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p. 4 of 5 BACK | NEXT ADB: A Natural Partner Regionalization in a Global Context Dimensions of Regional Cooperation Economic Cooperation Initiatives Conclusion

Empowering Nations Through Regional Cooperation

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Economic cooperation initiatives

Subregional programs

Greater Mekong Subregion: When initiated in 1992, relations among several of the GMS countries were strained, and trade and other forms of cooperation were limited. Peace in the region was complemented by ADB’s program for subregional economic cooperation, and the GMS program is now regarded as one of the most successful models of regional cooperation in Asia.

The establishment of trust and goodwill, and improved confidence among the participating countries led to investments in infrastructure and promoted further cooperation. Participating countries have formed cooperation agreements on new air routes, river navigation agreements, and border development. By mid-2001, 10 projects totaling $2 billion and technical assistance amounting to $46 million had been completed or were being implemented.⁵

The initial emphasis was on developing physical infrastructure linkages to increase trade and encourage investment among the countries. Priority went to subregional projects in energy, transport, and telecommunications, including the Phnom Penh-Ho Chi Minh City Road Project and the Theun Hinboun Hydropower Project. As the program evolved, increased attention went to human resource development, tourism, environment, and investment and trade. Initiatives in human resource development included addressing the needs of ethnic minorities in the border regions, searching for ways to mitigate the transborder spread of communicable diseases, and joint efforts to counter drug production and use. Initiatives in tourism included improving the access, promotion, and development of projects in full partnership with the private sector.

The GMS program now emphasizes the software components of physical infrastructure projects, such as ensuring the success of investments in transport projects by working to reduce legal and policy barriers to the movement of goods and people. Synergy between economic activities and infrastructure development is being achieved by developing economic corridors. The first of these—the East-West Economic Corridor—is a 1,500-kilometer road link from Mawlamyine on the Andaman Sea in Myanmar, traversing Lao PDR and Thailand, and ending at Da Nang near the South China Sea in Viet Nam. By 2004, it will be possible to traverse 90% of the corridor along a modern, all-weather highway.

At the 10th GMS Ministerial Conference in late 2001 in Yangon, Myanmar, the GMS ministers expressed their intention to strengthen and accelerate their economic cooperation initiatives and endorsed a 10-year strategic framework to serve as the blueprint for this. They agreed to

• strengthen infrastructure linkages with a multisectoral approach;
• facilitate crossborder trade and investment;
• enhance private sector participation;
• develop human resources; and
• promote environmental protection and sustainable use of shared natural resources.

The ministers endorsed 10 flagship projects, including further developing the East-West Economic Corridor and the Chiang Rai-Kunming road (North-South Corridor Project); facilitating crossborder movement of goods and services; and promoting the role of the private sector, particularly small- and medium-sized enterprises. Public-private partnerships will be promoted through the recently established GMS Business Forum. Major activities will include pilot testing single-stop customs inspection procedures, and working to complete the accession process for all GMS countries to the Framework Agreement for the Facilitation of Crossborder Movement of Goods and Peoples in the GMS by 2005. ADB will continue to help build the capacities of national institutions in program management.

Several lessons from the GMS program have relevance to other regional initiatives in Asia.

• Countries must have ownership as well as the capacity to lead, manage, and monitor the initiative.
• Broad-based participation of local officials, civil society, private sector, and nongovernment organizations is needed.
• Equitable sharing of the costs and benefits of crossborder projects is required.
• Success requires sustained diplomacy and long-term commitment by parties concerned.

For more on the GMS initiative, see http://www.adb.org/gms.

Central Asia: The former Soviet republics in Central Asia face the twin challenges of building their nations and making the transition to a market economy. Given the countries’ landlocked and remote locations from major world markets, small domestic markets, and complementary resource endowments, especially in energy and water, these challenges are formidable.

The Central Asian Regional Economic Cooperation (CAREC) program was initiated in 1997 to support and encourage economic cooperation among the PRC,⁶ Kazakhstan, Kyrgyz Republic, Tajikistan, and Uzbekistan. Azerbaijan and Mongolia are expected to join soon. With the overall objectives of promoting economic growth and raising living standards, CAREC focuses on promoting market integration within and outside the region, financing infrastructure projects, and improving the accompanying policy environment.

