INTE:ThTATION'AL BANK JroR REOONSTRUCTIOlJ .Alw DEVELOHL""ill:.""T :;JO OlfOMI 0 DEPbRTMENT Sl.JM¥l.ARY OI T:EG R:ii:PORT OF THE INDUSTRIAL DEVJ!'.LOPf-lZUT i':ORKING PARTY EOON01ITC COMNISSION FOR ASIA Ah~ TIJ::E :B'AR EAST Joseph s. Gould January 10, 1949 -1- The Industrial Development ~·forking Party of the :Zconomic Commisdon for Asia and the Far East convened in Shanghai on AUe,"'Ust 26. 1948 and 'V>ras in con- tinuous session to the 25th of October, 1948 during 'v-thich they unclertoo:: field trips to the principal countries of the region. Its personnel consisted of four members nominated by China, the Pht:i:;;?i:-: 1 India and the Kingdoms of Cambodia and Laos and sixteen co-opted experts from the various countries of ECAFE including one each from the hConomic Comwission for :E,'urope and the International Bank for Reconstruction and Development. :·:·ith the exception of the specialists co-opted from Indonesia and the Banl~. the members of the \\forking Party were primarily engineers and technical e::::)erts. The analytical vrork of the experts plus their appraisals and suggestions became the basis for the recommendations embodied in the final report, 1.•rhich ,..,as \Ot•re:c· generation, almost 2 times in cotton textiles, and 10 times in amtlonium sill- phate production. The more important planned expansions are shown below: PLANNED EXP.Al'J'SION OF CAPACITY Industry Unit Present Short Term Long Term C~tpaci t;y: Plan Plan Steel Ingots Million Metric Tons 1.3 3.0 4.0 per year Coal (Production) Million Metric Tons 39 55 78 per year Electric Power Million K~'l 4.0 6.4 10.3 Cotton Textile Million Spindles 15.5 26.1 29.3 Ammonium Sulphate Thousand Metric Tons 100 1,050 n/a per year n/a =not available Chapter III briefly summarizes the experts 1 individual studies and touches on the question of sources of funds to finance industrial develo;)ment. Stress is placed on (1) the need to mobilize internal finances through better organ- 1zed and more efficient local financial institutions and (2) the need to ~ro- vide conditions which will invite emnloyment of domestic venture capital. In this connection, caution is urged that due regard be given to the effect of local currency expenditure on inflationary pressures particularly on the part of those countries where inflation has persisted for some ti~e. and where domestic financing would impose undue budgetary burdens. -5- The sources of foreign exchange required are briefly indicated in this chapter. A statement is also made to the effect that investments by private foreign institutions and individuals will be conditioned by full consideret~on of s'l;l.ch factors as ( 1) economic, financial, and political stability of borro~·r­ ing country, ( 2) availability of adequately trained technical aml skilled. 1Jer- sonnel as well as competent managerial personnel, (3) well prepared and we:l planned projects, and (4) freedom to remit dividends, interest and profits, non-di~;~criminatory taxation, fair compensation in event of natio~mlization, etc. The fourth and last chapter deals with conclusions and recommendations, the most important of which can be summarized as follows: 1. To make surveys and investigations of existing resources, such as water po\'ler, coal, petroleum, and basic materials. 2. To secure international aid in importing machinery and equipment. J. To rehabilitate and develop transport facilities. 4. To standardize equipment particularly in transport and heavy engin- eering. 5. ExplGre possibilities of obtaining capital goods in exchange for ra1:t mate:rials. 6. To complete speedily the study of financial institutions of ECAFE countries to determine how they can be used in mobilizing domestic financial resources. 