REMARKS AS PREPARED FOR DELIVERY
USAID Assistant Administrator for Asia Jonathan Stivers
“The Intersection of the Private Sector and Sustainable Development in the Asia-Pacific Rebalance”
Business Council for International Understanding

I am honored to have the opportunity to speak to you today about the work of USAID and the role of development in promoting security and prosperity in furtherance of the Asia-Pacific Rebalance — and how our partnership with the private sector is crucial to our success.

THE ASIA-PACIFIC REBALANCE

Early in his presidency, President Barack Obama launched the Asia-Pacific Rebalance policy in recognition that the region is hugely consequential to our future.  As part of this, we are implementing a long-term strategy to strengthen our relationships not only with the countries but with the people of the Asia-Pacific region. 

It is an exciting and pivotal time for U.S. policy in the Asia-Pacific region.  It is the most dynamic, fastest growing region in the world.  More people live in Asia than anywhere else on the planet.  Hundreds of millions have been lifted out of extreme poverty over the past few decades, contributing to economic growth, regional stability and a growing middle class.  Over the next five years, nearly half of all growth outside the United States is expected to come from Asia.  This presents tremendous opportunities to expand trade, create American jobs, and support regional and global security and prosperity.  The United States has significant investments in the region, and USAID’s economic growth work helps protect those investments.  The United States is the single largest source of foreign direct investment in the region.  By the end of 2012, the stock of investment by U.S. businesses in the East Asia-Pacific region stood at $622 billion — a 35 percent increase since the beginning of the Obama Administration.

Yet with rapid economic growth comes complex development challenges.  The Asia region still has more than 50 percent of the world’s extreme poor, 70 percent of the world’s malnourished children, and the majority of all natural disasters.  A myriad of other development challenges hold the region back, from weak systems of governance to severe natural resource degradation.  For example, governance challenges in certain countries restrict the full participation in economic growth of marginalized segments of society, such as smallholder farmers and women — holding countries back from reaching their full potential.  With the majority of humanity, the region’s voracious appetite for natural resources has resulted in some of the fastest degradation rates in the world, which affects everything from air quality to water supply.  There is need to adapt to climate change in ways that provide food security and protect economic gains

THE INDISPENSABLE ROLE OF DEVELOPMENT

The U.S. Government’s Rebalance to the Asia-Pacific recognizes that our future prosperity and security are inextricably tied to the region, and it is thus in our strategic interest to play a greater role in helping the people of the region shape a more peaceful, prosperous and just future.

Now and in the coming decades, the countries of the Asia-Pacific region will play a more consequential role in the state of world affairs.

In effect, the long-term success of the Asia-Pacific Rebalance will be determined by just how the Asia-Pacific develops.  How a country develops can make the difference between economic growth that is lasting and economic growth that is fleeting.

Between cities powered by clean, sustainable energy sources versus suffocating pollution in overwhelmed urban areas.

Between a generation that grows up illiterate and malnourished, or one that is educated and healthy and breaks free from the cycle of poverty.

Between an oppressed populace with no hope for the future, or one empowered to unlock its full potential.

The decisions countries make today impact the global economy and jobs, the air we all breathe, the world’s food supply, and whether our planet is plagued by conflict or peace.

President Obama understands the stakes very well.  That is why he elevated development to a core pillar of our national security strategy, alongside diplomacy and defense.

While we must focus on solving immediate crises, it is essential that we also address the root causes of poverty, conflict and instability.

That is where development comes in.  We not only lend a hand during times of humanitarian crisis or natural disaster, but we partner with countries over the long haul to help them develop into more reliable partners.

We are all safer and stronger at home when fewer people face destitution, when our trading partners are flourishing, when nations around the world can withstand crisis, and when societies are freer, more democratic and more inclusive.

In launching the Asia-Pacific Rebalance, President Obama contended that security and peace, shared prosperity, and fundamental rights for every human being were its key elements.  

At USAID, our mission is to end extreme poverty and enable resilient, democratic societies to realize their potential.  Key to achieving success is ensuring that development gains are broadly shared, or inclusive of all a country’s people — which is also key to ensuring that development progress can be sustained over the long term.