Like other regional cooperation initiatives, CAREC’s focus has evolved. Early efforts were on raising awareness of the importance of regional cooperation, mainly through workshops, seminars, and studies. As mutual understanding and trust developed, the emphasis shifted to identifying and preparing priority regional projects in transport, energy, and trade, and in policy reforms to remove crossborder barriers to the movement of goods and people.

In August 2001, senior government officials reemphasized reiterated their support for ADB involvement in transport, energy, and trade. They also agreed to establish an overall institutional framework—consisting of a policy-making ministerial-level conference and implementation arrangements—to help strengthen the program and provide a mechanism for high-level policy dialogue, consensus building, and mobilizing resources.

ADB’s efforts have begun to bear concrete results. In October 2000, ADB approved a $57 million loan for the Almaty-Bishkek Regional Road Rehabilitation Project to improve a road link between Kazakhstan and the Kyrgyz Republic. A feasibility study on improving the Central Asia power transmission system has been completed. In addition, ADB continues to lead in addressing issues with a direct impact on the livelihood of people and poverty reduction. A project to manage education reform by reviewing key policy issues and development strategies, and collective discussions on education reform is one such initiative. Another is a project to improve nutrition of poor mothers and children by fortifying salt and flour with iodine.

The events of 11 September led to increased ADB support for economic cooperation in Central Asia. Trade facilitation initiatives will focus on regional cooperation in customs, a pilot joint processing project, and capacity building. An agreement has been reached with the Kyrgyz Republic and Tajikistan for ADB to assist in customs modernization and cooperation. In the transport sector, the focus will be on rehabilitating key sections of the regional transport networks. Technical assistance will help prepare the Kyrgyz Transport Corridor Project, which will develop a transcontinental rail and regional road link. ADB will continue to provide support to rationalize the use of regional energy networks and support regional initiatives to explore hydropower resources.

Annual ministerial conferences for the CAREC initiative will serve as important means for achieving long-term stability and prosperity in the region. The Ministerial Conference⁷ planned for 2002 is expected to advance support for economic cooperation in the region by prioritizing regional investment and other projects, explore new prospects for cooperation in the context of Afghanistan’s reconstruction, and facilitate coordination with other funding agencies and the international community within the CAREC initiative. For more on the CAREC initiative, see http://www.adb.org/CAREC.

South Asia: The South Asia Subregional Economic Cooperation (SASEC) subregion, comprising Bangladesh, Bhutan, India, and Nepal, has significant resources and potential. It also has more than 500 million of the 900 million people in Asia living on less than a dollar a day.

The complementarities among these countries—vast endowments of hydropower, hydrocarbon, and other minerals; ports; a large deltaic rice bowl; and skilled low-cost workforce—could rapidly reduce poverty through high growth, led by subregional cooperation.

In 1997, the foreign ministers of Bangladesh, Bhutan, India, and Nepal organized the South Asia Growth Quadrangle (SAGQ) to build on those complementarities. Launched by the Foreign Ministers, SAGQ identified five priority sectors for cooperation, established action committees for each sector, and assigned coordinating responsibilities among its members. Bangladesh was responsible for energy, Bhutan for environment, India for trade and investment, and Nepal for transport and tourism. SAGQ requested assistance in developing the sectors; that request led to the South Asia Subregional Economic Cooperation (SASEC).

The SASEC program began in 2000 with a regional technical assistance for a private sector forum on economic cooperation in South Asia, an ADB-supported initiative of the chambers of commerce of Bangladesh, Bhutan, India, and Nepal. Subsequently, a regional initiative was launched to identify and prioritize subregional projects in tourism, environment, transport, power and energy, trade and investment, and private sector cooperation. Each working group met in 2001,⁸ with the participation of top officials demonstrating the governments’ high-level commitment to the program. The sector working groups established specific priorities and identified project concepts.

The SASEC program also organized a regional roundtable on information and communication technology (ICT)⁹ to bring together key players from the ICT sector in SASEC and the GMS to interact with their public and private sector counterparts. The activity was aimed at learning from India’s success in ICT and applying the lessons to their own ICT development strategies. The roundtable generated concrete proposals for regional cooperation in physical infrastructure, and institutional and capacity-building dimensions of ICT. These range from fiber optic extensions to India’s neighbors to cyber laws and human resource development in the ICT sector.

