Ladies and Gentlemen:

It is with the greatest pleasure that I welcome APO Directors, Advisers, and Observers to the 55th session of the APO Governing Body in Tokyo, Japan. I would like to express my gratitude to the Government of Japan (GOJ) and the NPO of Japan, the Japan Productivity Center, for hosting this GBM.

As all of you are aware, this will be my last GBM as Secretary-General of the APO. When I took over as Secretary-General from September 2010 there were already major, difficult challenges facing the APO. One of the major challenges that I inherited was the unbalanced budget due to the rapid depreciation of the US dollar against the Japanese yen, resulting in several projects being deferred or cancelled. This was compounded by the fact that the rental cash grant for the Secretariat office by the GOJ was also going to be withdrawn and the Secretariat had to find alternative office space as directed by the GBM in April 2011. To top it all, there was still the unresolved issue of reviewing the membership contribution formula which was intrinsically linked to the office relocation issue. Sandwiched between these issues was the March 11 disaster two years ago that caused the 2011 GBM to be moved from Tokyo to Kuala Lumpur thanks to the gracious hospitality of Malaysia, which demonstrated the APO spirit of cooperation and mutual help. A large part of my first two years as Secretary-General was dedicated to resolving these massive challenges with the help of member countries.

The issue of rapid fluctuations of the US dollar against other major currencies has been addressed after the 54th GBM in 2012 approved the creation of a Contingency Fund that should mitigate currency fluctuation impacts on the APO’s Annual Program Plan. The current trend of the US dollar strengthening against the yen and now hovering around pre-2010 levels has also somewhat alleviated the pressure on the budget. Allow me to thank member countries again for concurring on this issue.

Office Relocation

Next, I would like to report formally to the GBM on the status of the office relocation issue. Following the decision by APO Directors at the 54th GBM, during the third week of November 2012 the Secretariat relocated its office to Bunkyo ward in Tokyo, where the rent is about 20% cheaper per square meter. The total office space was also reduced by almost half, from 1,136 m² to 607 m². In this manner, the annual rent was reduced from 61 million yen to less than 26 million yen, in line with the decision of the 54th GBM.

Despite the significant space constraints and the very tight timeline, the Secretariat held extensive discussions, both internal and external, to seek innovative, space-saving solutions while paying close attention to design and ergonomics to ensure a healthy, efficient work environment. Office facilities were conceived to be multipurpose, such as the single conference room that can be easily partitioned into two separate meeting rooms. More space was saved by converting paper documents and publications to electronic formats. The new office layout also promoted closer communication, collaboration, and teamwork among staff and the four departments. ICT was used to enhance the way the Secretariat communicates with member countries and other external partners, using cost-effective platforms such as Skype for videoconferences.

During the office relocation process, any environmental impact was mitigated through recycling and installation of energy-efficient solutions. The Secretariat was also very cost-conscious throughout the relocation and sought to obtain the most reasonable deal with the landlord to minimize installation costs. We successfully obtained a free-rent period of over five months and negotiated to circumvent the standard practice of making a rental deposit that can range up to 12 months, which would have affected our cash flow. The one-time costs, initially estimated to be close to 70 million yen, were kept to about 64 million yen. The one-time costs were financed by the 2011 unappropriated surplus as directed by the GBM.

I would like to take this opportunity to express my sincere gratitude to the GOJ for assisting in the smooth relocation of the office and for continuing to bear the total cost of the new office rent.

Review of the Membership Contribution Formula

The issue of the membership contribution formula has, however, remained unresolved despite the best efforts of APO Directors. After the taskforce met in Malaysia in July 2012, the Secretariat sent a letter to all member countries on behalf of the Taskforce Chair seeking their preference on the proposals shortlisted by the taskforce. As of mid-April 2013, fourteen member countries had chosen Proposal 1A, and one had chosen Proposal 1B. Both Proposals 1A and 1B are basically the six-year average GNI. Two chose Proposal 2, the nine-year average GNI; one of them with additional conditions. Another member chose to continue the current three-year average GNI formula. One member had not yet replied.

