Industrial Master Plans and Action Plans

1. Industrial Master Plans and Action Plans Policy Design and Formulation in Developing Countries

2. Proactive Industrial Policy Even under globalization, industrial policy is both necessary and possible. In fact, many countries already practice industrial policies consistent with WTO, regional integration and bilateral FTAs. But new policy must be different from old ones: planning, laissez-faire, infant-industry promotion (Korea), FDI-led industrialization with slow integration (ASEAN4). Proactive industrial policy must satisfy the following: Promotion of markets and international integration A strong and wise state to guide the private sector Retaining sufficient policy tools for catching up Dynamic capacity building of both government and private sector through concrete actions & projects Internalization of skills & technology Effective public-private partnership Deep industrial knowledge shared by government and businesses

3. Policy Learning • International best policy practices (and failures) must be collected and compared systematically. East Asia abounds in good examples, but we can also learn from other regions. • Using them as references and building blocks, government must acquire general capability to create a policy most suitable for a particular country, time and sector. • Do not copy other countries uncritically, or reject their experiences as irrelevant. Learning (knowledge collection) and thinking(adaptation to your country) must be combined. • Learning steps: • Collect and analyze policy documents of other countries • Seminars & advice by invited foreign officials and experts • Policy missions to foreign country governments (write reports) • Discuss how foreign experiences can be used in formulating policies

4. What to Be Learned? Basics • Policy content • Policy procedure • Policy organization • Policy documentation More advanced • National leadership • National movement for mindset change • Developmental state (politics & development) • Exit to an advanced society

5. Standard Policy Making Procedure(Five Necessary Conditions) 5. A secretariat with sufficient authority andresponsibility to coordinate the entire process Top leader 1. Vision 2. Consensus building 3. Documentation Brainstorming Set broad goals & direction Drafting work Comments & revisions Finalize & approve Studies & surveys (Drafting may be outsourced) Stakeholder consultation 4. Substantive stakeholder participation Ministries ＆agencies Academics & consultants Regions & localities Businesses

6. Taiwan: Statute for Industrial Innovation, 2010 The 3-year process was managed by Chung-hua Institution for Economic Research (a think tank winning competitive bidding). Brainstorming; agreeing on goals & directions Stakeholderconsultations Documentation Private sector hearings with six sectoral business associations Task force under Ministry of Economic Affairs Minister providing vision & key ideas Drafting by MoEA official with lawyer’s help for wording Further revision & approval by National Assembly Inter- ministerial meetings with MoEA chairing Dissemination(“Island Tour”)

7. Thailand: Automotive Industry Master Plan 2007-2011 The whole process (1 year) is managed by Thailand Automotive Institute (TAI)  Brainstorming; agreeing on goals & directions Set up formal committee for drafting M/P Subcommittees study identified issues Human resource “CEO Forum” FDI & local firms Exporters MoI, MoST, MoEdu Professors’ team (Chulalornkorn Univ) M/P Steering Committee Organized by MOI Businesses Officials Experts M/P Drafting By TAI staff Productivity Marketing Engineering Comment & dissemination Investment & linkage Business Business Gov’t Experts Gov’t Experts Implementation (Informal) (Formal)

8. Vietnam: Traditional Policy Drafting Process Order Submit Prime Minister Minister Drafting Team Inter-ministerial review Submit Review for approval Data MPI & otherMinistries Internal review MPI & otherMinistries Government Technical assistance(sometimes) Contact Ministry when necessary Interviews, symposiums (sometimes) Appeal letter to Prime Minister when problems arise International experts Business Community No permanent channel for continuous policy dialogue(case-by-case, temporary, ad hoc)

9. Alternative Policy Organizations Who will draft and execute policies, and how? The following approaches are not mutually exclusive; some countries use more than one. Technocrat group directly under PM or President National Councils or Committees Super-ministry Sector/issue-specific institute acting as a hub Strong leader without institutionalization

