Welcoming Remarks
by H.E. Cho Tae-yul
Vice Minister of Foreign Affairs
at the First High-Level Follow-up Dialogue
on Financing for Development
in Asia and the Pacific

March 30, 2016

Dr. Yoo Il-ho, Deputy Prime Minister and Minister of Strategy and Finance,
Dr. Shamshad Akhtar, Executive Secretary of UN ESCAP,
Distinguished Guests,
Ladies and Gentlemen,

Last year in Addis Ababa, New York and Paris, the international community adopted a series of historic documents to protect our planet and human dignity. They are the Addis Ababa Action Agenda, 2030 Agenda for Sustainable Development, and the Paris Agreement, respectively.

Now is the time for us to translate these historic agreements into our collective actions for a sustainable future. At this critical juncture, I find it very timely and meaningful for Korea to co-host with UN ESCAP this “High-Level Follow-up Dialogue on Financing for Development in Asia and the Pacific.”

I would like, first of all, to extend my warm welcome to all of you and express my gratitude to Executive Secretary Akhtar for taking the initiative for jointly organizing this special event with Korea.

This conference is aimed at consolidating the collective will and reinforcing the solidarity of the Asia-Pacific region in implementing the Addis Ababa Action Agenda that was adopted last July, which in turn will provide a new momentum for the implementation of the 2030 Agenda for Sustainable Development.

The Asia-Pacific is the growth engine of the global economy where financing and investment have been constantly on the rise and the capital market has been rapidly growing. However, the region is also witnessing a development gap between the middle-income and least developed countries. It is also a region with great potential to expand development finance as well as high demand for sustainable development and inclusive growth.

Today, I would like to share with you some of my thoughts on several issues that I believe are important for financing for development in the Asia-Pacific region.

First, I cannot overemphasize the importance of tax revenues.

Among the development finance tools, taxation is a fiscal means that generates revenues in a most direct and reliable manner, and can secure the long-term and stable supply of revenues. But many countries in the Asia-Pacific have not been able to fully realize their potential due to their weak institutional foundation, inefficient tax administration, limited human capacity, and low tax compliance.
Moreover, with the increase of cross-border capital movement, the challenges of tax evasion and illicit financial flows are growing and deepening in the region. In 2013, illicit financial flows from developing countries in Asia amounted to 482 billion US dollars, accounting for 40% of the global illicit financial flows and representing a faster growth than in any other region. As a result, the ratio of tax revenue per GDP in the Asia-Pacific region stands at only 13%, a ratio even lower than 16% in Africa, not to mention 20% in Western Europe.

Winston Churchill once said, “For a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” His remarks illustrate how difficult a task it is to increase tax revenues.

Korea also has the experience of encountering difficulties in tax revenue expansion due to our weak tax administration at the early stages of economic development, and overcoming these challenges later. Prior to establishing the National Tax Service in 1965, Korea’s tax revenues stood at a mere 155 million US dollars. But in a period of only one year, the tax revenue increased by 66% to 258 million US dollars. This is a case in point showing the importance of an effective tax administration system to secure revenues.

Based on such experiences in tax administration development, Korea has been providing assistance to developing countries in modernizing their tax administration system and building capacity. We will continue to take part in the Addis Tax Initiative and faithfully implement our pledge to double our technical assistance to developing countries on domestic tax revenue mobilization by 2020. We will also play our due part in supporting their efforts to build a financial information system which aims to detect illicit financial flows and broaden the base of tax revenues.

Second, Official Development Assistance (ODA) and public-private partnership have an important role to play in developing capital markets and expanding institutional investment in the area of infrastructure.

ODA can play a catalytic role in attracting private financing for investment and building infrastructure by means of improving the investment environment and reducing risk in developing countries.

It was for this reason that recently Korea Stock Exchange helped to open a securities market in Cambodia through a joint investment with the Cambodian Government. And KOICA, the development cooperation arm of the Korean Government, is working on a grant aid program to work out a plan to further develop the Cambodian securities market.

As for large-scale investment in infrastructure, I believe that with the launch of the Asia Infrastructure Investment Bank (AIIB) last January, a number of new opportunities will be created to build multi-dimensional partnerships that will promote greater institutional investment in infrastructure in Asia.

However, in order for such public-private partnerships to contribute to the sustainable development of developing countries, it is necessary to find public-private cooperation models equipped with an effective risk management system that can maximize development impact, while at the same time providing business incentives that can generate profits.
To this end, the Korean Government is attempting, through KOICA projects, to pursue impact investment that takes into consideration both returns and social impact. We are also actively conducting outreach activities to build innovative partnerships with businesses, academia and civil society.

Third, easier access to financial services is critical for sustainable development.

