Mr. Soutchay Sisouvong, APO Alternate Director for Lao PDR and Chair of the WSM;
Distinguished NPO and Agriculture Delegates; Advisers, Observers, and Guests:

Introduction
It is a great honor for me to attend this distinguished gathering of Heads of National Productivity Organizations (NPOs) and Agriculture Delegates which will, among other tasks, confirm the lineup of APO projects for 2012 and plan the lineup of projects for 2013 and 2014. I would like to thank the Government of Lao PDR sincerely for its generosity in hosting this year’s Workshop Meeting of Heads of NPOs (WSM) in the dynamic and delightful capital city of Vientiane situated on the banks of the Mekong River. We are greatly honored that His Excellency Dr. Nam Viyaketh, Minister of Industry and Commerce, is gracing this occasion with his presence and delivering the keynote address. I would like to express our deep appreciation to Director Somdy and Alternate Director Soutchay of the Small and Medium Enterprise Promotion and Development Office (SMEPDO) and their staff for all the arrangements and warm hospitality extended to the delegates.

GBM 2011 Updates
As all of you know, the venue of the 2011 GBM was initially planned for Tokyo, Japan, but had to be switched to Kuala Lumpur, Malaysia, due to the unprecedented scale of the disaster that struck the northeastern part of Japan on 11 March 2011. On behalf of APO members and the Secretariat, I would like to express my gratitude once again to the Government of Malaysia and the Malaysia Productivity Corporation for their spirit of cooperation in hosting the 2011 GBM at such short notice. That was a true manifestation of the friendship among member countries and their NPOs, as well as of the support extended to the APO during its 50 year-history. Allow me to give you a summary of the key decisions made along with some brief updates. Some of the key issues will be presented separately later as part of the WSM agenda.

2011/2012 Budget and Membership Contribution Formula
The GBM approved the 2011–2012 budget and the membership contributions based on the apportionment proposed by a task force composed of APO Directors formed in 2010. At the same time, the GBM directed that the Secretariat present options on the membership contribution formula and seek the views of member countries at this WSM to prepare possible options that will be submitted to the 54th session of the GBM in 2012.

On 8 July this year, the Secretariat submitted the possible options to the Governing Body. However, there was no consensus on the options from member countries, and more than half of the membership has not yet replied. Hence, APO Chair Somdy noted that this was a very urgent issue and approved the formation of a new task force chaired by Mr. Azman Hashim, APO 1st Vice Chair and APO Director for Malaysia, and comprising several APO Directors to resolve this matter expediently. When this statement was written, the task force was in the process of being formed. After its formation, the task force will be deliberating on the options submitted by the Secretariat and present its recommendations to the GBM next year.

Withdrawal of cash grant for office rental
The GBM was also informed of the intention of the Government of Japan, the host country of the Secretariat, to withdraw the rental cash grant for the Secretariat’s office in Tokyo from 2012 onward and noted that the rental fee would then have to be financed from membership contributions. The GBM thus directed the Secretariat to explore the option of moving the Secretariat’s office within or outside Tokyo to reduce the rental fee. The Secretariat has since explored various options that included reducing the office space by about 30% and relocating to less expensive premises within Tokyo. In addition, with the assistance of the Government of Japan, the Secretariat under my direct initiatives, has been actively exploring other relocation options as well. I will be updating the Governing Body on the relocation issue when there is further progress.

Proactive search for additional funds
To make up the shortfall in the budget for 2012 caused by the withdrawal of the rental cash grant from Japan, the GBM also asked the Secretariat to source additional funding from members and other relevant organizations. The Secretariat understands the tight budgetary constraints of member countries but would greatly appreciate it if members could step forward to offer additional cash grants to be allocated for office rent or specific projects. In connection with this, the Secretariat is very grateful for the special cash grants contributed by the Republic of China, Japan, the Republic of Korea, and Thailand. Such special cash grants from members have enabled us to deepen the substance as  well as to broaden the scope and outreach of APO activities.