As the Chair has pointed out, the APO has been struggling with this issue since the GBM in 2008 approved the current three-year average GNI formula. A significant amount of the APO’s time and resources have been spent trying to reach an amicable solution in the spirit of mutual cooperation. For instance, at my first GBM in 2011, the GBM agreed to a temporary cap to reduce the fluctuations in the membership contributions for 2011 and 2012. My sincere hope is that member countries can finally agree to a long-term solution. As Secretary-General, I have tried my best to forge a consensus because the smooth, stable operations of the APO will be threatened if this issue persists. One consequence of the delay was that the Secretariat has not been able to notify member countries of the amount of individual contributions due for 2013. Thus, the APO’s surplus and working capital are being used to implement programs in 2013. This situation cannot continue, and I urge members to disburse their individual contributions immediately after this GBM has made its decision.

Operational Effectiveness of the Secretariat

At the 2011 GBM, I reported an initiative to conduct a comprehensive review of matters such as the Secretariat’s organizational structure, staff regulations and rules, and remuneration packages. In addition, APO programs and projects were also reviewed as part of the policy of improving the cost-effectiveness of all aspects of operations. This was a more holistic approach to ensure that the APO’s operational costs continued to be at a sustainable level in contrast to the outright restoration of the severe salary cuts that took effect in July 2010.

Compared with 2008 five years ago, total administrative costs have been reduced by 30% in yen terms. Trimming costs by reducing salaries was a comparatively easy way to cut administrative costs in the short run. In the longer run, however, the Secretariat must continue to invest in its human capital, in line with the mission and vision of the APO. Our human resources policies, practices, and development programs must enable us to secure the right talent, while maximizing the potential of existing staff.

The Secretariat conducted its own initial assessment in 2012 to determine the scope and the magnitude of the work. The Staff Regulations and Rules of the APO and subsequent amendments have served our needs well for the past 50 years but a comprehensive review and updating of its contents are necessary to meet the needs of both the modern organization and individual staff. In 2013, the Secretariat will conduct a thorough review in consultation with experts familiar with Japanese labor regulations and practices, human resources practices of international and intergovernmental organizations, and the International Civil Service Commission to align our policies better with those of the international community. We would like to update and seek the Governing Body’s approval for the proposed changes at its next session.

As reported last year, recruitment was temporarily suspended due to the uncertainties over the office location. With this resolved, the Secretariat was able to resume its recruitment process to fill positions that had been left vacant. In 2012, the Secretariat was able to hire a new finance officer and an accounting staff member. In September 2012, the Secretariat launched another recruitment process to fill three additional vacancies for professional staff. At this moment, we have succeeded in filling one of the vacancies and will be re-doubling our efforts to recruit the right professionals so that the Secretariat can return to its full capacity as soon as possible to better serve members. During 2013, we will also be introducing a staff training program to build and enhance the skills and competence of the Secretariat.

To increase the productivity of our staff, we have been leveraging ICT to improve workflow and communication. More initiatives will be implemented later this year in consultation with member countries to improve the productivity of the APO as a whole. I would also like to report to the GBM that the March 11 disaster that struck Japan triggered a review of the Secretariat’s business continuity management practices and resulted in us taking the critical step in August last year of moving our main computer systems into a highly secure data center located in Yokohama, about 30 km southwest of central Tokyo. This will protect the APO’s information assets and help us quickly recover our business processes in the event of any natural or man-made disaster.

APO Program and Financial Estimates for 2013

I would like to thank the APO Directors for approving the Program and Financial Estimates for 2013 as circulated at the beginning of March. With the revision of the yen-dollar exchange rate from ¥75 to ¥79, more multicountry projects can now be implemented. The 2013 Program Plan included 10 more projects, increasing the annual total of multicountry projects to 68 from the initial 58 presented at the 53rd WSM. Six of these additional projects resulted from suggestions made by APO Directors at last year’s 54th GBM. These suggestions were discussed during the 53rd WSM held in October 2012 which endorsed action plans developed under three broad clusters:

1. Increase membership by recruiting new member countries both within and even outside UN ESCAP, thereby actively promoting the APO and its programs to nonmembers.
2. Increase the visibility of the APO through more collaborations, marketing, and promotion.
3. Attract new members by improving the quality and reach of APO programs.