In addition, several investment projects initiated within SASEC countries have subregional implications:

• a north-south transport corridor in India, from Siliguri to Kolkata and Haldia in West Bengal, with links to border points in Bangladesh, Bhutan, and Nepal;
• the Northwest Road Corridor Improvement Project in Bangladesh, from Panchagar to Bangla Bandh, which can be linked to Nepal and India; and
• the Fourth Road Improvement Project for Nepal’s East-West Road Corridor, which links to the road corridors in Bangladesh and India through Kakarbita.

ADB’s Private Sector Group has also invested in Lafarge Surma Cement, Ltd., the first subregional private sector project, which will transport limestone from Meghalaya, India, to a cement plant in Bangladesh through a crossborder conveyor system. For more on the SASEC initiative, see http://www.adb.org/SASEC.

Southeast Asia: Significant advances were made in regional cooperation in Southeast Asia in the mid-1990s. However, progress stalled after external and internal shocks spoiled the investment climate: the Asian financial crisis in 1997; the destruction caused by the El Niño and the La Niña weather phenomena in 1998 and 1999; changes in political leadership at national and local levels; and armed domestic conflict in some areas.

Opportunities to revive regional cooperation in Southeast Asia increased in 2001. Efforts of governments concerned are focused on the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) and the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA). Political leaders are focused on addressing the socioeconomic causes of security problems, and are planning measures to improve the environment for private sector participation, such as identifying new prospects for private sector partnerships in each other’s countries and lowering trade barriers.

ADB reaffirmed its support for regional cooperation in BIMP-EAGA in late 1999 when it initiated a study of small- and medium-sized enterprises (SMEs) in Indonesia and the Philippines to help develop and strengthen the private sector. The resulting strategy was endorsed by both countries’ governments and was aimed at developing SMEs in areas within the framework of the BIMP-EAGA subregional cooperation mechanism. ADB is undertaking activities to implement the SME development strategy and encouraging other bilateral and multilateral funding agencies to participate. ADB is examining options to expand the strategy across the entire EAGA region;¹⁰ reviewing the EAGA structure and mechanisms; and examining harmonization of customs, immigration, quarantine, and security rules, regulations, and procedures to revitalize subregional economic cooperation initiatives.

In November 2001, at a meeting of the ASEAN heads, it was agreed to invite ADB as an advisor to BIMP-EAGA. In this role, ADB is preparing a program to help revive and strengthen economic development in the region by reengineering subregional cooperation and jumpstarting economic activity to restore business confidence. Reengineering requires upgrading subregional cooperation mechanisms and improving coordination with bilateral, multilateral, and other subregional development partners, including ASEAN. The initiatives will seek to redefine subregional development priorities and strategies, enhance crossborder trade and investment, strengthen SME access to information, and establish an economic development fund.

ADB is closely following activities in the IMT-GT to help strengthen regional cooperation. As improved transport links are a priority for both the IMT-GT and BIMP-EAGA initiatives, ADB has approved technical assistance to strengthen regional cooperation in this sector.¹¹

Pacific DMCs: Regional cooperation has underpinned ADB’s operations in its 12 Pacific DMCs, which stand to gain from collectively reaping the benefits of economies of scale in public and private activities. The Pacific has more than 200 regional organizations covering issues such as politics, economics, sector development, commerce and trade, and religion. ADB’s promotion of regional cooperation has focused on fisheries, airline and airspace management, regional stock exchanges, public sector management, and governance and money laundering. ADB also supports regional studies to assess poverty in the Pacific region and analyze financial sector issues and strategies.

Fish are the most significant economic resource for the small Pacific economies. Together, the exclusive economic zones of the Pacific islands total 30.5 million square kilometers. The total tuna catch in the Pacific averages 1 million metric tons a year—almost one third of the worldwide catch. The tuna industry is worth some $1.9 billion per annum to Pacific economies.

