Comment on “Public Pension Programs in Southeast Asia: An Assessment”

• Author: Marcus Noland
• Published date: 01 July 2015
• Date: 01 July 2015
• DOI: http://doi.org/10.1111/aepr.12101

Comment on “Public Pension Programs in

Southeast Asia: An Assessment”

Marcus NOLAND†

Peterson Institute for International Economics and the East-West Center

JEL codes: H55, H75, J26

Asher and Bali (2015) is a wide-ranging paper, reviewing current pension issues in

Southeast Asia, reporting demographic trends, and making recommendations for

reform.

The demographic forecasts reviewed in Chomik and Piggott (2015), Asher and Bali

(2015), and some alternative projections reported in Table 1 underscore the challenges

that some Southeast Asian countries face. Three countries stand out. First, Thailand

appears to be remarkably “old,” resembling Singapore on some of the indices that

Asher and Bali (2015) report. Second, the Philippines stands out as the only Southeast

Asian country that does not become an aged society over the relevant time horizon.

Third, Vietnam is expected to age quite rapidly, indeed becoming an aged society while

most of the population is still rural. The joke about many Asian countries is that they

will get “old” before they get “rich”; Vietnam is on a trajectory to get “old” before it

gets “urban.”

The large share of the population remaining rural matters: rural areas are character-

ized by lower population densities and higher rates of self-employment and informal

employment which make these populations harder and more costly to serve in terms of

the pension issues discussed in the paper.

In this respect, Thailand stands out as having achieved universal health-care coverage

while still having a relatively large low-income rural population. The contrast with

socialist Vietnam, which appears to have trouble extending benefits to the rural popu-

lace, and the Philippines, whose pension program is characterized by extraordinary inef-

ficiency, is striking.

Ultimately public pensions are political arrangements. Looking at conditions today,

the divergence between Thailand and Vietnam is remarkable,and presumably not simply

a function of Thailand’s higher income level. A deeper exploration of the political

economy of these outcomes could be fascinating.

Looking forward, the question arises as to whether the ageing of these Asian societies

will generate political economies to promote perverse intergenerational transfers

favoring the old over the young as has happened in many of the advanced industrial

countries.

†Correspondence: Marcus Noland, Peterson Institute for International Economics, 1750 Massa-

chusetts Avenue, NW, Washington,DC 20036, USA. Email: mnoland@piie.com

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doi: 10.1111/aepr.12101 Asian Economic Policy Review (2015) 10, 246–247

© 2015 Japan Center for Economic Research246