[Closing Remarks (16.3.31)] UNESCAP Financing for Development in Asia and the Pacific

2016.07.14

55

Closing Remarks by President of KOICA

at High-Level Follow-up Dialogue on

Financing for Development in Asia and the Pacific

 

31 March 2016, Incheon, Republic of Korea

 

1

 

Greetings  

 

 

Excellencies, Distinguished Delegates, ladies and gentlemen,

 

We now have come to the conclusion of the discussion. Allow me to express my gratitude once again to all the presenters for participating in this timely and very successful event.

 

I am very encouraged by the high level of engagement over the past two days, and by the optimism and spirit of commitment with which you approach this ambitious Addis Ababa agenda. We have heard many thoughtful interventions and a rich diversity of voices and ideas. Progress on tax cooperation, regional capital market, South-South cooperation, financial inclusion and the new financing mechanism all are critical and they will undoubtedly inform and enrich the international delivery process of Addis Ababa.

 

At the same time, I have taken careful note of the various areas that have been emphasized where we can and should further strengthen our performance. Let me address some of these areas.

 

 

2

 

DRM: Support for the public financial management and Addis Tax Initiative

 

We all recognize the importance of domestic resource mobilization (DRM) and the role of governments and public sector in this regard.

 

States should be effective and accountable in enhancing and creating domestic capital market and mobilizing domestic resources and thus, promoting the environment for growth and development.

 

Good public financial management is responsible for not only protecting, developing, using resources, pushing and maintaining economic growth, and increasing income, but also effectively and efficiently managing all national resources. It is also essential in ensuring that aid is being used to achieve development goals.

 

We require prudent, effective, transparent and accountable management and robust budget revenue, audit system and oversight institutions that operate within the rule of law.

 

Donor communities have also started taking this approach. OECD DAC has recently introduced an official Creditor Reporting System code of domestic revenue mobilization for their statistical reporting.

 

Surely, Korea also has many narratives to share in this respect. The government of Korea has already shown dedication to the agenda by joining the Addis Tax Initiative last year and in addition, KOICA has been supporting developing countries by providing technical assistance to build capacity for taxation.

3

 

Financial Inclusion: a key component for inclusive and sustainable rural development

 

As history has shown us time and time again, grass-roots people matter. Under the SDGs key principle of ‘Leave no one behind’, the concept of inclusiveness should be taken account in the discourse of financing for development.

 

In reality, about 264 million at the bottom of the pyramid do not have a bank account in the Southeast Asia region. Only about 50% of people in the ASEAN countries have a bank account compared to the 90% of people with bank accounts in OECD countries.

 

The situation in rural areas is even worse. Still, many people, especially women, do not have an access to financial services or financial literacy, which is a key factor for inclusive and sustainable development.

 

In this regard, KOICA has added a component of financial inclusion into our signature ‘Smart Saemaul Undong (SMU)’ program. The SMU program, developed from Korea’s own model for rural development, is Korea’s  development program directed at the poor on a communal level with a comprehensive approach called “Impact in One”.

 

This program consists of several components such as health, education, water and climate change, which boost development in rural areas in a holistic manner.

 

Financial inclusion is also an important component within the program. KOICA will closely work with communities to realize full and equal access to formal financial services and information for the under-served bottom of the pyramid in our partner countries.

4

 

Private Finance : Broadening understanding on wider actors and resources for Development

 

In addition to mobilizing domestic resources, sustainable development will require investment of all kinds: public, private, domestic and international.

 

It is indeed an opportunity to engage a wider range of actors and resources for development and will require making the best use of each source, all of which can be mobilized and utilized just as effectively through various innovative financing.

 

But in order to make this happen, it is crucial to understand the mechanism of diverse multi-stakeholders interacting, the different types of resources they provide, and their respective roles and interests - and at the same time - to focus on formulating a differentiated strategy in leveraging private finance. Additionally, we need to anticipate the challenges of orchestrating cooperation with these multi-stakeholders, ensuring the balance between interest and development.

 

As global partnership is imperative in harmonizing various actors and guaranteeing an objective for development, KOICA is seeking various ways to bridge the private sectors in financing for sustainable development by acting as a ‘Development Cooperation Platform’. We will endeavor to assist public-private collaborative efforts, taking tailored approaches of different private actors, resources and interests into consideration.

 

 

 

5

 

Impact Investment as Innovative Ways of Financing

 

Next, impact investment can be highlighted as an innovative method of financing to support the implementation of SDGs. Impact investment can be defined as investment made to deliver socio-economic and environmental benefits to developing countries with expectation of financial return to the investors.

 

Utilizing grants as the catalyst to attract private sectors introduces two general approaches to promote impact investment. The first approach is to provide small grants as seed money to entrepreneurs with innovative ideas to trigger high development impacts. To this end, KOICA has introduced the Creative Technology Solution (CTS) program which provides Korean entrepreneurs seed funding to employ their innovative technology to goods and services for Bottom of the Pyramid (BoP) consumers in developing countries for the reduction of poverty and sustainable development.

 

The other approach is to participate in large-scale infrastructure investment such as railways, bridges and airports. Recently, blending finance mechanism has gained much attention as an innovate instrument of financing for development. Technical assistance is also an important part of the mechanism.

 

KOICA as a grant agency has consulted with international consulting firms to find out how to improve the quality of feasibility studies for infrastructure projects, which will in turn help the project attract multilateral development banks and private investors.

 

 

6

 

Collective Responses to Climate Changes

 

Last, but not least, I am glad that this Dialogue has fully recognized the importance of environmental sustainability. As we concluded at the Paris Agreement on Climate Change, climate-resilient and sustainable development is an urgent matter in achieving the SDGs and for our future generations.

 

The Korean government has supported the global efforts on climate change. In this regard, we are host to the Green Climate Fund in this city of Song Do where we are gathered today. Also, KOICA has fully supported the government of Vietnam in establishing their green growth policy in response to climate change.

 

We aspire to continue our efforts to play an active role for climate financing with financial institutions, partner countries government, donor agencies and other climate related stakeholders to tackle climate change in Asia and the Pacific.

 

 

 

 

 

 

 

 

 

7

 

Conclusions

 

For the past two enthusiastic days, we have heard loud and clear, the priorities of the Asia and Pacific region in the financing framework for sustainable development.

 

Once again, I would like to applaud United Nations Under-Secretary-General and ESCAP Executive Secretary Akhtar for initiating this dialogue and all the speakers and panelists for their participation and valuable input. This important insight will contribute to the progress of the Addis Agenda that applies to all countries and all regions.

 

I look forward to continuing this dialogue, and thank you for your commitment to making Addis a success.

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