USAID’s inclusive and sustainable development investments are necessary tools in building more peaceful, prosperous and just societies across the region — thereby advancing the key elements of the Asia-Pacific Rebalance.

Economic growth is a central part of our efforts.

Today, I will highlight the pivotal role of the private sector in ensuring success.

NEW MODEL OF DEVELOPMENT

In recent years, in response to the changing development landscape, USAID has embarked upon a new model of development — one that leverages the private sector, innovation, technology and regional approaches to further development goals and sustain progress.  Rather than delivering results with our dollars alone, we are creating partnerships at every opportunity to deliver focused and measurable results.  USAID has transformed the way it does business: Today, we leverage more than three times as much from the private sector than we did just five years ago.

Our partnership with India is at the forefront of USAID’s new model of development.  While our assistance dollars to India have been steady, the total value of U.S. development programs has increased by leveraging funding at every opportunity.  Through partnership with the private sector alone, USAID leverages over $4 dollars for every dollar invested in support of shared development goals with India. 

PRIVATE SECTOR PARTNERSHIP

Across the continent, we are finding that the private sector has much to offer as a driver of development innovations and solutions.

In Indonesia, just last month we established a partnership with Nestlé to jointly tackle a problem faced by every four out of 10 Indonesians — access to clean water and sanitation.  In East Java, we are working together to construct 100 upstream infiltration ponds.  These ponds collect rainwater and return it to the aquifer, reducing drought and ensuring that poor communities in the downstream urban areas have better access to clean water.  The business case for making this development investment with USAID is clear for Nestle: Refilling the aquifer contributes to a more reliable source of water and grass for dairy cows — ensuring a continued supply of milk for Nestlé’s core business.

In Timor-Leste, we seized a great opportunity to partner with ConocoPhillips and double the number of farm families we were able to reach with crop diversification training.  As a result, farmers practicing new horticulture techniques have boosted their incomes by up to 400 percent.

In the Philippines, we partnered with Microsoft to use empty TV White Space to connect remote communities to the internet — enabling citizens to register for government services and assist with tracking fish catches, and the government to better coordinate disaster response.

For the past decade or so, USAID has been at the forefront of the intersection between government and the private sector, bringing together over 3,000 partner organizations.

Many of the challenges that businesses face overseas are really symptoms of the development challenges that USAID is working to address.  For example, a company may be concerned with issues such as supply chain legality and sustainability or lack of qualified workers, while USAID seeks to improve opportunities for smallholder farmers or young people entering the workforce.  By working together in partnership, the public and private sectors can find new ways of looking at a problem and develop better solutions. 

Few other regions on Earth see the same level of enormous variation of economic development.  Even just within ASEAN, for example, the spectrum could not be more profound: from Laos, still in the early stages of its development, to much more established regional neighbors like Indonesia and Thailand — let alone the economic powerhouses of Singapore and Malaysia.  USAID works both at a regional level and at a bilateral level to overcome the barriers to closing this development gap.  USAID’s comparative advantage with regard to other aid organizations around the world is that we have the ability to work in a wide range of economic circumstances — from Burma, where upwards of 70 percent of the population economically depends on agriculture, to major emerging economies such as Vietnam and the Philippines.

For the purposes of today I will highlight the work of USAID in three areas:

1.      Investing in the Workforce

2.      Building the Enabling Environment

3.      Eliminating Trade Barriers

FIRST: INVESTING IN THE WORKFORCE

We know that a key ingredient for every country that’s grown its way out of poverty has been the emergence of a strong and dynamic private sector.  But several factors hold a workforce back from driving or sustaining their countries’ growth in a global economy, including:

·         barriers to the participation of women in economic ventures

·         lack of access to quality education and

·         inadequate information and communications technology (ICT).

GENDER

We know if we can erase gender inequities, we can unlock human potential on a transformational scale.  Investing in women has a well-documented multiplier effect.  Research has found that women typically invest more of their income than men do in their children and communities.  The World Economic Forum reports that across 134 countries, greater gender equality correlates positively with per capita Gross National Product.  The United Nations Economic and Social Commission for Asia and the Pacific estimates that the Asia-Pacific region alone loses more than $40 billion per year because of women’s limited access to employment, and $16 to $30 billion because of gender gaps in education.

