Opening Address at the 2009 42nd ADB Annual Meeting
By
Dr. Sri Mulyani Indrawati
Chair, Board of Governors and Governor for Indonesia
4 May 2009
Bali, Indonesia
Your Excellency President Yudhoyono, President Kuroda, Distinguished Governors, Ladies and gentlemen
It is an honor to welcome you on this important occasion of the ADB Board of Governors’ 42nd Annual Meeting.
Indonesia, as a founding member of the ADB, is no stranger to hosting the annuals, having first had the privilege in Jakarta in 1976.
Back then the world was a significantly different place. The speed with which economic, financial, and social developments transferred from one part of the globe to another occurred relatively slowly. With the advent of the information and technology revolutions, today a negative market develop in one country can often be felt almost instantly in markets around the globe.
But something that 1976 and 2009 have in common is that the world economy was then, and is now, in crisis. What differs is the nature of the crisis.
In the mid 1970s the world experienced stagflation and a global oil crisis. Last year we had another energy shock, as well as a food security crisis, and today we are facing an economic slowdown that is rivaling the great depression. Added to this, over the past week we have seen the World Health Organization announce an alert for a possible flu pandemic.
Something that has not changed over the period in between Indonesia’s hosting of the Annual Meetings is the ADB’s steadfast commitment to assisting members to combat crisis and its readiness to develop new facilities to meet member country needs. In the seventies the ADB was quick to shift assistance to energy projects, last year the Bank offered food, energy, climate change and avian flu efforts, and this year the Bank has offered counter-cyclical assistance.
As the world’s second largest multilateral development bank, I would argue that the ADB’s commitment to the Asia-Pacific region has strengthened as the Bank has grown with the region.
Distinguished ladies and gentlemen, the ADB and the Asia-Pacific region clearly have some serious challenges that we need to confront head-on.
As we know, GDP growth in the major industrial countries is expected to contract further over 2009, and we are only expecting a mild global recovery next year. In such an environment, export-dependent Asian economies are challenged to take meaningful stimulus measures by focusing on strengthening domestic markets, while maintaining fiscal sustainability and promoting activities that support regional and global trade. At this time, when credit is extremely tight, this will present some major challenges.
In line with its efforts to alleviate poverty and improve the region’s standard of living, the ADB has an unavoidable counter-cyclical role to perform in helping members to fight against economic decline and to help set them on a path for sustainable growth. I wish to register that Indonesia is encouraged by the ADB’s response so far, particularly its timely and responsive budget support to those countries among us in need.
2009 is unquestionably a landmark year for the ADB and the Bank’s role in development.
I am especially pleased that ADB shareholders were able to complete negotiations on the fifth general capital increase, and last week approved a tripling of the ADB's capital resource base. This development is something Indonesia strongly supported, and actively lobbied for on the global stage. I congratulate President Kuroda and the ADB staff on the extensive preparations and effective presentation of the case for such an increase at this time.
In addition to regular lending, the expanded resource base will allow the ADB to bring forward counter cyclical efforts such as investments in infrastructure, support for poverty alleviation measures and social safety net programs, and investments in climate change adaptation and mitigation measures. It will also provide the space to address crisis that emerge unexpectedly, such as the H1N1 flu.
In the face of substantial capital outflows from the region and the related liquidity shortages, the increase could not be better timed.
The general capital increase would not amount to much, however, if the mechanisms are not in place to ensure members can access funds through the introduction of new, flexible credit instruments and the acceleration of disbursements under existing instruments. In Indonesia’s view, to maximize its relevance in a complex and changing world, the ADB must continue its tradition of moving with the times to meet the contemporary needs of its members.
Indonesia would like to commend the ADB’s performance to date in its efforts to help address the negative effects of the economic crisis, and its efforts on climate change. Over the past year, we have seen a responsive Bank that has been ready and willing to offer products in line with member requirements.
Significant examples of well-targeted assistance include the Public Expenditure Support Facility and the Infrastructure Financing Facility. These innovative products will help members remain on track to meet development goals through this difficult time.
We should also be ready to act on H1N1 flu. The Bank and our region have considerable experience with SARS and the Avian flu, and we are well equipped to respond positively to this latest challenge.
I would also like to note that last year in Madrid, shareholders voted to replenish the Asian Development Fund with $11.3 billion to assist the poorest developing economies in our region. The ambitious program under ‘Asian Development Fund 10’ is now under implementation. As I understand, the fund will focus on financing operations in a number of sectors to help achieve MDG outcomes in eligible developing member countries.
Distinguished ladies and gentlemen
In addition to the challenges associated with the global economic crisis, our region must address a number of other issues that have long-term considerations. The need to address the unacceptable gap in critical infrastructure investment is one such challenge.
The lack of modern, efficient infrastructure across the region is a hindrance to both economic growth and poverty reduction. The private sector, for example, cannot thrive in the absence of adequate transportation, telecommunications, and public utility services. Nor can the poor participate in growth and its benefits without access to employment opportunities, health care and education.
The ADB’s role is a crucial one, not only in direct financing of infrastructure, but also in its ability to mobilize funds from the private sector and other development partners.
Another major challenge before us is climate change. I note and commend the leadership role that the ADB is taking on this important issue and in assisting its developing members to implement mitigation measures, such as clean energy production and use, and adaptation solutions.
I also note the ADB’s foresight in keeping the focus on climate change as one of the world’s most pressing global issues. Given our region’s size, diversity and growth potential, along with the tremendous needs for energy, environmentally sustainable development in Asia and the Pacific is essential not only for the region but for the world.
Addressing these challenges will require increased cooperation and stronger partnerships among nations — both regionally and globally. We are encouraged by the Bank’s continued focus on ensuring that its assistance supports sustainable growth and environmentally responsible activities. The ADB’s efforts and investments today are laying the foundations for the benefit of future generations.
In many parts of the Asia and Pacific region, countries are joining together to develop cross-border infrastructure, to increase intra regional trade, and to address commonly held challenges in a cooperative fashion. Areas of focus include environmental degradation, infectious diseases, and the provision of public goods.
The ADB’s support for regional and sub-regional cooperation programs is essential to build progressively on our shared successes. At the same time, the ADB can help developing Asian countries integrate better into the global economy.
But in order to advance our efforts on all of these fronts, the ADB has to be an organization for our times. This requires the Bank to continue with internal reform efforts, including those reforms aimed at promoting improved governance and management systems that reflect a merit-based system and international best practice.
President Yudhoyono, President Kuroda, Distinguished Governors, ladies and gentlemen
As we strive to maintain our growth momentum through this period of global turmoil, let us not forget our long-term development goals. The ADB is our institution to help Asia-Pacific countries to reduce poverty, to alleviate hardship for their citizens, and to achieve Millennium Development Goals.
Let us ensure that the tripling of the Bank’s capital resource base is used as wisely as possible so that we leave a positive legacy for future generations. The Bank has 42 years of experience and 67 willing members to accomplish this goal. I am sure that together we will make a difference.
This year’s Annual Meetings will offer many opportunities for us to collectively and cooperatively advance our shared and critically important objectives.
In closing, I again offer a warm welcome on behalf of the Government of Indonesia, the organizing committee, and the citizens of Indonesia.
We are delighted that you and your colleagues have been able to travel to Bali, and we hope that you enjoy your stay here to the fullest, and that you experience all the charm and wonder that the Indonesian people, landscape and culture have to offer.
I wish each and every one of you a pleasant stay, and all of us a rewarding and fruitful meeting.
Thank you.
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