In the past two decades, economic success has lifted nearly a billion people out of poverty in Asia. Still, four Asia-Pacific countries are classified as low income, which means 450 million extreme poor live in what are essentially middle-income countries.
Since the late-1950s, the East Asian Miracle has seen rapid economic growth that led to the emergence of a solid middle class, all the while holding income inequality steadily at bay. But this is changing.
Today, about a fifth of the region’s population remain at risk of sliding back into poverty with growing concerns around the social mobility of large swathes of society.
Only four Asia-Pacific countries are still classified as low income, which means 450 million extreme poor live in what are essentially middle-income countries.
For East Asian societies to continue the remarkable progress of past decades, new responses are needed to the economic challenges that are now faced.
Private enterprise continues to have a key role to play in ensuring economic growth that will benefit all participants.
Globally, the private sector accounts for 60 per cent of gross domestic product, 90 per cent of jobs and 80 per cent of capital flows on average in developing countries.
Alongside creating decent jobs, the private sector in Asean (Association of South East Asian Nations) can spur innovation in smart cities, finance green infrastructure, as well as adopt business models that promote good governance and diversity that serves to future-proof their business models. This supports sustainable economic development.
Partnerships between governments and the private sector are at the heart of the UN’s Sustainable Development Goals, which provide a vision for countries around the world on how to achieve transformative development that leaves no one behind.
Governments, for their part, need to accelerate efforts to establish enabling policy and regulatory environments for ease of doing business and create incentives for those who invest in innovations that increase accountability.
Particular efforts need to focus on how to address corruption, which has been consistently cited as the single most important obstacle to doing business in the region, according to the Asean Business Outlook, and is estimated to add up 15 per cent to the cost of doing business (World Economic Forum).
However, this will require a major shift on how governments and private sector work together, as well as finding new ways for businesses to align their strategies and operations with the Goals.
The United Kingdom has just announced a partnership with the UN Development Programme and a group of pioneering Asean countries (Indonesia, Malaysia, Myanmar, Philippines, Thailand, and Vietnam) to back the strength of these ideas.
Our initiative ‘Promoting a Fair Business Environment in Asean’ aims to create a virtuous cycle of prosperity that ensures everyone shares the fruits of economic growth. By promoting transparency the project hopes to see citizens claim their rights and hold governments accountable, for example by monitoring major public infrastructure projects.
We will also work with pioneers in the private sector that are willing to champion good governance, for example by introducing equal opportunities for men and women in the workplace and guaranteeing a minimum representation of women in company’s executive boards. These are just illustrations of what we would like to achieve, as solutions emerge through the ingenuity fostered by commerce.
We believe that this collective effort has the power to ensure more inclusive growth, and encourage businesses to fulfil their potential and their responsibilities to society.
Lewis Neal, Director for Economic Diplomacy of the Foreign Commonwealth Office, Government of the United Kingdom.
Valerie Cliff, Deputy Regional Director for Asia & the Pacific and Director of Bangkok Regional Hub, United Nations Development Programme.