Industrial Master Plans and Action Plans
Policy Design and Formulation in Developing Countries
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
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
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
Studies & surveys
Brainstorming
Top leader
Set broad goals &
direction
Draftingwork
Businesses Ministries & agencies
Academics & consultants
Comments& revisions
Finalize& approve
Regions & localities
Stakeholderconsultation
1. Vision
4. Substantive stakeholder participation
2. Consensus building
3. Documentation
Standard Policy Making Procedure(Five Necessary Conditions)
5. A secretariat with sufficient authority andresponsibility to coordinate the entire process
(Drafting may be outsourced)
Taiwan: Statute for Industrial Innovation, 2010
Task forceunder
Ministry of Economic Affairs
Minister providing vision & key ideas
Private sector hearings
with six sectoral business
associations
Brainstorming; agreeing on goals
& directions
Stakeholderconsultations
Documentation
Draftingby MoEA
official with lawyer’shelp 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
Furtherrevision &approval
by National Assembly
Thailand: Automotive Industry Master Plan 2007-2011
“CEO Forum”
FDI & local firmsExporters
MoI, MoST, MoEduProfessors’ team
(Chulalornkorn Univ)
M/P SteeringCommittee
Organized by MOI
BusinessesOfficialsExperts
Brainstorming; agreeing on goals
& directions
Set up formal committee for drafting M/P
Subcommittees study identified
issues
Gov’t
Business
Experts
Business
Gov’t Experts
Human resource
Productivity
Marketing
Engineering
Investment& linkage
M/PDraftingBy TAI staff
Comment & dissemination
(Informal) (Formal)
The whole process (1 year) is managed by Thailand Automotive Institute (TAI)
Implementation
Vietnam: Traditional Policy Drafting Process
Prime Ministe
r
Minister DraftingTeam
MPI & otherMinistries
Inter-ministerial review
Internal review
Order
SubmitReview for approval
Submit
Business Community
Internationalexperts
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 & otherMinistries
Data
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
- Elite technocrat group with full planning authority given by top leader
- Members are selected officials, business leaders & experts with good education & experience
BusinessesAcademics 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 BoardMalaysia – Econ. Planning UnitThailand – NESDBTaiwan – Kuomintang ElitesIndonesia – BAPPENASChile – “Chicago Boys”
Technocrat Group Approach
National Council/Committee Approach
National Council or Committee
Ministries and agencies
working groups or task forcesfor specific issues and sectors
PlanSupport
Implement
PM or President
Chair, give mandate
BusinessesAcademics
Experts
National Productivity and Continuing Education Council (NPCEC)
Working Committee for Productivity and Continuing Education (WCPCE)
ConstructionBCA
UnionsIndustry
Low wage workers
Sector working groups (12 priority sectors)
Precision Eng.EDB
UnionsIndustry
ElectronicsEDB
UnionsIndustry
Transport Eng.EDB
UnionsIndustry
General Mfg.SPRINGUnionsIndustry
F & BSPRINGUnionsIndustry
RetailsSPRINGUnionsIndustry
Research & benchmarking
Infocomm and logistics
Cross-cutting issues
NationalProductivity
Fund
Productivity& Innovation
Credit
OversightReview & approval
ScrutinyDraft & propose Skills Dvt. Fund
Lifelong Learning E.F.
Chaired by Deputy PMMembers 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
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 OfficeMembers: Heads of concerned ministries
Higher EducTVETClustersSupportingindustries
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
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.
MITI
Main Bureau Attached Organizationsand External Bureaus
Deliberation Councils
Minister’ s Secretariat (incl. Research & Statistics)
Int’ l Trade Policy Bureau
Int’ l Trade Admin. Bureau
Industrial Policy Bureau
Industrial Location & Environment Protection Bureau
Basic Industries Bureau
Machinery & Information IndustriesBureau
Consumer Goods Industries Bureau
Agency of National Resources& Energy
Patent Office
SME Enterprise Agency
Agency of Industrial Science & Technology
Trade & Investment Training
Other
I ndustrial Structure Int’ l Trade TransactionExport Insurance Industrial Location & WaterTextile Product Safety & Household Goods Quality IndicationPetroleum Aircraft & Machinery IndustryElectrical Works Traditional Crafts Industry......... ...................