Action Plan Progress

I would like to report briefly on the progress of some of the ongoing efforts under these action plans. After last year’s GBM, I met the Turkish Minister of Industry and Trade who was visiting Tokyo since Turkey was seriously considering joining the APO. As of now, its government is conducting domestic approval procedures for APO membership. We have also made efforts to involve Myanmar actively in APO programs, thanks to cash grants from the GOJ as well as jointly funded projects with the ADB. Last year’s APO Chair Azman Hashim has also written to the governments of Brunei and Australia to promote their membership to the APO. I myself held a follow-up meeting with the Australian Ambassador here in Tokyo.

In addition, in January 2013, I had an excellent exchange with senior officials from the UAE government and the Dubai Chamber of Commerce & Industry. They have followed up by writing to me to express their interest in APO membership as well as continued cooperation on productivity-related initiatives. As you are well aware, every potential member country needs to conduct its domestic procedures and these efforts will take some time to bear fruit.

Improving the visibility of APO continues as a priority. The ongoing efforts of the Secretariat may only be multiplied many times with the active involvement of APO stakeholders, especially the NPOs, enabling the APO to expand its network in member countries and beyond. I am pleased to report that in close collaboration with NPOs and various international organizations such as the UN Centre for Regional Development, and International Rice Research Institute, APO activities were profiled in more than 80 English-language news articles, online news, e-newsletters, and TV broadcasts. The APO was also able to leverage collaborations with international organizations to tap their expertise at no additional cost, for example, experts deployed by the United Nations Framework Convention on Climate Change and the ADB in a jointly organized agriculture project.

The APO continued spreading the message of productivity enhancement through the use of these main channels: APO publications, APO website, collaborations among the APO-NPOs-international organizations, and speaking engagements by me and other Secretariat staff. All these methods not only help increase the visibility of the APO but also establish our authority on productivity-related issues. In 2012, Secretariat staff spoke at four public events, for example, the Summit of the Global Agenda 2012 organized by the World Economic Forum, on topics ranging from the global competitiveness of SMEs and Green Productivity to business excellence.

APO publications are often translated into various languages of our member countries as well as Spanish and Portuguese. The APO Newsletter has a wide circulation, while the e-format was downloaded more than 10,000 times last year. Apart from member countries, government organizations, and NPOs, other stakeholders who use our publications include international organizations and renowned research institutes such as the ADB, OECD, UNEP, and Harvard University. Our publications were also cited by UNIDO and Pearson as sources in their training manuals and journals. To extend the reach of the APO’s publications in a more cost-effective way, we will also be exploring win-win collaborations with international publishing houses.

Other Achievements and Future Directions

Having tangible outcomes of APO programs has always been a primary concern expressed by APO Directors. The Secretariat conducts an impact study once every two years and also publishes a yearly evaluation report. As APO programs are targeted at changing mindsets and improving the productivity-related knowledge and skills of top executives and public servants, as well as middle management, it is extremely difficult to track and measure the real impact. We will take into account feedback from member countries and NPOs to improve the impact study methodology further.

In addition, I have also requested the Secretariat to generate visible outputs from all projects. Many APO participants who have met me will be familiar with my statement: “The completion of a project is not the end. It is not even the beginning of the end but merely the beginning of a lifetime of applying and disseminating the new knowledge you have acquired.” Thus, to supplement the efforts of the Secretariat and NPOs, I have asked that APO participants submit follow-up action reports three to six months after the end of projects. This requirement has been reflected in relevant Project Notifications starting from 2013.

