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Title page
Contents
Acknowledgements 4
Abbreviations and acronyms 7
Executive summary 9
Key findings 13
1. Introduction 20
2. Subnational government structures and reforms in Asia and the Pacific 25
Introduction 25
Subnational government structures 26
Decentralisation reforms in Asia and the Pacific 34
Territorial reforms in Asia and the Pacific 38
Vertical co-ordination mechanisms 40
3. Subnational government finance 44
Fiscal decentralisation in Asia and the Pacific 44
Subnational government expenditure 49
Subnational government investment 53
Subnational government revenue 56
Subnational governments borrowing and debt 64
Fiscal frameworks and fiscal rules 69
Financial management 75
4. Policy Opportunities 84
References 87
Annex A. Key indicators for the country sample 92
Annex B. Summary of recent territorial reforms 95
Table 1. Example of responsibilities assigned to central and subnational governments across Asia and the Pacific 26
Table 2. State and subnational government organisation in selected countries in Asia and the Pacific 27
Table 3. Examples of sub-municipal entities and small municipal governments in Asia and the Pacific 31
Table 4. Three types of asymmetric decentralisation 33
Table 5. Benefits and challenges of reforming the territorial structure 38
Table 6. Examples of recent and upcoming reforms to enhance transfer systems in Asia and the Pacific 59
Table 7. Examples of recent and on-going reforms of the property tax in Asia and the Pacific 62
Table 8. Subnational government debt as a proportion of subnational government revenue 67
Table 9. Examples of subnational governments and public institutions that provide access to financing in Asia and the Pacific 68
Table 10. Fiscal rules identified in the country profiles of the World Observatory on Subnational Government Finance and Investment 71
Table 11. Examples of recent fiscal and public financial management reforms in Asia and the Pacific 75
Table 12. Examples of integration of participatory budgeting practices 77
Table 13. Examples of green budgeting practices 78
Table 14. Examples of initiatives to improve subnational asset management 80
Table 15. Use of PPPs by subnational governments in Asia and the Pacific 82
Figure 1. Impact of COVID-19 crisis on subnational government revenues and expenses (% change 2019-2020) 22
Figure 2. Number of subnational governments by world region 27
Figure 3. Population and geographic area represented by state and regional governments 29
Figure 4. Population and geographic area represented by municipal governments 30
Figure 5. Evolution of the Regional Authority Index in Asia and the Pacific and other world regions (1950-2018) 37
Figure 6. Regional Authority Index in 2018 in a selection of countries in Asia and the Pacific 42
Figure 7. Subnational government expenditure as a share of GDP 45
Figure 8. Subnational government expenditure as a share of total government expenditure 45
Figure 9. Subnational government revenue as a share of GDP 45
Figure 10. Subnational government revenue as a proportion of total government revenue 46
Figure 11. Comparing tax revenue and expenditure of SNGs in Asia and the Pacific 48
Figure 12. Subnational expenditure by function as a percentage of GDP 49
Figure 13. Subnational government expenditure by functional classification (COFOG Level 1) as a percentage of total subnational government expenditure (2020) 50
Figure 14. Subnational government expenditure responsibilities in Asia and the Pacific 51
Figure 15. Subnational government expenditure by economic classification (2020) 52
Figure 16. Subnational government investment as a percentage of total public investment and as a percentage of GDP (2020) 54
Figure 17. Subnational government investment as a percentage of total public investment and subnational government expenditure as a percentage of tota... 55
Figure 18. Subnational government investment and the Human Development Index 56
Figure 19. Subnational government revenue as a percentage of total subnational government revenue (2020) 56
Figure 20. Subnational tax revenue as a percentage of total tax revenue 60
Figure 21. Subnational tax revenue as a percentage of GDP 60
Figure 22. Share of the property tax in total subnational government revenue and GDP (2020) 62
Figure 23. Total subnational government debt as a proportion of general government debt and of GDP (2020) 64
Figure 24. Change in subnational government debt as a share of total public debt (2016-2020) 66
Figure 25. Subnational government debt as a share of GDP (2016-2020) 66
Boxes
Box 1. The role of subnational governments in meeting the SDGs 21
Box 2. OECD/UCLG World Observatory on Subnational Government Finance and Investment 23
Box 3. Countries from Asia and the Pacific studied in this report 24
Box 4. Asymmetric decentralisation to strengthen urban governance in Viet Nam 33
Box 5. A dual system of territorial administration: decentralised vs. deconcentrated 36
Box 6. Armenia's amalgamation policy towards increasing self-governance efficiency 39
Box 7. Challenges associated with measuring fiscal decentralisation in Asia 46
Box 8. Equalisation transfers in countries in Asia and the Pacific 57
Box 9. New Zealand Local Government Funding Agency 69
Box 10. OECD Subnational Green Budgeting Guidelines and tools 78
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