For example, the grant from the Republic of China enabled the APO to embark on a special 50th anniversary project to publish the key achievements of the past 50 years as well as to chart new directions for the APO in coming years. I had the pleasure of attending the launch ceremony held last month in Taipei where Premier Den-Yih Wu graciously delivered the keynote address. I was also very impressed by the efforts of the China Productivity Center (CPC) to increase the visibility of not only the CPC but also the APO throughout this project. This project will eventually involve around 30 distinguished international and national experts from various disciplines who will cover themes such as  innovation and sustainability. I would like to thank member countries for the commitment and effort put into making this a successful project.

Meanwhile, the Secretariat has proactively approached various international organizations to seek funds and collaborate on relevant projects. I am pleased to announce that some of these efforts have borne fruit. In addition to ongoing collaborations with the Food and Agriculture Organization of the United Nations and Colombo Plan, the APO will be working closely with the Asian Development Bank Institute on a jointly funded project. We will continue our efforts to develop partnerships with other international organizations such as the ADB.

New Strategic Directions
The Secretariat presented a paper at the 2011 GBM on the review of the APO thrust and subject areas which included inputs from Directors at last year’s GBM and WSM. I distinctly recall last year’s strategic planning exercise chaired by Mr. Anthony D. Kalaw, Jr. of the Philippines where valuable feedback and insights were given. After that WSM, the Secretariat consolidated and analyzed the inputs before conducting an internal review. Under the guidance of an expert advisory panel, the Secretariat identified new strategies in line with the newly developed vision and mission.

The GBM subsequently approved the review of the APO thrust and subject areas with  recommendations to inject elements of inclusiveness into the strategy by helping to foster microenterprises because these programs will also help alleviate poverty and contribute to the development of member economies. Those recommendations were noted and reflected in the implementation of the new strategic plan that the departmental directors will elaborate on later. As I have commented before, it is essential to have the right strategies to chart the direction of the APO but it is even more critical to develop an effective implementation plan. I therefore look forward to the country paper presentations and tomorrow’s strategic planning session where more discussions on the strategies and implementation plan will take place.

Program Planning and Budgeting for 2013/2014 and 2012
That completes my summary of 2011 GBM-related items. As I mentioned, more details will be provided by Secretariat staff later. In June this year, the Secretariat devised an action plan to implement the revised APO strategies. The initial line-up of projects for 2013 and 2014 was developed and sent to member countries in the form of a survey. Some of you may have noticed that, unlike previous years, the projects were presented as a two-year plan under the three new broad strategic directions to ensure that they are more outcome driven.  After receiving the survey results, the projects were ranked and finally sent to you in the WSM documents. In addition, we have also received requests from member countries to undertake other projects. The list of projects and requests will be discussed in tomorrow’s strategic planning sessions.

Cost-effectiveness of the Secretariat
During my inaugural speech as the Secretary-General at last year’s WSM, I highlighted the unprecedented difficulties caused by the strong yen. At the end of 2010, the US dollar was trading at ¥83, and therefore the Secretariat adopted the exchange rate of ¥80 to the dollar for the 2011 budget and ¥85 for the 2012 budget. However, the situation this year has deteriorated even further, and the dollar was hovering around the ¥77 mark when I left Tokyo. The Secretariat is monitoring the situation and will likely be obliged to revise the exchange rate for 2012 at next year’s GBM.

As announced at the last GBM, administrative costs have been drastically reduced with average 18% salary cuts in yen terms imposed since July 2010. The Governing Body recognizes that salary reductions can only be a temporary measure until the financial situation stabilizes. It was concerned about the sustainability of the organization and asked that the Secretariat review these measures at the 2012 GBM to ensure that we are able to continue to attract and retain talented staff. In addition, the Secretariat has also renegotiated the office rental downward by 15% for 2011 and is in the midst of exploring the possibility of relocating the office.

The financial situation, however, has been compounded by the withdrawal of the rental cash grant from the Government of Japan. The annual rental fee of ¥62 million or about US$800,000 translates into about 15 multicountry projects. The office rental fee had not been budgeted for when the 2012 budget was presented for approval at the GBM in 2010. If the Secretariat had cut the number of 2012 multicountry projects by 15, it would have reduced the total from 52 to 37. Comparing this number with 89 multicountry projects in 2008, 80 in 2009, and 65 in 2010, we will all conclude that it is not tenable to implement only 37 multicountry projects in 2012.

