Region requires $ 1.7 trillion per annum for investments in power, transport, telecommunications and water: ADB President

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By M Naeem Chaudhry

YOKOHAMA (Japan) May 06 (APP): 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 ADB 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.