The core principle of the 2030 Agenda is inclusiveness that leaves no one behind, and increasing access to financial services holds important implications for inclusive growth.

With growing interest in enhancing the financial access of small and medium sized enterprises (SMEs) in developing countries, Korea has been assisting SMEs in Uganda through an impact investment project, a project contributing to the special fund designed to improve their financial access.

Going forward, we plan to contribute to realizing financial inclusiveness by implementing projects to build payment and settlement systems that could help populations in developing countries have greater access to basic financial services, such as opening accounts and automatic transfers.

We will also play a more visible role in improving the financial access of vulnerable groups in developing countries. To this end, we plan to promote financial literacy of girls, one of the most vulnerable groups in developing countries, by teaching them accounting.

This plan is an important part of the ‘Better Life for Girls’ initiative that was announced by President Park Geun-hye at the UN Development Summit in New York last September.

Fourth, such efforts to promote inclusiveness need to be expanded into the area of the environment.

In particular, natural disasters caused by climate change, such as floods and droughts, can make huge populations fall into vulnerable groups, which, in turn, could undermine the very foundation of inclusive growth.

It is in this regard that development finance should contribute to reducing environmental vulnerability, while climate finance should create synergy with development finance to contribute to achieving the sustainable development goals.

The Paris Agreement adopted last December carries great significance in that it created the platform for increasing climate finance. It reaffirmed the commitments by developed countries to provide climate financing, while recognizing the possibility of financial contributions by other countries.

To contribute to mobilizing climate finance, the Korean Government signed an agreement pledging up to 100 million US dollars to the Global Climate Fund (GCF) -- the largest multilateral fund specialized in climate change response by developing countries. And we will continue to work closely with the international community so that GCF can establish itself as the core operational mechanism of climate finance.

Fifth, south-south and triangular cooperation should be further strengthened.

Today, south-south cooperation is making greater contributions to sustainable development and the Addis Ababa Action Agenda also encourages promoting development effectiveness through south-south cooperation.

As I mentioned earlier, the Asia-Pacific is a region with a wide development gap as it consists of a broad spectrum of countries ranging from the least developed, middle-income, emerging economies, to developed countries. Paradoxically, this implies that the Asia-Pacific is a region with great potential for south-south and triangular cooperation.

Taking this into consideration, the Korean Government incorporated south-south and trilateral cooperation into our development cooperation initiatives as their core elements for attaining sustainable development goals. We also took initiatives to support developing countries’ efforts to achieve the SDGs especially in the areas of girls’ health and education, rural development, response to infectious diseases, and science and technology innovation. In implementing such initiatives, we will focus on capacity building of focal countries at the initial stage and expand our cooperation to neighboring countries through south-south cooperation.

Finally, development effectiveness should be our priority goal in the global partnership for sustainable development.

Enhancing the impact of development cooperation is as much important as increasing development finance and implementing the 2030 Agenda. All development actors should make concerted efforts to maximize development impact by respecting the principles of development effectiveness, -- ownership of aid recipient countries, results orientation, inclusive partnership, transparency and mutual accountability.

While the 2030 Agenda presents us with the way forward for what needs to be done in which areas, the principles of development effectiveness provide us with guidance on how to achieve the SDGs, which in turn will contribute to ensuring that the Addis Ababa Action Agenda is implemented effectively.

In this regard, I look forward to the success of the Second Ministerial Meeting of the Global Partnership for Effective Development Cooperation (GPEDC) to be held in Kenya this December. Korea, as the host of the 4th High Level Forum on Aid Effectiveness in 2011, is committed to make its contribution to advancing the discussions on development effectiveness by continuing to host the annual Busan Global Partnership Forum.

Distinguished Guests,

The strength of the 2030 Agenda and the Addis Ababa Action Agenda lies in their robust follow-up mechanisms.

Today’s meeting provides an evidence that such a follow-up mechanism is functioning effectively, and will serve as an opportunity to demonstrate that the Asia-Pacific region is leading the implementation of the development finance agenda. This meeting will also contribute to the ECOSOC Financing for Development Forum to be held in New York in April, on the occasion of which the Korean Government and UN ESCAP will co-host a high-level side event to present the outcome of this meeting. All the countries represented here today are invited to participate in this side event. Korea, as the chair of ECOSOC this year, will share its due responsibility for the success of the Forum.

In closing, Ladies and Gentlemen, I am confident that this conference will add another important milestone in the annals of regional as well as global partnerships for development cooperation. The international community will greatly benefit from your collective insights and wisdom in our common endeavor to achieve sustainable development and inclusive growth that leaves no one behind. I wish you a great success in your intellectual exercise.

Thank you. /END/