By Kalinga Seneviratne
BANGKOK (IDN) – In its 2017 Economic and Social Survey of Asia and the Pacific, the Bangkok-based UN Economic and Social Commission for Asia and the Pacific (ESCAP) makes an interesting argument in regards to achieving the Agenda 2030 Sustainable Development Goals (SDGs) in seemingly downplaying the importance of democratic accountability and emphasising that how power is exercised is more important.
“In the Survey for 2017 political dimensions, such as democratic accountability, are avoided, and governance is framed in terms of how power is exercised instead of how it is acquired,” the report says in its executive summary.
When asked by IDN-INPS during its launch here whether this is a departure from the usual United Nations stance on democratic accountability being essential to sustainable development, ESCAP’s chief macroeconomist, Hamza Ali Malik, said “we are not undermining any democratic accountability. We are not taking a position on that.”
“We should not be telling governments what type of democratic systems they should be or not be running. Governments should be deciding that for themselves. We are more interested in analysing how the power is exercised in terms of delivery of public services rather than how it is acquired. That is what we are focusing on,” he added.
Malik also pointed out that “if you look at our region there has been a range of cultural experiences, history, development models that interact with democracy and it offers a range of arrangements of how development can be pursued by phases, so we are not getting into the determinance of governance in that sense.”
Launching the flagship survey in Bangkok on May 1, United Nations Under-Secretary-General and ESCAP Executive Secretary Dr. Shamshad Akhtar stressed that better governance for effective mobilisation and use of fiscal resources is critical to advancing the 2030 Agenda for Sustainable Development.
The survey highlights the importance of effective governance and fiscal management, given the high demands on fiscal policy to address the diverse challenges to sustainable development. For instance, economic expansion has been accompanied by rising income inequality with inadequate creation of decent jobs in the region, which trails the world in social protection coverage.
While the region’s economies are expected to grow by around five percent in the coming year, the report confirms an important trend in the growth pattern in the region where domestic demand rather than export growth is pushing economic growth. This is reflected in the region’s growing purchasing power, driving domestic private consumption accompanied by low inflation, ease of borrowing and increasing spending by the rich as their assets grow.
“As we enter the second year of the 2030 Agenda, economic growth in Asia-Pacific economies is steady but modest, amid prolonged weak external demand and rising trade protectionism,” Dr. Akhtar noted, adding that China is important for the region and its economic growth has stabilised after the 2008 global crisis.
“Future economic growth will need to rely more on productivity gains, compared to factor accumulation,” said Dr. Akhtar. “Sustained productivity gains, in turn, will require effective institutions and better governance, in both public and private spheres (and) will need to address social and environmental challenges in order to improve the quality of this growth.”
In their presentations, both Dr Akhtar and Malik emphasised the importance of good tax collection systems as essential for driving sustainable development. Malik pointed out that focusing on data may make people feel pessimistic but “collective will of both the people and governments together could improve governance”.
He added that what will happen in the Asia-Pacific region will affect the rest of the world and in the next 20-30 years more than half the world’s GDP will come from this part of the world. “Private consumption in the region will primarily be the driver of this economic growth,” he predicted.
Tax reforms for enhancing public revenue for sustainable development was a major part of a two-day ‘High-Level Dialogue on Financing for Development in Asia and the Pacific’ meeting held at ESCAP on April 28 and 29.
In an opening address to the meeting, Dr Akthar argued that efficient tax systems are essential for finding public financial resources for sustainable development. Noting that many developing economies distort tax revenues to compete for export markets with each other, she said that “taxation policies need to be focused on development needs,” adding that tax avoidance should be fought in alliance with international agencies.
In an introductory address, South Korea’s minister for strategy and finance, Song Eon-seog, noted that South-South cooperation has now replaced North-South cooperation and said that his country has secured finance for its economic development by reforming the tax system and will be eager to share its experience with the region’s emerging countries.
Giving the keynote address, Sri Lanka’s finance minister Ravi Karunanayake said that domestic resources for infrastructure development are inadequate for his country and there need to be better coordinated and harmonised regional capital markets.
“Many of us don’t have the benefit of concessional borrowing because our economies have progressed,” he complained, expressing the hope that China’s Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (the BRICS bank) could supplement development financing for middle-income countries such as Sri Lanka.
According to Karunanayake, tax evasion in the Asia-Pacific region is huge and regional cooperation among tax authorities is very low compared with other regions. “Our challenge is to balance corporate tax with investments,” he noted.
Australia’s former Treasurer and Deputy Prime Minister Wayne Swan, who heads ESCAP’s eminent persons’ panel on tax reform, argued that SDGs cannot be achieved without additional revenue which needs to come from better taxation, so it is important to build a regional platform for discussing tax reform as well as coordinate capacity building in the region for such measures.
Swan believed that when growth is generated it needs to be distributed fairly among the population and multinational companies (MNCS) operating in the country need to be seen to be paying their taxes fairly. “In Australia, there is a debate about high tax evasion by MNCs and it is seen (by the public) as a form of corruption,” he pointed out.
“In addition to getting the technical details (of tax collection) correct, it is essential to build public political support for taxation,” Swan argued, “otherwise it falls apart at elections.” [IDN-InDepthNews – 3 May 2017]