, the environment and science and technology policy. He has served in advisory and research capacities at the U.S. National Science Foundation’s Electric Power Networks Efficiency and Security Programme, Virginia Tech Consortium on Energy Restructuring, Virginia Centre for Coal and Energy Research, New York State Energy Research and Development Authority, Oak Ridge National Laboratory, Semiconductor Materials and Equipment International, U.S. Department of Energy’s Climate Change Technology Programme and the International Institute for Applied Systems and Analysis near Vienna, Austria.

Prior to joining CAG, Anthony worked with the Institute of Water Policy at the LKY School of Public Policy, using system dynamics to address public policy and water policy challenges. He has worked with the Greenhouse Gas Protocol at the World Resources Institute and at UNEP-ROAP, respectively focusing on corporate GHG emissions and sustainable buildings. In addition to consultation work on transportation and corporate environmental reporting, Anthony has worked for organisations in India, Australia, New Zealand and the US on rural development and sustainable agriculture issues.

Dr Sovacool has published four books, more than 80 academic articles and presented at more than 30 international conferences and symposia. His email address is bsovacool@nus.edu.sg

His email is sppald@nus.edu.sg and you can follow his work on the Southeast Asian energy sector on Twitter, @seasiaenergy.

The Lee Kuan Yew School of Public Policy is an autonomous, professional graduate school of the National University of Singapore.

Its mission is to help educate and train the next generation of Asian policymakers and leaders, with the objective of raising the standards of governance throughout the region, improving the lives of its people and, in so doing, contribute to the transformation of Asia. For more details on the LKY School, please visit www.lkyspp.nus.edu.sg