$1.7trln per annum required for the region: ADB

YOKOHAMA: Identifying major Bank's future priorities, mainly infrastructure development, President Asian Development Bank, Takehito Nakao said Saturday the region will require $1.7 trillion per year in investments in power, transport, telecommunications, and water through 2030.

In his speech at the Annual Meeting of ADB Board of Governors here, Takehito Nakao said "this is more than double our previous estimate, reflecting additional investments, needed to support continued growth and address climate change."

Listing five chief priorities of the Bank, the ADP President said supporting infrastructure development will remain priority.

In this regard "we will incorporate more advanced technologies. Our developing member countries care about maintenance costs and the resilience of infrastructure," he added.

He said member countries increasingly aspire for innovative technologies for their projects. And many innovative companies across the world, including in emerging economies, are keen to contribute to Asia's development. "We have already initiated reforms in our business processes for project preparation and procurement to promote greater use of advanced technologies," he added.  Social sectors being another priority, he said in health, bank will support universal healthcare systems and cross-border initiatives to combat communicable diseases such as malaria, tuberculosis, and HIV.

While in education, ADB will continue to support Technical and Vocational Education and Training, or TVET, and help improve the quality of secondary education.  "We will further promote gender equality. Gender has been a key area of ADB operations for many years, even before we adopted our first Policy on the Role of Women in Development in 1985," he said adding, gender is a cross-cutting issue that influences all social and economic processes. "We will design projects that help women and girls secure higher skills, better health, more jobs, and a larger voice in decision making."  Next priority area includes ADB efforts to mobilize private resources for development besides promoting greater and more effective use of public-private partnerships, or PPPs, he said.  In addition, ADB is directly financing private companies in such infrastructure as solar, wind and geothermal power, highways, telecommunications, and ports.

And ADB is supporting an increasing number of private sector projects in education, health, and agriculture. Funding micro, small, and medium sized enterprises, through local banks, will remain a priority, the President observed.  Regarding ADB's private sector operations, he said "I very much appreciate Japan's contribution to the newly created trust fund called Leading Asia's Private Infrastructure, or LEAP fund."

It is based on an equity investment of up to $1.5 billion from JICA (Japan International Cooperation Agency), and it supports ADB's lending and equity investments in private infrastructure projects. "In 2016, only five months after it was set up, we approved two clean energy projects, in India and Indonesia, using this trust fund and ADB's own resources", he added.  Another priority for Strategy 2030 will be continued reforms in ADB itself. ADB will strengthen its sector and thematic expertise, enhance staff capacity, and streamline procedures, he said. "We will deepen our collaboration with civil society, academia, the private sector, and local authorities such as Yokohama."

Takehito Nakao said Japan has always been a steadfast supporter of ADB. It is ADB's largest shareholder and the biggest contributor to the Asian Development Fund, ADB's concessional window for poorer countries.

"It has also contributed to major trust funds for poverty reduction and scholarships. In 1966 when ADB was established, the Asia and Pacific region was defined by poverty. One of the most important challenges at that time was how to feed the region's large and growing population. Agriculture was a priority sector for operations in ADB's initial years," he stated.

Half a century later, he observed Asia accounts for one-third of global GDP, and it contributes to more than half the world's economic growth. The region's rapid development has reduced poverty and raised the living standards of people. ADB has been a reliable partner in this remarkable transformation of Asia.  The President said in his view, ADB's achievements over the past 50 years could be summarized in its three broad functions including combining finance and knowledge to support developing member countries.

"There is much discussion about mobilizing private resources to finance large development needs. But I would like to emphasize that ADB, itself, was created to mobilize private resources from global capital markets. Asia was desperately short of capital at the time of ADB's establishment."

By adhering to sound banking principles and establishing a strong credit profile, in 1969 ADB successfully issued its first bond in Deutschmark in Germany, he said. ADB was the first international entity to issue yen-denominated bonds in Japan in 1970. That was the start of the 'samurai' bond market.  During the past 50 years, Mr Nakao recalled ADB provided about $270 billion of loans and grants, based on a cumulative $7 billion of paid-in capital contributions from 67 members, and $30 billion of contributions from 34 members to the Asian Development Fund.  Another major contribution of ADB is the promotion of good policies. "Over the years, Asian countries have adopted prudent macroeconomic policies and open trade and investment regimes, as well as strong investment in infrastructure and education, all underpinned by clear long-term visions. I believe these policies have provided a basis for rapid growth in Asian economies," he observed.

ADB has been supporting good policies through high-level dialogue with state leaders and ministers, technical assistance, capacity building, and policy-based budget support loans, he said adding, based on intensive discussions with the authorities, ADB has also provided emergency loans when members were hit by crises, such as the oil crisis in the 1970s, the Asian financial crisis in the 1990s, and the global financial crisis more recently.

Fostering regional cooperation and friendship is another achievement of the Bank, he opined continuing, ADB itself was created by the idea of regional cooperation in Asia and the Pacific.

Over the years, ADB has promoted subregional cooperation frameworks in Central Asia, South Asia, Southeast Asia, the Pacific, and the Greater Mekong subregion. Australia and New Zealand, ADB's founding developed members in the region, have been strong supporters of initiatives for Pacific island countries, he added.

Partnerships with non-regional member countries in North America and Europe have been critical. They have enhanced ADB's financing capacity and contributed to concessional operations.

Non-regional members have also provided many new ideas about development, the President observed.  "The Bank last year maintained good momentum in scaling up our operations," he said adding, total ADB operations including cofinancing and technical assistance, reached $31.7 billion.

"Our own loan and grant approvals reached a record high of $17.5 billion, a 9% increase from the previous year. Out of this, ADB's lending and equity investment to the private sector was $2.5 billion," he added.  Our climate finance, for mitigation and adaptation, reached $3.7 billion, up from $2.6 billion in 2015. In addition, cofinancing with our public and private partners increased to $13.9 billion. This includes our first two cofinanced projects with the Asian Infrastructure Investment Bank for roads in Pakistan and a natural gas project in Bangladesh.

Developing Asia has been growing at about 6% annually, even after the global financial crisis, Nakao said abd added it will grow 5.7% this year.