ADB has a special role in responding to emerging regional concerns. For example, marine resource management, including the Multilateral High-Level Consultations to develop an international tuna management agreement, is an area where ADB assistance can be especially beneficial. The Forum Fisheries Agency approach gave the distant water fishing nations an improved bargaining position. ADB has also supported live reef fish trade management; environmental and resource management, including climate change and sea level rise resulting from global warming; biodiversity; and indigenous environmental management.

ADB is encouraging negotiations in the area of airline and airspace management. As private investment is often not viable in this area, regional cooperation will enable Pacific nations to develop collaborative arrangements that allow economic and financial viability. Similarly, ADB is helping Pacific DMCs assess their ICT readiness, closing the gap between ICT demand and supply, and increasing the awareness of regional cooperation in this sector. In particular, ADB is focusing on ICT infrastructure development, social inclusion, and electronic governance.

Also showing promising results in the Pacific is ADB’s support for regional cooperation in capacity building and information sharing. For example, ADB is promoting regional cooperation to develop economic statistics capacity in selected Pacific DMCs. Public sector management and governance reform continue to be an important ADB focus through support to the Pacific Financial Technical Assistance Center and regional seminars. ADB initiated governance assessments for some Pacific DMCs in 2001, and will continue this process in 2002. ADB has also, in collaboration with the ADB Institute, supported the training of trainers in public expenditure management and private-public partnership in the social sectors.

The financial and utility services sectors are essential for long-term private sector development. An ADB-assisted review of financial sectors in seven Pacific DMCs identified key constraints and facilitated dialogue among countries on regional solutions, including the possibility of electronically linking regional stock exchanges. ADB continues to promote regional cooperation among utility providers through the Pacific Water Association and the Pacific Power Association, which developed benchmarks for their members’ utilities and facilitated sharing of experiences and approaches to providing drinking water and power in Pacific countries. ADB also helps Pacific DMCs combat money laundering by establishing legal and financial frameworks that meet international standards.

The PRC and Mongolia: Trade and economic relations between the PRC and Mongolia were previously limited. However, by participating in the Tumen River Area Development Program,¹² both countries expressed interest in accelerating growth and development by strengthening economic cooperation.

To support this, ADB provided technical assistance in 2000 for a strategic study of the options for economic cooperation among three eastern provinces of Mongolia,¹³ and the Xinganmeng Prefecture of the Inner Mongolia Autonomous Region in the PRC.¹⁴ The study highlighted the region’s potential for developing mineral resources, preserving its diversified ecosystem and unique natural environment, and developing green food production and international tourism. The study recognized that rapid development of the PRC transportation system would help break the region’s physical isolation from world markets.

As a result of the study, the two governments agreed on a phased approach for promoting cooperation, beginning with the construction of joint border facilities to allow year-round trade and travel, and also formulating a plan to manage the environmental impact of development arising from enhanced crossborder activities. In the medium term, they agreed to review the export potential of mineral deposits in eastern Mongolia. A shared view on the mining sector’s potential will help them formulate a mutually agreed medium-term regional transport plan.

Regional monetary and financial cooperation

In the aftermath of the 1997 Asian financial crisis, many countries in East Asia sought closer monetary and financial cooperation to achieve greater regional financial stability. Initiatives were in three broad areas: information exchange and economic surveillance; regional financing arrangements; and coordination of macroeconomic and exchange rate policies.

Information exchange and economic surveillance: There are three major initiatives in information exchange and economic surveillance: the Manila Framework Group, the ASEAN Surveillance Process, and the ASEAN+3 Surveillance Process.

The Manila Framework Group¹⁵ was formed in November 1997 with the overriding purpose of regional surveillance. Under this process, deputies from the finance ministries and central banks of member countries meet semiannually to discuss regional economic issues of common interest. ADB supports this process by participating in all the meetings and presenting a regional economic outlook to help facilitate policy dialogue.

The ASEAN Surveillance Process was established in October 1998 to strengthen policy-making capacity within the group, based on the principles of peer review and mutual interest. The Process monitors exchange rates and macroeconomic aggregates, and also sectoral and social policies; and includes provisions for capacity building, institutional strengthening, and information sharing. The ASEAN finance ministers meet twice a year for policy coordination.