10. Technocrat Group Approach - Elite technocrat group with full planning authority given by top leader - Members are selected officials, business leaders & experts with good education & experience PM or President Direction, full authority for policy making Faithful execution and reporting BusinessesAcademics Experts Technocrat Group (Policy Maker) Policy, guidance and monitoring Faithful execution and reporting Korea – Econ. Planning Board Malaysia – Econ. Planning Unit Thailand – NESDB Taiwan – Kuomintang Elites Indonesia – BAPPENAS Chile – “Chicago Boys” Ministries (Policy Implementers)

11. National Council/Committee Approach PM or President Chair, give mandate National Council or Committee BusinessesAcademicsExperts Plan Support working groups or task forcesfor specific issues and sectors Ministries and agencies Implement

12. Singapore Now: New Productivity Drive Economic Strategies Committee: Report Chaired by Deputy PM Members from ministries/agencies, business, unions Joint secretariat: MTI, MOM (ministers) National Productivity and Continuing Education Council (NPCEC) Review & submit Oversight Review & approval Led by MTI, MOM (PS level) Inter-agency coordination Working Committee for Productivity and Continuing Education (WCPCE) Sectoral “Productivity Roadmap” for the next 10 years Financial Incentives National Productivity Fund Productivity & Innovation Credit Skills Dvt. Fund Lifelong Learning E.F. Scrutiny Draft & propose Sector working groups (12 priority sectors) Construction BCA Unions Industry Electronics EDB Unions Industry Precision Eng. EDB Unions Industry Transport Eng. EDB Unions Industry General Mfg. SPRING Unions Industry F & B SPRING Unions Industry Retails SPRING Unions Industry Cross-cutting issues Low wage workers Research & benchmarking Infocomm and logistics

13. My Proposal for Vietnamese Government Prime Minister Direct, give mandate Plan National Competitiveness Council Chaired by PM (or DPM)Secretariat: Government OfficeMembers: Heads of concerned ministries Commission studies, reports Support, report, draft Working groups for specific issues or sectors SMEs Supporting industries Clusters TVET Higher Educ Secretariat:MPI Ministries, businesses, experts Secretariat:MOIT Ministries, businesses, experts Secretariat:MOIT Ministries, businesses, experts Secretariat:MOLISA Ministries, businesses, experts Secretariat:MOET Ministries, businesses, experts Implement Ministries and agencies

14. Super Ministry Approach One ministry with broad authority for industry (sectors, trade, technology, training, standards, SMEs, FDI, IPR, regional development…) Performing multiple tasks—planning, interface with politicians, working with businesses and other stakeholders, trade negotiation, drafting laws and regulations, monitoring, dissemination…. Highly motivated and capable officials and extensive information networks are needed. No charismatic leader is needed for this approach to work.

15. Organizational Structure of Japan’s Ministry of International Trade and Industry, 1960s

16. Special Institute as a Hub Government creates/designates a special institute for promoting a specific sector or a specific issue. This institute becomes a hub of policy making and implementation (secretariat function)—as well as a service provider for consultation, training, testing, etc. The institute works closely with relevant ministries, businesses and experts/researchers. The institute prepares a policy draft.

17. Thailand: Special Institute(around the time of Asian Financial Crisis)

18. Thailand under Thaksin Administration (2001-2006) Strong PM, quick decision, running the country like a business corporation Thailand should become:-“Detroit of Asia”-“Hub of Tropical Fashion”-“Kitchen of the World,” etc. Visions to be concretized Prime Minister Instruct Report Relevantministry Industry-specificcommittees Directaccess High level coordination Specializedinstitute Privatesector Experts Operational levelcoordination

19. Documentation • DraftingImplementationResults. Producing documents is the means, not the end. • Generally speaking, short & concise is better than long and complex. Large documents are usually not read. • Only include information and arguments necessary for the policy actions proposed. • Drafters can be officials, consultants, academics or a mixed team. As long as key contents are agreed and necessary studies have been prepared, anyone can draft policy documents.

