Inequality a growing challenge for rising Asean

Inequality a growing challenge for rising Asean

"Studies have shown that [development and income] gaps are widening rather than decreasing. Vulnerable groups continue to benefit the least from the gains of development within Asean" -- DON PRAMUDWINAI, Thailand Foreign Affairs Minister

The Association of Southeast Asian Nations (Asean) had a lot to celebrate when it marked its 50th anniversary last year. The region has undergone a significant transformation from a bloc of underdeveloped countries to become one of the world's most dynamic economic drivers.

Poverty has been reduced significantly and the quality of life has improved for a vast number of Southeast Asia's 625 million residents. Gross domestic product (GDP) has reached US$2.4 trillion and is still growing at an annual average of 5%. Regional trade has grown from $10 billion in 1967 to $2.3 trillion in 2015.

This rapid growth, however, has had some undesirable consequences including rising disparity, inequality and malnutrition. The wide development gaps in Asean are a warning sign for the years to come, say experts.

"These challenges should be viewed from a regional standpoint where all Southeast Asian countries recognise the value of regional synergies and explore ... integrated solutions to uplift the entire region together and ensure that no one is being left behind," said Shamshad Akhtar, a United Nations under-secretary-general and executive secretary of the UN Economic and Social Commission for Asia and the Pacific (Escap).

"How we address poverty and develop infrastructure affects the management of natural resources, affects consumption and production patterns and establishes the long-term resilience of our communities," she told a forum held recently in Bangkok.

Collective efforts by Asean and the UN have helped the region to achieve large gains in poverty reduction. The poverty rate has fallen from 47% in 1990 to 14% in 2015. Undernourishment fell from 30.4% to 8.9% in the same period, while life expectancy improved from 56 years in 1967 to 71 in 2016.

"But many challenges to the development for Asean remain. There continue to be development gaps between countries and income gaps within countries," said Thai Foreign Affairs Minister Don Pramudwinai.

In most parts of Asia, economic growth is a major contributor to poverty alleviation. But it is usually less successful in increasing the size of the middle class or bridging disparity gaps.

"Studies have shown that such gaps are widening rather than decreasing. Vulnerable groups continue to benefit the least from the gains of development within Asean," Mr Don added.

The number of people in extreme poverty in Southeast Asia declined from 138 million in 2000 to 44 million in 2015, and Escap predicts the figure will fall below 25 million by 2030.

However, rising income disparity and higher levels of inequality as a result of development continue to be a worrying trend that could undermine fight against poverty, slow economic growth and threaten social cohesion.

Uneven wealth distribution is making the top 10% of the population richer at the expense of others, according to International Monetary Fund (IMF) data. This group had a 32% share of income in emerging Asia compared with 30% in 1990, it said.

Inequality remains high as indicated by the Gini coefficient, a measure in which 0 is perfect equality and 1 is perfect inequality, in the more developed Asean states: Malaysia (46.2 in 2009), Singapore (45.8 in 2016) and Thailand (44.5 in 2015). That puts them almost on par with China at 46.5.

The Credit Suisse Global Wealth Report 2016 identified Thailand as the world's third most unequal country, with a staggering 58% of the nation's wealth controlled by the richest 1% of the people.

Oxfam reported that the four richest men in Indonesia have more wealth than the 100 million poorest combined. The richest man in Vietnam earns more in a day than the poorest person earns in a decade, it said.

Rapid economic growth has also created a growing infrastructure gap, which has broad implications for the environment and social development.

The Asian Development Bank estimates that developing Asia will need to invest $26 trillion from 2016 to 2030, or $1.7 trillion per year, if it is to maintain its growth momentum, eradicate poverty and respond to climate change.

Dr Akhtar of Escap noted that currently, 80% of the population in Southeast Asia has access to improved water services, while only 70% have improved sanitation. Frequent natural disasters also demand better resilience planning.

Annual average losses due to natural disasters are estimated at $4.4 billion, according a report produced by the World Bank, the Global Facility for Disaster Reduction and Recovery (GFDRR), the Asean Secretariat, and the UN International Strategy for Disaster Reduction. In 2016, over 5,000 people in Asia Pacific died and 35 million were affected by disasters that caused $77 billion in damages, mainly from flooding and drought.

"We must balance these development needs with enhanced sustainable management of the region's natural resources," said Dr Akhtar. "To build strong, resilient and sustainable communities requires us to continue assessing risks and dealing with them to improve the economic and social conditions in a manner that limits resource intensities."

Mr Don said malnutrition and stunting also remained major problems despite some progress in nutrition and food security.

The latest available data reveals that an average of 30% or 17.9 million children under five years of age in Southeast Asia are affected, especially in rural and less accessible areas.

For instance, 44% of children in Preah Vihear, Cambodia are stunted, compared with only 18% in the capital city of Phnom Penh, according to the Malaysia National Health & Morbidity Survey in 2015. In Vietnam, the prevalence is above 40% in Kon Tum province, compared with less than 7% in Ho Chi Minh City, the Vietnam Multiple Indicator Cluster Survey said.

Malnutrition can also be linked to cultural and historic factors affecting diverse groups, such as ethnic minority populations. In Laos, for example, 61% of Chinese-Tibetan and Hmong-Mien children under five are stunted compared to 33% of Lao-Tai children.

Also high is the prevalence of food inadequacy, which measures the percentage of the population at risk of not meeting the food requirements associated with normal physical activities.

Countries with high prevalence include Laos (29%), Myanmar (24%), Cambodia (23%) and the Philippines (21%). Thailand's food inadequacy rate is 16% compared with 18% in Vietnam, and 15% in Indonesia, according to the Food and Agriculture Organization (FAO).

"The sustainable development undertaking is a never-ending story that will require persistent multi-stakeholder efforts, both within and across boundaries, and linking of efforts at the local, national, regional and global levels," Mr Don said.

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