50th Governing Body Meeting in Iran
21–23 April 2008, Tehran, Islamic Republic of Iran
SG’s Annual Report
Ladies and Gentlemen:
It is my great pleasure to welcome the distinguished APO Directors, advisers, and observers to the 50th Session of the APO Governing Body. On behalf of all APO member countries and the Secretariat, I would like to express my sincere appreciation to the Government of the Islamic Republic of Iran for hosting this important APO meeting in Tehran, nestled 1,200 meters above sea level at the foot of the stunning Alborz Mountains and the capital of this great nation.
This is a historic GBM in the sense that for the first time in the half-century of the APO, the Governing Body is called upon to decide the amount of the total membership contributions for 2009 and 2010. This is a clear departure from past practice, when each member’s contribution was decided automatically on the basis of GNI and the amount of total membership contributions was simply the result of adding up the contributions of all member economies. Now, the amount of the membership contributions is closely linked to the contents and direction of the programs. Such a transition cannot be achieved smoothly without the cooperation and support of all member governments.
The Secretariat, in consultation with the WSM held in Hanoi, has designated a number of priority projects that may be undertaken with total membership contributions ranging from 0% to 20% above the current 2008 level. For the reference of the Directors, the Secretariat has also prepared computations of the contributions to be apportioned to each member country with increases of 0%, 10%, and 20%. If the amount of increase falls between 0% to 10% or 10% to 20%, the Secretariat is able to compute the amount for each member country without delay. We hope that this groundwork will facilitate the decision on the amount of total membership contributions at this meeting so that we can proceed to the preparation of 2009 projects as soon as the meeting is concluded.
We also hope that the GBM will support some increase in total membership contributions, bearing in mind the fact that they have been frozen for four years since 2005, and that sharp rises in oil prices, which have been hovering around US$100 per barrel, have triggered a series of increases in airfares.
In addition, I would like to remind you that the rapid weakening of the US dollar against the Japanese yen is a matter of particular concern to us. As all the personnel expenses of the Secretariat are disbursed in yen, a weak dollar affects our organization’s financial position adversely. These expenses are estimated in yen and then converted into dollars using an exchange rate determined for budget purposes. For 2009, our calculation rate was based on the exchange rate of one US dollar to 110 yen. Recently, however, the rate has fallen far below that. This will increase the amount of personnel costs in US dollar terms, which in turn will push up overall APO expenses substantially. There are also other items in the budget which will be affected in a similar fashion, although the amounts involved are smaller.
This year is also a watershed year for the APO for two reasons. One is that 2008 is designated as the target year to restore a balance between administrative and project costs. The 47th GBM in 2005 directed the Secretary-General to bring about a proper balance between them by this year. The other is that 2008 was designated by the same GBM as the final year for the Secretariat to submit a progress report on the APO Secretariat Reform Plan. As I have already submitted the reports on these issues which have been circulated as GBM documents, I wish to touch only on some of the most salient points, starting with the final report on the APO Secretariat Reform Plan.
Under the reform plan, we set out to deal with three areas: Secretariat restructuring, personnel policy, and financial discipline and management. During the past year, we made major progress in the field of personnel policy by implementing a new performance appraisal system based on management by objective. As highlighted previously, the system links staff salary adjustments with work performance. In the past, staff members automatically received one-step increments each year, and those who reached the maximum of their grade level were promoted to the next grade level regardless of their performance. Under the new system, however, rewards are offered to those with a proven track record of good or outstanding performance. The introduction of the system contributed greatly to the work culture of the Secretariat and motivated them to contribute more to the organization. The first cycle of performance appraisal was completed, and now we are moving to the next cycle when all provisions of the system will come into full force based on observations of 2008 work performance.
For the sake of brevity, I will refrain from discussing the details of the efforts and progress made in the areas of Secretariat restructuring and financial discipline and management. These efforts have produced very positive results in many areas, but nowhere are they more evident than in restoring the balance between administrative and project costs.
Back in 2003, administrative costs stood at 58% against 42% for project costs. During the three years between 2004 and 2006, the figures for administrative costs were 52% in 2004, 53% in 2005, and 51% in 2006. They represented some improvement over 2003 but were still higher than the 50% mark. In 2007, however, the percentage of administrative costs dropped sharply to 41%.
Secretariat restructuring and ensuing rejuvenation of staff were the major contributing factors, reducing personnel costs considerably. The introduction of the personnel appraisal system encouraged our staff members to improve their work efficiency, making it possible for them to execute a larger number of projects last year. Moreover, thanks to more disciplined financial management of projects, the average disbursement rate for current projects rose from 63% in 2006 to 77% in 2007. Although the US dollar is likely to remain weak against the yen for some time, as long as we maintain the present reform momentum, I am confident that we will be able to maintain a proper balance between administrative and project costs through the end of this year as well.
Now I would like to turn to the content and delivery of APO projects. At the last WSM, I explained the new initiatives of the APO to undertake projects on new topics, projects with new methods, and projects with new outreach contents. I would like to update you on the progress made so far.
