While sharing these overall challenges, the specific priorities differ among the
countries according to their current state of development, their comparative advantages,
and historical heritages. The need to improve access to education and strengthen
education and vocation institutions is especially acute in Indonesia and Thailand, while
Malaysia’s focus is on strengthening links between academic and research institutions
and industry. China and Viet Nam particularly need to facilitate the development of
the private sector and better define the ultimate of state owned businesses in the
economy – although the former is much further along in this transition. In many
Emerging Asian countries, regulatory reforms to reduce barriers to SMEs and services
sector development are of high priority. Exchange rate regimes will need to become
more flexible.
Institutional development at the regional level, among the ASEAN countries and
with larger groupings such as Emerging Asia, will also be very important. The various
initiatives to liberalise trade in goods and services and investment flows among the
countries in the region have the potential to create mutually reinforcing “virtuous circle”
of institutional strengthening to support development