The ASEAN+3 Surveillance Process, established in November 1999, involves 10 ASEAN countries and PRC, Japan, and Republic of Korea. ASEAN+3 finance ministers meet semiannually to exchange information and discuss policy issues, and have taken steps to enhance cooperation in monitoring short-term capital flows and developing early warning systems to assess regional financial vulnerabilities and prevent future financial crises.

Regional financing arrangements: The ASEAN+3 finance ministers met in May 2000 in Chiang Mai, Thailand, on the sidelines of the ADB Annual Meeting. They agreed on the Chiang Mai Initiative (CMI) to expand ASEAN Swap Arrangements (ASA) to all ASEAN member countries, set up a network of bilateral swap and repurchase arrangements (BSA) among ASEAN+3 countries, and establish a regional financing facility to supplement existing international facilities. Subsequent progress in both areas includes the November 2000 expansion of the ASA to cover all ASEAN member countries. The total amount of the ASA involved is now $1 billion. Seven of 30 bilateral agreements are now in place, and negotiations are ongoing for several more. Although the amounts involved in these arrangements are relatively small, compared with total crossborder capital flows, the CMI lays the foundation for enhanced regional monetary and financial cooperation. It also attempts to fill an important niche in the international financial architecture.

Coordination of macroeconomic and exchange rate policies: Efforts are also under way among East Asian nations to go beyond the CMI and coordinate macroeconomic and exchange rate policies. An ASEAN Currency and Exchange Rate Mechanism Task Force was set up in March 2001. The Kobe Research Project is one of the recent initiatives of the Asia-Europe Meeting (ASEM) launched by the Asia-Europe Finance Ministers when they met in Kobe, Japan, in January 2001. In this initiative, studies undertaken by institutions and experts in Asia and Europe explore ways of improving regional monetary and financial cooperation. The ASEM is a gathering of heads of governments from 10 Asian countries,¹⁶ 15 European nations, and the President of the European Commission. Its objective is to strengthen the political, economic, and cultural ties between the two continents. The inaugural ASEM—held in Bangkok in March 1996—started a series of initiatives involving the public and private sectors of all ASEM countries.

ADB support for monetary and financial cooperation in East Asia—The Regional Economic Monitoring Unit: ADB established the Regional Economic Monitoring Unit (REMU) in early 1999, and has so far approved 10 regional technical assistance projects, totaling $5.1 million, to enhance East Asian countries’ capacity for economic monitoring and regional surveillance. Activities under these projects include

• training secondees from ASEAN central banks and finance ministries in economic monitoring and surveillance;
• supporting the activities of the ASEAN Surveillance Coordination Unit located in the ASEAN Secretariat in Jakarta;
• helping establish national surveillance units in the finance ministries of ASEAN countries;¹⁷
• providing monitoring input to high-level meetings of the ASEAN, ASEAN+3, and Manila Framework Group;
• promoting regional initiatives in monitoring short-term capital flows and establishing early warning systems;
• developing and maintaining a web-based clearinghouse of information on East Asia’s recovery and growth; and
• conducting special studies on regional monetary and financial cooperation, including policy options to pursue ASEAN+3 countries' monetary and financial cooperation efforts as part of the Kobe Research Project.

Sector themes in regional cooperation within ADB

Agricultural research: ADB provides annual financing of about $4 million to the Consultative Group for International Agricultural Research Centers and supports continued research by the International Food Policy Research Institute (IFPRI) and the International Rice Research Institute (IRRI) on developing high-yield, high-profit, iron-rich rice. In collaboration with various funding agencies, and the National Agricultural Research Systems of Bangladesh, Indonesia, Philippines, and Viet Nam, this research has identified a high-yielding, disease-resistant strain of rice (IR68-144) that contains 80% more iron after milling than most modern rice varieties. Efficacy trials are under way and work continues on the viability of distributing this iron-rich germ plasm to participating countries for adaptation to and testing under local conditions. In Asia, 60% of pregnant women, 50% of all women of childbearing age, and 40% of preschool children are anemic. Anemia permanently impairs cognitive development and learning capacity in infancy, limits capacity to undertake physical labor, reduces immunity, and substantially increases maternal mortality. Since all these factors inhibit income generation, iron deficiency anemia contributes significantly to increased poverty and poses an enormous public health problem. The nutrition study to eliminate anemia is a clear example where multilateral and regional institutions, through regional cooperation, work to address major development issues.

