World Economic Forum on East Asia

  • From Social Protection to Financial Inclusion

    Friday 7th June 2013 - 9:15am - 10:30am

    Download PDF

  • How can East Asian economies implement a sustainable social protection system, given such diverse challenges as an ageing population and seasonal unemployment?

    Key Points

    • The informal or shadow economy in less-developed countries is often as large as the formal sector and can be overlooked when designing and implementing social protection programmes.
    • Social protection must not be seen as entitlement, as some beneficiaries in the West tend to do; the provision of social safety nets must be financially sustainable. 
    • Education, health, financial inclusion and other basics cannot be divorced from social protection; they enable social protection, just as social protection enables them.
    • Educating children early in entrepreneurship, financial literacy and the value of saving – not only money, but also energy and other resources – is important.
    • Technology is a big part of the solution, including taking cash out of the delivery system and promoting mobile banking and other inexpensive ways of financing and delivering.


    Developing East Asia can learn from the West and the more developed economies in the region about what can be copied and what should avoided when putting social protection safety nets in place. In the West, social security and health benefits tend to be regarded as entitlements. As economies in Asia design and implement social protection schemes, they should make sure that individuals do not escape responsibility for some of their own pension and health needs.

    The same principle should apply to cash transfers to the poor, which is becoming part of the social safety nets in some countries, like Indonesia and the Philippines. Money should be given on condition that beneficiary families comply with requirements, such as sending their children to school. With conditional cash transfer programmes, protecting the poor and vulnerable can be coupled with broader goals such as ensuring universal education.

    Education, health, financial inclusion and other basics cannot be divorced from social protection. In some countries, the focus is on providing pension and health insurance benefits to workers in the private and public sectors in the formal economy. In Cambodia, on the other hand, the government looks at social protection not only in terms of pensions and health, but also as part of a wider safety net of food security, maintenance of irrigation systems and community-based microfinance, micro life insurance and micro health insurance.

    But care must be taken that these programmes be sustainable. Politicians tend to make promises to win elections, but the short-term benefits eventually become too costly and ineffective. It is estimated that government revenues must account for 20% of GDP to make large-scale government social protection programmes sustainable. Most developing economies in Asia have not reached this threshold, and so must be judicious in what government-supported programmes they put in place.

    Harnessing the private sector and civil society can help, in addition to the traditional means of social protection, such as the family or place of worship. These institutions must not be replaced by the formal government-led social protection systems. Multilateral agencies and international donors must ensure that they support schemes that not only meet social protection goals, but are also sustainable and do not destroy traditional values, particularly those that strengthen the family as an institution.

    Early education is important. Children should be made financially literate early on and taught to practice saving – not only money, but also energy and other resources. As they grow older, concepts such as banking, investment, pension planning and entrepreneurship should be taught. In remote areas, teaching the children about financial literacy can also benefit their parents. In one scheme in India, children were asked to save money in the bank. Learning about this, their mothers entrusted their own money to the children because they felt it was safer in the school than at home and will also earn interest.

    Printing and maintaining cash is expensive for nations, as much as 1% of GDP in some cases. Cash also enables tax evasion and other illegal acts. Electronic payments are cheaper, faster, more efficient and secure. The savings squeezed from administering social protection programmes can help strengthen their core activities. Mobile banking also holds great promise in promoting financial inclusion among the poor and disadvantaged, and cost savings in administration that can be put to other, better, uses.


    This summary was written by Cesar Bacani. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum. 

Session objectives

How can East Asian economies implement a sustainable social protection system, given such diverse challenges as an ageing population and seasonal unemployment?

Dimensions to be addressed:

  • Building effective distribution channels
  • Integrating growth, employment and social protection
  • Addressing social and gender inequities

Moderated by

  • Donald P. Kanak Donald P. Kanak
    Chairman, Prudential Corporation Asia, Hong Kong SAR

    BA, Economics, Univ. of N. Carolina; JD, Harvard; M.Litt, Mgmt Studies, Univ. of Oxford, UK; CLU and...


  • Supachai Panitchpakdi Supachai Panitchpakdi

  • Jeroo Billimoria Jeroo Billimoria
    Managing Director, Child and Youth Finance International, Netherlands

    Social entrepreneur; founded six organizations, the latest being ChildFinance International, a globa...

  • Matthew Driver Matthew Driver
    President, South-East Asia, MasterCard, Singapore

    BCom, University of Otago, New Zealand; Master's degree, University of Auckland; MBAs, Columbia Univ...

  • Keat Chhon Keat Chhon
    Deputy Prime Minister of Cambodia

    Degree in Naval Architecture and Marine Engineering, Ecole Nationale Supérieure du Génie Maritime,...

  • Thomas Klotz Thomas Klotz
    Managing Partner, South-East Asia, Roland Berger Strategy Consultants, Singapore

    Diploma in Industrial Engineering, Technical University, Berlin; MBA, Columbia Business School. Over...