As the economies in Southeast Asia tap new sources of financing for their infrastructure and public service needs, they have become more assertive, demanding flexibility and less-stringent safeguards in project loans from their traditional lenders such as the World Bank Group.
Where BIC Works
In larger SE Asian economies such as Thailand and Indonesia, the IFIs face greater competition from private banks and sovereign lenders that offer faster transaction and weaker rules. New institutions such as the upcoming China-backed Asian Infrastructure Investment Bank (AIBB) and the BRICS Bank whose social and environmental policies are unclear or may be totally absent also threaten to destabilize the supremacy of the WBG and ADB investments.
To avoid redundancy, the World Bank Group and to some extent the ADB has offered a new menu of attractive lending instruments with a focus on increasing private sector funding. Among these are the Program for Results (PforR); new climate financing schemes such as the Forest Investment Program (FIP); and Financial Intermediaries (FIs). These are often accompanied by Development Policy Operations (DPOs, often policy-based or sector assessment loans), which allow borrowers to use their own country safeguard systems (CSS) and delegate more supervision and monitoring roles to the national and sub-national institutions.
BIC’s focus countries in Southeast Asia are Cambodia, Indonesia, the Philippines, Thailand, and Vietnam. BIC also has an extensive country program in Burma, which is described in more detail on the Burma country program page.
Increasing use of new lending instruments imperils basic rights and environmental protection
The Program for Results (PforR) pilot project in Vietnam underscores the risks of this approach in Southeast Asia. The PforR lending instrument, adopted by the Bank in 2012 in spite of deep concerns from civil society, works by providing general budget support for borrower programs (in this case Rural Water Supply and Sanitation) rather than financing for a specific project. The program does not require the application of the World Bank’s Environment and Social Safeguard Policies – instead a Program Action Plan is developed following staff assessment of the borrower’s Country Safeguards Systems (CSS) that includes measures to address identified weaknesses. Among the concerns raised by civil society groups is whether the World Bank’s disbursement requirements are a strong enough incentive to ensure that the government complies with these safeguard agreements.
BIC’s report on the Vietnam PforR project indicates that while the results-focused disbursement did drive project activities, it was often targeted in communities that were already better resourced, potentially leading to higher inequality in the long run. No appropriate sequencing of operational and capacity-building activities, lack of World Bank supervision and monitoring at all stages of program implementation, focus on quantitative rather than qualitative indicators, inconsistent risk identification and classification systems, and limited transparency and participation were also indicated as areas of concern. Without addressing these issues in upfront project preparation, future PforR projects could lead to serious harm in higher risk programs – especially when complex resettlement of ethnic minorities is being undertaken.
This trend towards using a client’s own systems, whether public or private sector, comes at a time when many borrowers still do not have substantial policy equivalence, lack institutional capacity, have poor transparency and accountability, and often dismiss any meaningful civil society and community engagement. Using a CSS that is not comparable to the WBG’s or ADB’s policies and that lacks government capacity (enforcement measures, budget, staff, incentive for compliance) presents real dangers to communities, especially when they deal with uninformed or uncooperative leadership and live in a politically constrained environment.
For more information about BIC’s global campaign on safeguards, including country systems, please visit BIC’s Enviromental and Social Assessment page.
Slowing recognition of community resource rights
Forest governance programs in particular, typically funded by alternate lending instruments such as the Forest Investment Program (FIP) and the Forest Carbon Partnership Facility (FCPF), have remained problematic in many of the places where BIC has been active, such as Indonesia, Cambodia, and Vietnam. Despite the high profile government commitments to protect forests as reflected in their climate mitigation plans and REDD+ strategies, recent trends in tropical countries suggests that progress in recognizing community land and resource rights is slowing.
The 2014 report from Rights and Resources Initiative reveals that the area of forestland secured for community ownership since 2008 is less than 20 percent of the area that was recognized in the previous six years. This trend has been associated with various forms of continuing resource grabs by local elites and corporations, aided by governments eager to give away land to investors on almost any terms, says the report. The consequence can be that promises to curb deforestation and forest degradation will remain unfulfilled, and efforts slowed down. BIC is connected with a wide network of community forestry practitioners and advocates who expressed support in elevating their community forestry agenda into the IFI’s REDD+ and other forest-related strategies.
For more information about BIC’s global forest campaign, including details about FIP and FCPF, please visit BIC’s Forest page.
