ADB may need to reinvent itself in a growing region

ADB may need to reinvent itself in a growing region

Yoko Nishikawa & Yuzo Saeki KYOTO

WITH 1.9 billion people in Asia living on $2 a day, the Asian Development Bank (ADB) faces tough challenges to balance its mission to help the poor with the need to better serve a growing number of middle-income countries. Winding up its 40th annual meeting on Monday, the Manila-based agency heard from its governors on what its new role should be in a region that experts say will account for 45% of global growth by 2020.
Some shareholders said that reducing poverty should remain its main focus, while more efficient use of energy was needed as environmental degradation spread across the region and the world. One focus of the meeting in Kyoto, western Japan, was a report by a panel of experts on the future of the ADB. The report will be the basis for debate on the agency’s future role, priorities and strategies to keep pace with a changing economic environment in the region.
“We must respond to changing needs in the region,” ADB president Haruhiko Kuroda told a news conference. “That does not mean the bank can dilute its devotion to poverty reduction,” he added. The development body has 67 members, ranging from struggling Bangladesh and Afghanistan to booming China and India, and powerful donors such as Japan and the United States.
The panel of experts, envisaging a dramatically transformed Asia by 2020, said the ‘New ADB’ will need to focus more on inclusive and more environmentally sustainable growth, regional integration, and technology and knowledge management. The member countries also emphasised the need to tackle infrastructure bottlenecks and environmental concerns, and to improve financial sectors so Asian developing countries can benefit from global growth. “It is abundantly clear the nature of investment demand is changing rapidly, which is an indication of the inherent strength and resilience of Asian economies,” Subba Rao, head of India’s delegation, said on Monday.
Though the report stresses the need to care for the region’s poor, delegates from some developing countries expressed concerns the poor could be left behind. The US, the largest ADB shareholder along with Japan, and some industrialised nations said the agency should not lose sight of its goal of reducing poverty. “We are concerned a ‘two-bank model’ is emerging in some thinking,” Christopher Pearce, head of Australia’s delegation, said Sunday. “This could see Asian Development Fund countries relegated to lesser importance than their more prosperous neighbours,” he said.
The ADB aims to complete a review on how to set the course for strengthening Asian economies and itself by the next annual meeting in Madrid. A decade after financial turmoil engulfed the region, Asian economies have recovered sharply, boosting trade with the rest of the world and accumulating massive foreign exchange reserves. Per capita income in Asia, in real terms, grew from less than $170 in 1967 to more than $1,000 in 2005, noted ADB.–– Reuters