One of the key areas where the APO has made its international mark is in productivity research. Sound productivity research is one of the raisons d’être of the APO and helps differentiate our international organization from others. The productivity data and analyses obtained through the APO Productivity Databook project provide comparative data on economic growth and productivity levels of Asian and global economies which are highly sought after internationally by industry associations, governments, banks, research institutions, and the international media. This was very apparent on my recent mission to the UAE, where government officials and journalists repeatedly asked for the APO’s views on comparative productivity performance based on our data and analysis. Our productivity research capability must thus be continuously strengthened for the APO to remain as the leading international organization on productivity.

Another example where there have been concrete outcomes is the subject of public-sector productivity. After about two years of effort, member countries have developed the APO Public-sector Productivity Program Framework. This was endorsed by the last WSM in Indonesia to guide APO members in applying proven innovative productivity tools to the public-sector and to develop new APO programs to enhance public-sector productivity.

The pilot phase of the Center of Excellence (COE) program for Business Excellence (BE), approved by the GBM in April 2009, has delivered clear outcomes. Among its achievements, the COE for BE initiative was able to conduct research on the impact of BE on enterprises, develop training manuals and practical self-help toolkits for SMEs, and facilitate the setting up of BE frameworks in member countries. With the completion of the pilot phase, an expert panel convened last year recommended a new COE on Green Productivity to be hosted by the Republic of China (ROC). Meanwhile, the COE on BE will continue to provide support to member countries through the existing technical support programs such as TES.

Last year, the Secretariat implemented a special program funded by the GOJ to help revitalize the agriculture and food industries in the Tohoku region of Japan which was devastated by the natural disaster two years ago. Participants were able to learn from top experts who provided solutions to overcome problems faced by the farmers and food processors affected by the disaster.

The Secretariat with the support from the ROC organized the International Conference on Productivity and Sustainable Inclusive Development in the Asia-Pacific. The international experts who attended contributed to the Taipei Declaration that outlined the future key activities and focus areas for APO member countries.

Planning for the 2015 and 2016 Programs

The policy statements and feedback of APO Directors at this GBM will help identify emerging productivity issues and provide directions for the program planning cycle for the new 2015/2016 biennium. To strengthen the planning process and improve communications, we will hold a strategic planning workshop for all APO Liaison Officers next month in Tokyo. Through this workshop, we will have the opportunity to discuss new APO initiatives and member countries’ priorities in the promotion and development of productivity programs, discuss the results of each country’s survey on the 2015/2016 Program Plan, and share experiences of best practices in the implementation and evaluation of APO projects.

This new strategic planning workshop will become another key platform to improve the quality and cost-effectiveness of the APO’s programs, always a major concern of APO Directors and NPO Heads. Of particular importance will be how each member evaluates the benefits of APO programs and how the Secretariat can coordinate follow-up activities with NPOs to maximize the impact. We also aim to align APO program plans and NPO priority activities more closely to create greater synergies and agree on the measures to improve the planning, implementation, and evaluation of future APO projects.

In the continuous quest to improve our programs, no stone will be left unturned. All programs are being scrutinized carefully to weigh their costs versus benefits. Some of our major programs, the APO Productivity Databook and Database and the Eco-Products International Fair (EPIF), are still under review with some changes already introduced. For example, to align the EPIF with our mission, the 8th EPIF became more B2B focused instead of B2C. Other possible ideas include fixing the venue of future EPIFs in one member country for several years, holding the EPIF once every two years instead of annually and outsourcing its organization and implementation to make the EPIF easier to market and ultimately more cost-effective.

Conclusion

This brings an end to my final annual report to the Governing Body. The past two-and-a-half years have been tough, but the APO has managed to persevere in the face of the gauntlet of challenges posed by the changing environment and economic circumstances of our member countries. Last year was a defining year in the APO’s 52-year history and in some ways marked a new beginning with the move to the new Secretariat premises. From the bottom of my heart, I would like to thank all APO Directors sincerely for their strong support during my tenure. Like the productivity journey and its noble objective to raise the standard of living for the citizens of our member countries, the job of the Secretary-General never ends. I wish even greater success for the new Secretary-General who takes over the baton from me in mid-September. Thank you very much.

55th GBM in Tokyo