Hence,  in addition to the previous set of cost-cutting measures, the Secretariat has further trimmed costs by reducing the headcount in the Secretariat, downgrading the class of airfare travel for all staff, reducing medical insurance costs, controlling overtime pay, being extremely conscious of minimizing cost in every aspect of our operations and proposing the cancellation of two study missions to nonmember countries. With these ongoing efforts, the Secretariat has tried to build up a contingency fund, which may be nearly sufficient to maintain the same number of multicountry projects at 52 for 2012. Whether we can achieve this will depend on the strength of the yen next year and the outcome of the office relocation issue. 

For the 2013 and 2014 Program Plan, the Secretariat has compiled the list according to their priorities. However, the Secretariat had to make an important assumption for the 2013/2014 biennium, which is for the rental fee of the Secretariat office to be zero. In other words, the APO will have to find a new location that offers free rental for the Secretariat office; otherwise rental costs must be funded almost entirely from the administrative budget. The Secretariat is preparing for this eventuality but seeks the cooperation and support of member countries and NPOs in meeting the requests of member countries to maintain and even increase the number of multicountry projects.

In particular, the Secretariat is proposing not to fund local implementation costs of e-learning courses from the General Fund from 2013. This would then be consistent with the treatment of other multicountry programs. The e-learning modality has already taken root in the APO and is acknowledged widely as an effective tool to disseminate productivity knowledge to a larger audience. To minimize the impact on member countries, the Secretariat will be exploring videoconferencing systems that will leverage information technology to reduce costs. A paper on the e-learning program will be presented later by the Secretariat.

Thus, utilizing the same amount of budget for the new 2013/2014 biennium as for the 2011/2012 biennium, the Secretariat is proposing to increase the number of multicountry projects to 63 each for both 2013 and 2014. This is a 20% jump compared with 2012 and a testimony of the Secretariat’s commitment to becoming more cost-effective, as I promised you last year. More can be done and one of the ideas that will benefit both the APO and NPOs is to reduce project implementation costs by sharing the cost of co-hosting a welcome reception instead of having two separate receptions each hosted by the NPO and the APO. The Secretariat would welcome other ideas and would also like to thank you for your continued support and understanding for sharing part of the cost burden. Delegates are requested to review and confirm the revised 2012 and 2013/2014 Program Plans as set out in Document Nos. 3 and 4, respectively.

Updates on key projects and other matters in 2011
Let  me now briefly highlight some of the key programs and projects undertaken since the beginning of this year.

The APO Center of Excellence (COE) for Business Excellence (BE) is already in its third year. This year, the COE started developing a simple self-help toolkit aimed at helping SMEs begin their BE journey. Work has also started on a BE consultants’ manual. The manual will be used in a workshop to train more BE consultants held in Singapore this month. The COE program is a core APO initiative aimed at building up critical productivity-enhancing capabilities in designated NPOs, which then serve to spread and multiply these capabilities to other NPOs. As the BE COE will be ending its term in March 2013, we will be asking you for proposals to develop a new COE at next year’s WSM.

One  of APO’s flagship programs since 2004 is the Eco-products International Fair (EPIF). The EPIF 2011 was held in New Delhi, India, in February 2011, in collaboration with the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry; National Productivity Council; and Confederation of Indian Industry. I would like to congratulate them for successfully organizing the mega event and flying the APO flag high throughout the Asia-Pacific region. As the EPIF in India was already the seventh in the series, the Secretariat felt that it was an opportune time to review the format and structure of this flagship program to ensure that it becomes even more effective in promoting the Green Productivity concept, and increase the visibility of the APO and NPOs. Thus, the 8th EPIF originally scheduled to be held in Singapore in February 2012 has been postponed to 2013 to allow time for a review to be conducted by the APO together with its advisory body, the Green Productivity Advisory Committee. However, the APO’s efforts to pursue sustainable economic development in the region will continue through the development of the Eco-products Database and the 8th edition of the Eco-products Directory in 2012.