Minister
Politically appointed VM
Administrative VM
Deputy VMs
Special assistants
(* ) I ndustrial Structure Council:influential in the 60s (18 special committees): industrial pollution, int’ l economy, consumer economy, heavy industry, chemical industry, etc.
Organizational Structure of Japan’s Ministry of International Trade and Industry, 1960s
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.
Name Start-up date Organizations
Thailand Productivity InstituteJun. 1995
Originated from MOI industry promotion dept. 20Board members, 161 staff.
Thai-German InstituteNov. 1995
Financial cooperation from KfW, GDC. Technicaltraining (CNC, CAM/CAD, etc.), 12 Board members,79 staff, 5 German experts.
Thailand Textile InstituteJun. 1997
Based on MOI industry promotion dept. and industryassociation. 20 Board members, 27 staff.
National Food Institute (NFI)Oct. 1996
Based on MOI industry promotion dept. and industryassociation. 20 Board members, 27 staff.
Management Systems CertificationInstitute (MSCI) Mar. 1999
Originated from Thai Industrial Standard Institute(TISI). 14 Board members, 55 staff.
Thailand Automotive Institute (TAI)Apr. 1999
Supporting industry development. 20 Boardmembers, 28 staff
Electrical & Electronics Institute(EEI) Feb. 1999
Supporting industry development. 29 Boardmembers, 28 staff.
Foundation for Cane & SugarResearch Institute Apr. 1999
Originated from Cane & Sugar Research Institute.13 Board members.
Institute for SME DevelopmentJun. 1999
Modeled on Japan’s SME Univ. Operated byThammasat Univ. in cooperation with 8 localuniversities. 21 Board members.
The Iron & Steel Institute of Thailand Dec. 1998(cabinet approval)
Aimed at joint marketing promotion of four steelcompanies (oversupply)
Thailand: Special Institute (around the time of Asian Financial Crisis)
Prime Minister
Visions to be concretized
Relevantministry
ExpertsPrivatesector
Specializedinstitute
Directaccess
Industry-specificcommittees
Thailand should become:-“Detroit of Asia”-“Hub of Tropical Fashion”-“Kitchen of the World,” etc.
High level coordination
Operational levelcoordination
Instruct
Report
Thailand under Thaksin Administration (2001-2006)Strong PM, quick decision, running the country like a business corporation
Documentation DraftingImplementationResults.
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.
Comparison of Master Plan Structure0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Malaysia: Third IndustrialMaster Plan
Thailand: First AutomotiveIndustry ES
Thailand: SecondAutomotive Industry ES
Thailand: SecondAutomotive Industry
Thailand: Small and MediumEnterprises
Thailand: SupportingIndustries ES
Thailand: Food Industry ES
Thailand: Leather, leathergoods, footwear ES
Indonesia: National IndustrialDev. Policy
India: National Strategy forManufacturing
India: Industrial Policy ofMaharashtra State
Vision
Targets
Situation analysis
Policy issues
Action plans
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)
Thailand AutomotiveM/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
Vision—“Asia’s auto production base with value-added and strong parts industry”
Thai Automotive Vision, 5 Strategies and12 Action Plans
Source: Thailand Automotive Institute, The Automotive Industry Master Plan 2007-2011 Executive Summary, p.4.
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)
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 Plan4. Execute Action Plan Vietnam—review/adjust laws and regulations Japan—ODA support5. Monitor Action Plan Interim monitoring (one year later) Final monitoring (two years later)
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
MoFAMETIKeidanrenCoord
inateCo-work
A/P Drafting & MonitoringVietnam-Japan
Joint Committeeheaded by
Japanese ambassadorKeidanren chairman
MPI Minister
Task Forceheaded by MPI Minister & GD
attended by Japanese Bus. Assn.
Japanese ConsultantsHearing from companies
Preparing action plan draft
Drafting Action Plan
Monitoring Action Plan
Evaluation Committeeheaded by
Japanese ambassadorKeidanren chairman
MPI Minister
Monitoring Committeeheaded by MPI Minister & GD
attended by Japanese Bus. Assn.
Task Forceheaded by MPI Secretary & DGDattended by Japanese Bus. Assn.
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
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)
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