Through our regional efforts with ASEAN, we are working to provide the creators of small and medium enterprises — with a particular focus on women and youth — with the tools and financing they need to succeed.  We do this through business development training, access to financing and market linkage support.  Our partnership with ASEAN and the U.S.-ASEAN Business Council has enabled us to institutionalize several efforts, including greater emphasis on women’s entrepreneurial, as well as raise the profile of women’s entrepreneurship issues among ASEAN members.

EDUCATION

Few societies have achieved high and sustained rates of growth or significantly reduced extreme poverty without investing in expanded access to quality education.  USAID’s higher education programs in Asia work toward enhancing human capacity for economic growth.  For example, USAID brings experts from U.S. universities and the private sector to Indonesia, India, the Philippines and Vietnam to help strengthen their higher education institutions’ ability to serve as drivers for innovative, sustained economic growth.  In the Lower Mekong region, USAID works closely with the private sector, universities and vocational centers to identify specific industries and skills in high demand and develop customized curricula to meet that demand so that students can develop the skills needed to secure employment.

For example, in Vietnam, we are partnering with Arizona State University, Intel, and top Vietnamese universities and vocational colleges to transform engineering education from passive, theory-based instruction to active, project-based instruction.  More than 100 faculty members have already benefited from the training and are improving the way they teach.  And in Indonesia, where our mission is a leader in incorporating science, technology, innovation and partnership across USAID programming, we invited 44 private sector and civil society entities to partner with each other and with us to develop innovative programs to promote inclusive workforce development.

INFORMATION AND COMMUNICATIONS TECHNOLOGY (ICT)

USAID sees information and communications technology (ICT) as a key enabler for development and for building a 21^st century workforce.

In Burma, USAID partnered with Hewlett-Packard (HP) and the University of Indiana to launch HP’s Learning Initiative for Entrepreneurs in Burma.  This online business and information technology program is known as “LIFE” for short.  So far, HP has established 10 of 12 planned LIFE centers, which are equipped with computers and Internet to enable access to HP LIFE e-Learning for urban and rural entrepreneurs.  We’re partnering with the University of Washington and Microsoft to train Burma’s public, private and civil society leaders on critical ICT skills.

HP and Microsoft are also part of the USAID-initiated U.S.-Burma Information Communications Technology Council — which also includes other leading U.S. technology companies such as Cisco, Google and Qualcomm Incorporated — to maximize ways in which technology can spur broad-based economic growth, increase transparency and support Burma’s integration into regional and global markets.

SECOND: BUILDING THE ENABLING ENVIRONMENT

Critical to inclusive and sustainable economic growth is good governance that encourages an enabling environment where entrepreneurship and innovation can flourish.  That is why we work with governments, the private sector and civil society in countries across Asia to modernize laws and regulations affecting trade and responsible investment.  We promote legal and regulatory processes that strengthen the rule of law, increase transparency, safeguard worker rights and enable citizens to play an active role in economic reform.

USAID is instrumental in helping the United States deliver on the promise of the proposed Trans-Pacific Partnership.  In Vietnam, USAID promotes and supports implementation of reforms critical to potential Trans-Pacific Partnership participation.  Already, we have helped Vietnam rewrite about 150 laws and regulations affecting commercial activities and related judicial procedures.  Through our Governance for Inclusive Growth (GIG) project, we are helping to improve compliance with trade agreements, the rule of law and expand our access to Vietnam’s growing market for U.S. exports.  We focus on improving the regulatory environment and labor issues, systems for accountability, and inclusion of vulnerable and historically disadvantaged groups, such as women.  And our efforts with the Vietnam Chamber of Commerce and Industry are driving regulatory reforms and new business enabling policies at the local government level, thanks to a Provincial Competitiveness Index we’ve established.

In the Philippines, where one-fifth of the population still lives in extreme poverty, we have helped the country emerge as one of the fastest growing economies in the region, and a more reliable U.S. trade and investment partner.  Through the Partnership for Growth, a White House initiative implemented in only four countries worldwide, we collaborate with the Philippines on addressing the country’s most serious constraints to lasting equitable growth that benefits all Filipinos — with a particular focus on addressing weak governance and inadequate human capacity.  Together, USAID and the Government of the Philippines analyzed and addressed structural challenges in its macroeconomic foundations, and in so doing, helped to build a stronger and more resilient environment for commercial activity to thrive. 

