Private Sector Development

The Asian Development's Private Sector Development (PSD) Strategy aims at strengthening the role of the private sector as the engine of growth in Asia. Long-term, rapid growth is necessary to sustain ADB's overarching goal of poverty reduction.

The PSD strategy consists of a systematic and coherent framework that will guide ADB's activities to promote private sector development across the region. It has three main thrusts:

• creating enabling conditions for business

• generating business opportunities

• catalyzing private investment, particularly in infrastructure and finance

Pursuit of the three strategic thrusts will be the focus in four areas of ADB's operations:

• governance

• financial intermediation

• public-private partnerships

• regional and sub-regional cooperation

These areas are the key vehicles for promoting private sector development and pro-poor growth in the Asian context.

A guiding principle in all ADB activities in future will be to "think private sector" in all public sector operations, and to "think development impact" in all private sector operations.

How can the private sector help reduce poverty?

• By generating jobs

• By creating public-private partnerships so that governments can make services increasingly available to the poor

• By properly regulating private utilities to ensure the poor have access to services at lower prices

• By linking privatization and divestiture to poverty reduction.

ADB's recently approved New Pacific Strategy will also focus on helping member countries in the Pacific streamline their public sectors and boost private sector investment that will create more jobs and raise incomes and the quality of life. It aims to reduce risks in doing business in the Pacific, support maintenance of macroeconomic stability and develop policy framework where they are needed.

Private sector development requires stable and credible macroeconomic policies. Efficient infrastructure, in particular transport and power facilities, is essential for private sector development. ADB is well poised to assist in this area, by financing projects and helping reform sector policies. ADB will also link infrastructure provision to improved public sector and public enterprise performance. Special attention will be given to improve transportation linkages within the region and to countries outside the region.

Among the prominent infrastructure projects include the North Luzon Expressway Project in the Philippines, one of the country's main road arteries. The expressway is at present narrow, congested, and poorly maintained. The $377 million project will spur development of central and northern Luzon - the Philippines' biggest island - especially between Metro Manila and the Clark Special Economic Zone, Angeles City and San Fernando.

In Bangladesh, ADB is financing $140 million to construct a 450-megawatt power plant in southeast Dhaka, Bangladesh. The Meghnaghat Power Project, the first ever power project supported by the private sector in Bangladesh, will provide cheaper electricity for the people and alleviate acute power shortages in the country.

Other key areas for ADB are in the setting up of industrial centers, business advisory services, marketing, and training. Country-specific private sector strategies will also be formulated within the framework of the overall PSD strategy and as an integral part of ADB's operational strategy for individual DMCs.