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. Studies & surveys Brainstorming Top leader Set broad goals & direction Drafting work Businesses Ministries ＆ agencies Academics & consultants Comments & revisions Finalize & approve Regions & localities Stakeholder consultation 1. Vision 4. Substantive stakeholder participation 2. Consensus building3. Documentation Standard Policy Making Procedure (Five Necessary Conditions) 5. A secretariat with sufficient authority and responsibility to coordinate the entire process (Drafting may be outsourced)

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

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

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

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

11. National Council/Committee Approach National Council or Committee Ministries and agencies working groups or task forces for specific issues and sectors Plan Support Implement PM or President Chair, give mandate Businesses Academics Experts

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

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

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. Prime Minister Visions to be concretized Relevant ministry Experts Private sector Specialized institute Direct access Industry-specific committees Thailand should become: - “ Detroit of Asia ” - “ Hub of Tropical Fashion ” - “ Kitchen of the World, ” etc. High level coordination Operational level coordination Instruct Report Thailand under Thaksin Administration (2001-2006) Strong PM, quick decision, running the country like a business corporation

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 Automotive M/P 2007-2011 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) Drafting team at Thailand Automotive Institute

23. Vision—“Asia’s auto production base with value-added and strong parts industry” Thai Automotive Vision, 5 Strategies and 12 Action Plans 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) Vietnamese Side Japanese Side Ministry of Planning and Investment (MPI) J.Embassy, JICA,JETRO in Vietnam Japanese Bus. Assn. (HN/HCM) WT1 Power supply WT2 Labor market WT3 Macroeconomy WT4 General (SI, IPR, customs) WT5 Retail distribution WT6 Infrastructure Gov’t Office M of Finance M of Industry & Trade M of Sci/Tech M of Transp M of Post/Tel M of Resource M of Justice M of Labor Coordinate MoFA METI Keidanren Coordi nate Co-work

27. A/P Drafting & Monitoring Vietnam-Japan 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 Drafting Action PlanMonitoring Action Plan 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 of proposed 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)