One of the APO’s key projects is collecting and analyzing productivity data from member economies so that we are better able to analyze and compare their sources of economic growth using a harmonized methodology. The 2011 edition of the APO Productivity Databook focused on widening the scope of productivity indicators and developing quality-adjusted labor input measurement methodology. As this project has been ongoing since the release of the first APO Productivity Databook in 2008, it would be timely to review its scope as well as explore additional collaborative efforts with other organizations so that the productivity data collection and analysis project continues to remain relevant to member countries.

As mentioned earlier, the e-learning modality is an effective way to extend the reach of our productivity projects. In June this year, the Secretariat launched a pilot structured self-learning course through our dedicated web portal. The reaction to this new self-learning course on the Occupational Health and Safety Management System has been tremendous, with almost 1,900 participants enrolled in the course. Out of the 1,900 participants, 422 have taken the online examination and 231 have managed to pass. To cater to the expected demand for such courses in future, the Secretariat has already revamped the APO website to incorporate new features that facilitate online learning. As mentioned earlier, more details on the e-learning program will be provided by Secretariat staff later and we will also be improving the site further after reviewing the feedback from participants.

Member countries have requested the APO to focus on improving productivity in the public sector to deliver better value-for-money public services. Last year, an expert group developed a broad framework and strategies to guide member countries in improving public-sector productivity. A research project is currently underway on using knowledge management to capture innovation within the public sector which can then be shared among member countries. In addition, the APO has already conducted a workshop on using “lean” techniques, already widely used in private industry, to improve and transform public services. Other projects focusing on applications of specific tools and techniques are scheduled for this year and next. Public-sector productivity will continue to be on the APO’s radar because of its immense importance to many members.

In agriculture, we have completed a two-year research project on Agricultural Policy in Asia focused on selected member countries. This study examined the linkage of agricultural policies to productivity through the use of a new analytical tool. We conducted this study with the support of the OECD and the Kyushu University Asia Center. In line with our effort to support members in monitoring productivity, we have also embarked on another research project on Productivity Measurement and Monitoring Systems for Agriculture.

Pursuant to directives from recent WSMs and GBMs, we have begun this year to examine the impact of climate change on agricultural productivity as well as promote appropriate farm production practices to reduce greenhouse gas emissions. These projects supplement ongoing projects to “green” the food supply chains such as the Special Program for Strengthening the Capacity of Food Supply Chain Management in Asian Least Developed Countries funded by Japan.

Food safety remains a high priority area for agriculture. This year, we focused on promoting modern food safety management systems (FSMS) as well as safe, competitive food supply chains through multicountry and national training programs, and the establishment of model demonstration food companies. One hundred and forty participants were trained in FSMS through three national workshops organized in Bangladesh, the Islamic Republic of Iran, and Pakistan. In addition, a demonstration project on modern FSMS was also launched in  Cambodia.

The number of multicountry projects on Integrated Community Development (ICD) has decreased over time. However, in line with the directive for more inclusive economic development programs, we have focused on rural enterprise development through community-based rural tourism (CBRT) and the One Village, One Product (OVOP) movement. We have thus supported the Philippines and Vietnam in organizing a national conference and workshop on CBRT. To promote the OVOP movement, Lao PDR organized two regional workshops with a total of 90 participants, while Cambodia organized a National Forum on OVOP chaired by its
Deputy Prime Minister and attended by 446 participants. We hope to continue this country-specific, focused support for ICD and we encourage NPOs to organize these large-scale signature events as they not only attract hundreds of participants but also the attention of policy makers and the media.

Conclusion
Before I conclude, I would like to thank the Government of Indonesia in advance for  agreeing to host the next WSM in 2012.

My first WSM in Bangkok last year was certainly a very important, eye-opening experience for me. At this juncture, on behalf of the APO, I would like to extend my deepest condolences for the more than 300 deaths caused by the flood in Thailand and express my sympathy for all the damage and suffering caused by this tragedy. I am very much looking forward to your feedback on our programs and our discussions in the next two days. In closing, I would once again like to thank the Government of Lao PDR, in particular SMEPDO, for graciously hosting the 52nd session of the WSM. I hope that all the delegates, advisers, and observers will have an enjoyable stay in lively Vientiane, a city that never fails to charm and impress its visitors.

Thank you.