In recent decades, there has been a growing recognition across Asia of the need for greater investment in national social protection systems, in particular those financed from general taxation.
Yet, across most Asian countries investment in social protection is still low. While developed countries invest on average 14% of GDP in social protection, few Asian countries come anywhere near this. The notable exceptions are Uzbekistan and Georgia, which invest around 12% and 6% respectively.
In fact, Nepal’s investment of almost 1% of GDP in tax-financed schemes for the majority of citizens is well ahead of middle-income countries such as the Philippines, Indonesia, Cambodia and Viet Nam.
In many Asian countries a pattern of investment in social protection has developed in which small tax-financed social transfer schemes have been established for those living in extreme poverty, while contributory social insurance schemes are in place for formal sector workers.