Possibility of circumventing accountability commitment remains as WB re-engages in Cambodia
The World Bank has sent signals that they are ready to re-engage in Cambodia after freezing lending operations in the country in 2011. The lending freeze had come on the heels of an Inspection Panel investigation into the Land Management and Administration Project (LMAP) in 2009, which had found that the Bank’s safeguard policies, especially those around involuntary resettlement and project monitoring, had been violated. The project, which was meant to help legalize land tenure rights for the urban population in Phnom Penh, instead led to massive land grabbing and the forced relocation of thousands of poor families, including those living near Boeung Kak Lake (BKL). When confronted with the Panel’s report, the Government of Cambodia refused to cooperate with the Bank to provide restitution to the 3,500+ families displaced from the BKL community and cut all ties with the institution.
Now, however, the Bank has resolved to revive its relationship with the government despite the fact that the BKL community has yet to see any form of compensation. As part of its re-engagement strategy, the World Bank is beginning the process of developing a short-term country strategy, or Country Engagement Note (CEN), formerly referred to as an Interim Strategy Note (ISN). The consultation process began with an online survey in December 2013 and face-to-face meetings with stakeholders were scheduled to start in February 2014, but were delayed until 2015. Consultations on the CEN were held from June 29 to July 13, 2015 in Kampong Cham, Siem Reap, Sihanoukville, and Phnom Penh with a number of stakeholders from government ministries, parliament, the private sector, and civil society.
The CEN, together with four new investment projects, including the Land Allocation for Social and Economic Development (LASED) II Project, was approved by the Bank Board of Directors on May 19, 2016. The project’s lead implementing agency – the Cambodian Ministry of Land Management, Urban Planning and Construction — was also the lead implementing agency of LMAP, leading many to wonder whether the LASED II project will actually improve land tenure secu rity in Cambodia or simply perpetuate more of the same issues that plagued LMAP and the previous LASED project.
For more information about the World Bank’s new Country Partnership Framework, please see BIC’s CPF page.
Civil Society AnalysisWorld Bank PforR in Practice – Vietnam, Bank Information Center, July 2014
World Bank PforR in Practice – Vietnam – Executive Summary, Bank Information Center, July 2014
Indonesia Country Update, March 2014, Bank Information Center. Also available in Bahasa Indonesia
Beyond Carbon: Rights-based Safeguard Principles in Law, Bernadinus Steni, ed. (2010), HuMa, Jakarta, Indonesia
Scaling up renewable energy investments: Lessons from the best practices model in Indonesia, by Fabby Tumiwa and Imelda Rambitan, Institute for Essential Services Reform, July 2010
Case Studies on renewable energy in Indonesia, Institute for Essential Services Reform, July 2010
Mekong Scoping Report, Bank Information Center, December 15, 2006
World Bank ResourcesCambodia Country Page, World Bank Website
Indonesia Country Page, World Bank Website
Philippines Country Page, World Bank Website
Thailand Country Page, World Bank Website
Vietnam Country Page, World Bank Website
Country Director, Cambodia, Lao PDR, Malaysia, Myanmar, and Thailand
Tel: +66 2 686 8300
30th Floor, Siam Tower
989 Rama 1 Road
Pathumwan, Bangkok 10330
Country Manager, Cambodia
Tel: +855-23 861 300
113 Norodom Boulevard
Phnom Penh, Cambodia
Country Director, Vietnam
Tel: +844 3934 6600
8th Floor, 63 Ly Thai To Street
Hoan Kiem District
Country Director, Indonesia
Tel: +62-21 5299 3000
Indonesia Stock Exchange Building
Tower 2, 12th Floor
Sudirman Central Business District (SCBD)
Jl. Jendral Sudirman Kav. 52-53
Country Director, Philippines
Tel: +632 917 3001
26th Floor, One Global Place
5th Avenue corner 25th Street
Bonifacio Global City
Taguig City 1634
Country Manager, Cambodia, Lao PDR, and Vietnam
Country Manager, Indonesia
Tel: +62-21 2994 8001
Indonesia Stock Exchange Building
Tower 2, 9th Floor
Jl. Jend. Sudirman Kav 52-53
Jane (Yuan) Xu
Country Manager, Philippines
Tel: +63-2 465 2700
23rd Floor, One Global Place
5th Avenue corner 25th Street
Bonifacio Global City
Taguig City 1634
Cambodia Resident Mission Contact Information, ADB Website
Indonesia Resident Mission Contact Information, ADB Website
Philippines Resident Mission Contact Information, ADB Website
Thailand Resident Mission Contact Information, ADB Website
Vietnam Resident Mission Contact Information, ADB Website
Acting Director, Asia Program
Tel: +91 98711-53775 (Delhi)
For other regional contacts, please see BIC’s Asia Program page.