Excellency Dr. Ibrahim Assane Mayaki, former Prime Minister of Niger and FACTI Panel Co-chair,
Excellencies, Distinguished colleagues,
Ladies and gentlemen,
It is my pleasure to address the high-level Asia-Pacific regional consultation: Towards an Ecosystem of Financial Accountability, Transparency and Integrity. I am pleased to co-host this regional consultation with the High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda.
Global economic and financial ties extend beyond national borders. Maintaining a healthy ecosystem of financial accountability, transparency and integrity is increasingly a shared policy priority across the regions.
Taxation issues are now part of a multilateral policy landscape. With the emergence of digital economy and web-based business models, these are new challenges related to the core principles of taxation and the fair allocation of tax base across countries and jurisdictions.
Furthermore, increasingly complex financial transactions and cross-border illicit financial flows, remains a key constraint in mobilizing development financing.
With the ever growing requirements of development financing to meet the aspirations of the 2030 Agenda, the interim report of the High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (FACTI Panel) provides a timely opportunity for governments and policymakers to ensure accountability, transparency and integrity in our financial system.
In the Asia-Pacific region, it is estimated to account for some 40 per cent of global illicit financial flows, mostly in the form of trade mis-invoicing. ESCAP research suggests that more than 6 per cent of total regional tax revenue could have been lost in this form alone, amounting to nearly $200 billion a year. In comparison, the global net official development assistance and official aid in 2018 was just about $165 billion.
To date, Asia and the Pacific’s effort in addressing this challenge has concentrated on multilateral tax cooperation, especially through its participation at the main international tax cooperation platforms. The region is also taking part in the ongoing initiatives to reform the current global tax governance architecture for minimizing tax avoidance and evasion.
Notably, ESCAP organized four consecutive high-level regional dialogues on financing for development in Asia and the Pacific between 2014 and 2017, with tax cooperation as one of the key aspects of these deliberations. In 2019, ESCAP further mainstreamed the tax cooperation discussion into its inter-governmental conference structure as part of our Committee on Macroeconomic Policy, Poverty Reduction and Financing for Development. In this regard, ESCAP continues to serve as a regional platform to communicate insights and ideas to the global UN processes and share global knowledge and good practices with policymakers in the region.
Allow me now to highlight three policy areas for your further reflections and deliberations.
First, developing countries are inadequately represented and supported in the ongoing international taxation reform and tax cooperation initiatives. Even for developing countries already participating on a procedural “equal footing”, they often lack the human resource and technical expertise to effectively articulate the complex reform proposals and their own interest in related tax negotiations.
Second, the regional tax cooperation framework has been highly fragmented and inadequate in Asia and the Pacific. For example, in contrast to Latin America, Africa and developing/transitional Europe, the Asia-Pacific region remains the only region without a region-wide mature tax cooperation platform, that has broad membership, is well-funded and has sufficient in-house capacity for closer-to-the-ground policy coordination and support.
Third, the cooperation and agenda have yet to move beyond taxation issues, and to address financial accountability, transparency and integrity as well. Tackling tax evasion and avoidance and boosting public revenues for development financing is only one part of the policy agenda. There is a growing call to include policy issues such as fighting corruption, stopping illegal capital flight, or promoting economic equality and responsible business and investment in the sustainable financing agenda.
I welcome the important and seminal work of the FACTI Panel and its interim report aiming to analyze the gaps, vulnerabilities and impediments in the current international systems related to financial accountability, transparency and integrity issues.
This is even more significant as member States are focusing on addressing the COVID-19 crisis that would require increased level of government financing to protect people’s lives and financing economic recovery.
I look forward to the new policy ideas and suggestions to be inspired by the findings of the FACTI interim report and to emerge from this Asia-Pacific regional consultation.
ESCAP stands ready to move forward the recommendations, as appropriate, for our region to build back better and advance the Sustainable Development Goals.