We organized about 10 projects on new topics in 2007. These projects, aiming at capturing emerging concepts and issues, enabled the member countries to keep up with global developments in the industry, service, and agriculture sectors. Consequently they were well received by the participants. Topics like the aging of society and mergers and acquisitions were so popular that they will be repeated this year. We plan to organize about 15 projects on new topics in 2008.
In terms of projects with new methods, we organized four e-learning projects last year, which attracted well over 900 participants. Contrary to the perception that e-learning courses are less popular primarily because of a lack of face-to-face contacts with resource persons, roughly 90% of the participants rated these courses as “more than expected” or “as expected” and recommended the continued offering of such projects.
One of the novel steps we took last year was to organize follow-up face-to-face projects on the same topics for the outstanding participants in the e-learning courses. Since all the participants had enrolled previously in e-learning courses, it was possible for us to organize the projects more efficiently, producing better results. Almost all the participants who attended the follow-up courses were appreciative of this new approach in their evaluations. Encouraged by the positive feedback, the Secretariat is planning to increase the number of e-learning projects in 2008 to six.
As projects with new outreach contents, last year the APO deputed one observational study mission each to Australia, Switzerland, and Canada to learn from their best practices in selected productivity fields. A total of 55 participants took part in these missions. Their evaluations revealed that the missions were very beneficial and they recommended that the APO continue organizing observational missions, even though the travel expenses must be borne by either participants or their organizations. In 2008, we are therefore increasing the number of such missions to five, covering new topics such as advanced manufacturing technologies and safe green supply chain management, and introducing the new destinations of Germany and the Netherlands.
While developing new types of projects, we are not neglecting our activities in familiar areas. The 4th Eco-products International Fair, organized by the APO with the Vietnam Productivity Centre and Vietnamese government, marked a milestone in APO history with 91 companies and organizations participating. Over the course of the four-day event, more than 98,000 people attended, breaking the previous attendance record in 2006 by almost three-fold. It was extensively covered by the local media, spreading the message of Green Productivity to people throughout Vietnam. The organization of the EPIF also helped us to reach out to a large number of private-sector businesses and enhance our visibility among them. In light of this success, the Secretariat plans to organize the APO Eco-products International Fair in March 2009 in Manila in close cooperation with the DAP, the Philippine government, and its private sector.
Apart from the EPIF, this year and the next we will have a host of GP projects, projects for the development of NPOs, and projects for integrated community development. The last two involve many Category C projects that cater to the specific in-country requirements of member countries. Last year, we conducted a series of meetings under our DON Strategy initiative which brought together 15 NPOs from two clusters of development. These meetings produced in-depth analyses of the institutional development needs and priorities of NPOs. The Secretariat very much appreciates the cooperation, and enthusiasm of NPOs in this endeavor. With such joint efforts, I am confident that we will be able to make more concrete contributions to the institutional development of NPOs this year.
During the same period, we intend to implement all the other planned projects, including those related to knowledge management, strengthening of SMEs, IT and innovation, and food safety. In this connection, I am happy to report that the efforts to increase the number of Category B projects have been maintained and strengthened since I reported to you on the issue two years ago. As a result, the number of Category B projects implemented during 2007 outnumbered those in Category A.
Under the APO-African Program, which is funded by a special cash grant from the Government of Japan, the Secretariat has developed a three-week advanced course as a follow-up to the basic training course conducted last year. The advanced course will commence at the end of this month in South Africa and it will again involve experts from APO member countries. Under the same program, an APO delegation will attend the 4th TICAD meeting in Yokohama hosted by the Government of Japan, where issues related to economic growth, human security, and the environment in Africa will be addressed.
I would like to elaborate on the details of the content and delivery of the 2009 Program at the WSM to be held later this year in Cambodia. At the same meeting, I am hoping to give you an updated account of what we have achieved as a result of our research efforts that started from the beginning of last year.
Ladies and gentlemen, our mission of creating a better tomorrow through productivity improvement today would not be possible without the full cooperation and determination of member countries to advance the productivity movement in the changing environment. The APO must constantly investigate new topics, adopt new modalities, and establish new outreach programs, the results of which can be incorporated when appropriate into project planning and design to benefit member countries. I look forward to the strong support of the Governing Body on the amount of membership contributions to enable delivery of the programs for 2009 and 2010. With your fullest support, the APO can be relentless in the pursuit of higher productivity, which is fundamental to economic progress, prosperity, and the well-being of the people in the region.
In concluding my remarks, I would once again like to thank the Government of the Islamic Republic of Iran for hosting this meeting, and most especially Mr. Mohsen Haji Mirzaie, Dr. Mahmood Ghanizadeh, and the able staff of the National Iranian Productivity Center for the excellent arrangements. I wish you all fruitful discussions and a pleasant stay in this beautiful city of Tehran.
Thank you.