7. To establish a permanent Committee !ill Industrial Develo'Pment in the Commission with broad functions of planning and coordination of reconstruction and development projects; collection and dissemination of information concern- ing industrial rehabilitation and development; securing of experts to advise governments. upon request, on detailed planning and best methods to increase -6- production; initiation and fostering of arrangements to remove bottlenecJ:s in supPlies, etc; establishing when necessary SUb-Committees or ':iorkil'..g Parties. The report was presented at the Fourth Session of the Economic ComrJission for Asia and the Far East held at Lapstone, Sydney, Australia in December. Thr Commission, however, felt that the governments concerned had not had su:fiicier. time to consider the material submitted. It was therefore agreed that the Report of the Working Party on Industrial Development should be further con- sidered by a Committee of the ~fuole Commission to meet as soon as convenient after two months from close of the session. In a recent statement by Dr. Lokanathan, the Executive Secretary of ECAFE, he urged that this meeting be held in Bangkok sometime in March 1949. Annex I The position of countries in the ECAFE region in regard to electric :r.:..o,·rer is indicated by the follo,ITing table, giving present installed capacity, ,nnd th planned increases in capacity under short-term and longer term plans: ELECTRIC Pm•TER CAPACITY Present Installed Planned Increase ]:,_onge_.r_)}.?np~--- ~i:l1- i · Capacity: in Ca]:!acity !_iona~_Jnc :r_:e{'_~'LJ: Country (Partially Estimated) Short~Term Planned C1lQ.S-.ci ty (Thousands of K~'l) Burma 30 20 120 Ceylon 21 25 75 China 1,332 698 n.a. Hongkong 72 n.a. n.a. India 1,862 1,097 6,700 Indochina 46 27 188 Indonesia 340 40 210 Malaya 120 40 n.a. Pakistan 75 43 184 Philippines 108 323 437 Siam 16 n.a. n.a. Total 4,022 2,313 Plans to bring about increases in existing capacity have been formulated in all countries, although the one for Siam has not been made available. Longer term plans have not been finalized for :Burma, Chine. and Malaya. Annex I Page 2 Textiles The cotton textile industry is one of the best developed industries in th ECAFE region; although it is large in size in both India and China, it is sti~. small relative to the clothing requirements of the population. The table belo• summarizes available data on the present capacity of the cotton te::tile i:-1dus- try in the ECAFE region. PRESZNX CAPACITY IN THB TEXTILE I1TDUSTRY Spindles Looms Cloth Ceylon 22,200 6?4 3.1 million yds 1.5 million lbs China 4,924,000 64,?42 nja 2,19?,000 (400-lb bales) Hongkong 120,000 3,22.) n/a 86,400 (400-lb bales) India 10,100,000 200,000 4,?00 million yds 1,600 million lbs Indochina 130,000 n/a n/a. Indonesia 2,200 6,000 10 million yds 80,000 lbs Pakistan 166,?00 n/a 76.6 million yds n/a Philippines 20,300 504 6.1 million yds n/a Available information on plans for the development of the textile industr;y in the region is as follows: fJANS FOR DIDTELOPU!G TEXTILE UIDUSTRY !3.Eindles ~ Cleth y~ Ceylon n/a n/a 30 million yds n/a China (1948-52) 5,000,000 150,000 5.550 million yds 3.?50,000 bales (400-lb bales) (19.5.3-5?) .),000,000 90,000 3.330 II " 2,250,000 bales (400-lb bales) India 4,800,000 n/a 1,700 It !l n/a Indochina (1948-5.3) ~50,000 n/a 80 II II 21 million bales (Longer term) 210,000 n/a 160 II 11 42 tl II Indonesia 117,200 12,000 250 1'1 II 30 " II Philippines 130,000 n/a. n/a 35 II fl . n/a = not available Annex II Estimated Foreign Total A~ :§iS.Q.g,!l;!!g§L.J!~uir~ British North Borneo US$ 16,000,00~_/ us~ 16,ooo,ooo21 Brunei & Sarawak 2,634,115-Y 2,634,1152/ Burma 20,000,000 N.A. Ceylon 33,815,036 N.A. China 6, 579,93.3,000 3,222,201,000 Hongkong N.A.. 1~. A. India 3,650,566,000 Indo-Chinese Federation 750,001,000 240, O'JO, o::JO Indonesia 1,045,345,500 101,406~400 Malayan Union & Singapore 112,ooo,oooV 112, 000, oao2J Philippines 1,411,456,33oY 1 'la'6' 681' 4902/ Siam N.A. N.ll'. US$13,626,749,931 U3~7,214,160,725 N~A. means that the data was not available either because the government concerned had not submitted its plans to ECAFE or data on financial requirements were inco~lete. 1/ The figures are for industrial development only. They do not incluQe financial requirements for development projects in agriculture, forest:~ and fisheries. ?./ British North Borneo, Brunei and Sarawak 1 and Malayan Union and Singapore supplied estimates for foreign exchange requirements only. 11 This estimate does not correspond either in to·tal a11ount or in tl1e pur- poses for which it is to be invested or finally in the distribution between the total amount and the foreign exchange requirenent 1.:ith the estimates presented in Washington and discussed between the Philippine Government and the International Bank.