20. Comparison of Master Plan Structure

21. Action Plan Template • The following template is actually used in Vietnam-Japan Industrialization Strategy (2011-ongoing). • Only essential items are included to save time & energy; total about 5 pages. 1. Situation analysis (about 2 pages, essential facts only for promoting this industry) 2. Vision for 2020 (one sentence) 3. Targets (3-5 items, one phrase each) 4. Policy issues (3-5 items, one phrase each, policy efforts required for targets above) 5. Action plan (who, what, by when, success criteria in table format) 6. Monitoring mechanism (1-2 sentences, common for all industries)

22. Thailand AutomotiveM/P 2007-2011 Drafting team at Thailand Automotive Institute • Vision 2011  4 Objectives  5 Strategies  12 Action Plans • Strong coordination by Mr. Vallop of Thailand Automotive Institute • Effective stakeholder networking – FDI, local producers, government, donors • Process-based action mechanism – annual budget and projects for implementing actions (no matrix)

23. Thai Automotive Vision, 5 Strategies and12 Action Plans Vision—“Asia’s auto production base with value-added and strong parts industry” Source: Thailand Automotive Institute, The Automotive Industry Master Plan 2007-2011 Executive Summary, p.4.

24. Vietnam-Japan Joint Initiative • Purpose: Improve Vietnam’s investment climate to become an attractive investment destination • Background: (1) Japan is the largest implementer of FDI and largest donor in Vietnam; (2) public private dialogue; (2) Vietnam joined WTO in Jan. 2007. • Scheme: (1) Action Plan is agreed among Vietnamese & Japanese governments and Japanese private companies.(2) Monitor progress and announce final result. Phase 1, 2003-2005 (44 items, 85% achieved) Phase 2, 2006-2007 (46 items, 94% achieved) Phase 3, 2008-2010 (37 items, 81% acheived) Phase 4, 2011-2012 (70 items, 87% achieved) Phase 5, 2013-2014 (100 items, ongoing)

25. Procedure for Action Plan Vietnam-Japan 1. Japanese Business Associations in Vietnam identify problems and study support measures. 2. Bilateral dialogue to agree on problems and solutions (two governments & Japanese FDI) 3. Agree on Action Plan 4. Execute Action Plan Vietnam—review/adjust laws and regulations Japan—ODA support 5. Monitor Action Plan Interim monitoring (one year later) Final monitoring (two years later)

26. Organization for Action Plan Vietnam-Japan (Phase 4) Japanese Side Vietnamese Side MoFAMETIKeidanren J.Embassy,JICA,JETRO in Vietnam Ministry of Planning and Investment (MPI) Coordinate Coordinate Co-work M of Transp M of Post/Tel M of Resource M of Justice M of Labor Gov’t Office M of Finance M of Industry & Trade M of Sci/Tech Japanese Bus. Assn. (HN/HCM) WT1 Power supply WT2 Labor market WT3 Macroeconomy WT4 General (SI, IPR, customs) WT5 Retail distribution WT6 Infrastructure

27. A/P Drafting & MonitoringVietnam-Japan Drafting Action Plan Monitoring Action Plan Joint Committee headed by Japanese ambassador Keidanren chairman MPI Minister Task Force headed by MPI Minister & GD attended by Japanese Bus. Assn. Japanese Consultants Hearing from companies Preparing action plan draft Evaluation Committee headed by Japanese ambassador Keidanren chairman MPI Minister Monitoring Committee headed by MPI Minister & GD attended by Japanese Bus. Assn. Task Force headed by MPI Secretary & DGD attended by Japanese Bus. Assn.

28. Action Plan Format Sample: (Phase I, Item 29) Adoption of international accounting standard (total 2 pages) (1) Current status—Explanation of current situation and citation of relevant laws & regulations (2 paragraphs) (2) Issues raised by enterprises—Gap between local and global accounting system adds cost and ambiguity, etc (2 paragraphs) (3) Views expressed by Vietnamese Gov’t—Statement ofproposed law revisions and future direction (2 paragraphs) (4) Concrete solution measures: 1. Clarification of all accounting and auditing standards and integration into international standards. 2. From 2004, PR & implementation of Accounting Law Common deadline: Action within 2 years

29. Reasons for Success • Excellent bilateral relationship between VN & JP • High level political involvement • Public Private Partnership • Commitments with a deadline on Action Plan and monitoring • Support by ODA for implementing Action Plan • Openness and transparency of the result (Cited from the presentation of Mr. Kyoshiro Ichikawa, Senior Investment Advisor & JICA expert, Hanoi, Dec. 2007)