Over the past five years, the country’s GDP growth averaged 6.7 percent — one of the highest in the region — and its consistent improvements in business competitiveness helped it leapfrog to the top half of the Global Competitiveness Index.  The Philippines, for the first time, received investment-grade sovereign debt ratings from three of the world’s leading credit rating agencies.  This incredible development will further enhance the Philippines’ reputation as a worthy destination for international investment, and will reduce the costs associated with accessing financing in global and domestic credit markets.  Under the Partnership for Growth, USAID supported the July 2015 enactment of the Philippine Competition Law, which marks a major step forward in the Philippines’ efforts to increase attractiveness for investment by ensuring fair competition.

And in Laos, where USAID assistance was instrumental to World Trade Organization (WTO) accession in 2013, USAID supports key legal reforms needed to fully implement WTO and ASEAN Economic Community commitments, as well as the U.S.-Laos Bilateral Trade Agreement.  The reforms directly contribute to the modernization of the legal, policy and institutional framework for dynamic private sector growth, the integration of Laos into regional and international markets, and the advancement of the rule of law and improved governance throughout many sectors in Laos.  In part due to USAID efforts, Laos’ compliance with WTO-required commitments is expected to increase real GDP by about 0.5 percent.

AND FINALLY: ELIMINATING TRADE BARRIERS

In the Asia-Pacific, regional economic integration presents tremendous potential for global growth.  The Organization for Economic Cooperation and Development (OECD) estimates that inadequate, trade-restrictive border procedures raise total trade costs by up to 17.5 percent — a reality that I’m sure many of your companies are all too familiar with.  Reducing these costs can deliver tremendous benefits.  Estimates show that even a 1 percent reduction in global trade costs will increase worldwide income by more than $40 billion.

A hallmark of USAID’s regional work is our five-year ASEAN Connectivity through Trade and Investment project, referred to as ACTI for short.  This project helps to improve ASEAN’s regulatory framework for trade and investment and private sector competitiveness — further opening markets for U.S. exports.  Over the past decade, USAID supported the launch of the ASEAN Single Window, which integrates customs procedures across all 10 ASEAN member countries to expedite cargo clearance.  The ASEAN Single Window improves enforcement and compliance at the border and reduces trade transaction costs and time, effectively lowering the cost of doing business across the region and facilitating ASEAN’s participation in global supply chains, creating opportunities for expansion for American business.

Clearly there is still a ways to go with regard to improving regional trade connectivity.  Regional integration between South and Southeast Asia is still relatively limited, with poor surface transportation and major ports in India, Bangladesh and Burma constrained by capacity, efficiency and connectivity to road and rail networks.  Public-private partnerships can be an important part of a viable solution.  In that vein, we are supporting the implementation of the WTO’s Trade Facilitation Agreement (TFA).  The TFA, if implemented robustly, has the potential to dismantle some of the most critical obstacles to the efficient movement of goods across borders.  In December 2015 with strong support from the Office of the United States Trade Representative, USAID launched the Global Alliance for Trade Facilitation — a partnership of several donors, private sector companies and international organizations seeking to support implementation of the TFA.  The Alliance will leverage the private sector’s knowledge — capturing and using business’ real world experience and insights — to effectively identify key border bottlenecks and implement solutions to deliver commercially meaningful results.  USAID anticipates providing support to multiple Asian countries that demonstrate the political will and capacity to implement TFA commitments.

CONCLUSION

In conclusion, President Obama’s Asia-Pacific Rebalance policy recognizes that our future prosperity and security are inextricably tied to this region.  At its core, the Rebalance is about strengthening our relationships with countries — but more specifically people — of the region to help them shape a future that is peaceful, prosperous and more just.

Our investments in enabling inclusive and sustainable economic growth in partnership with the private sector play a vital role in giving the people of the Asia-Pacific the needed tools to chart a path of lasting progress that benefits all.

Thank you all for your interest in the future of the Asia-Pacific region, and we at USAID look forward to our work together for a brighter future. 

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