Water: The pressure on Asia’s water resources is rapidly becoming acute. ADB and its DMCs need to move from water sector investment aimed primarily at creating assets, to holistic, integrated investment to promote efficient water use as stated in ADB’s water policy. Investments in water supply and sanitation, irrigation and drainage, hydropower, flood control, and watershed management need to be made in the context of managing water resources within river basins. ADB fosters integrated water resource management, based on comprehensive studies, and concentrates interlinked water investments in river basins. ADB also promotes regional cooperation to increase the mutual benefits of shared water resources within and between countries. The primary focus is to exchange information on water sector reform. Support will also be provided to enhance awareness of the benefits of shared water resources, create sound hydrologic and socioenvironmental databases relevant to managing transboundary water resources, and implement regional or subregional projects.

Successful examples of water sector regional cooperation include the Mekong River Commission and the Interstate Water Commission of Central Asia. ADB supports the Southeast Asia and South Asia water partnerships in exchanging information and ideas on national water sector reforms. In the GMS, ADB funds studies that will lead to improved management of the Tonle Sap, an internationally significant wetland area shared by six countries along the Mekong River. ADB will continue to assist governments in developing collaborative frameworks with stakeholders, including assessing the downstream impact of any ADB-financed water project, in a river basin context.

Environment: ADB helps its DMCs address many transboundary environmental issues, including atmospheric pollution, global climate change, greenhouse gas abatement strategies, acid rain in Northeast Asia, emission reduction, cleaner technology, coastal and marine resource management, integrated water resource management, and soil-conserving farming systems. ADB has collaborated with ASEAN to produce Fire, Smoke, and Haze,¹⁸ a general guide on preventing fire and haze in the ASEAN region.

A key focus of ADB efforts is promoting regional cooperation for improved environmental governance, including capacity building, policy reform, a regional action plan, data collection, and information sharing. Many vital institutional and infrastructure changes will be required. ADB supports its DMCs in their compliance with environmental provisions of international treaties and agreements.¹⁹ ADB also targets high-level regional conferences on key policy and capacity issues to highlight their relevance to regional development.

Urban development: The Asian and Pacific region is experiencing rapid urbanization. Already, one third of the region’s 3.5 billion people live in cities and this is forecast to increase by 54% in 2020. The private sector’s role in providing services is increasing, and governments are focusing on providing an enabling environment, rather than giving direct services. Most cities in developing countries receive inadequate information, which undermines their ability to understand the forces shaping their urban environments, and thus does not allow them to develop and test effective urban policies. Major economic data measuring the health of an urban economy are seldom collected; data on population growth, rural-urban migration, infrastructure, and the environment are not available in a single location or consistent format; and some data are not collected at all, such as the distribution of job opportunities.

ADB has established a policy-oriented database of urban indicators for research, policy formulation, monitoring development impact of interventions in the urban sector, comparing performance between cities, and improving the efficiency of service delivery. The database, involving 18 cities in 15 countries in the Asian and Pacific region, develops methodologies and criteria to measure and evaluate the efficiency of urban service delivery,²⁰ and establishes a network for exchanging information on the quality and efficiency of urban management between cities. Urban Indicators for Managing Cities: Cities Data Book is designed primarily for policymakers and urban managers of cities in the region and provides information to trigger reforms. ADB has also joined the Cities Alliance, a group of countries and international organizations committed to the goal of “cities without slums.”

Transport and energy: Regional cooperation in developing transport infrastructure takes advantage of economies of scale, helps reduce the physical isolation of remote regions in Asia, promotes year-round trade and travel in border regions, and opens new areas to mineral exploration. Border areas are also usually the poorer regions, and building proper infrastructure further reduces poverty by promoting the mainstreaming of isolated people. ADB is a driving force in financing or promoting infrastructure for regional and subregional cooperation.

Although the economic feasibility of several regional projects has been established through ADB-funded regional technical assistance, several sector issues must be resolved by participating countries before the infrastructure projects become bankable. The 1997 Asian financial crisis was a major setback, as investments and economic growth in general slowed in the region, and the development of large infrastructure projects was deferred for nearly 3 years.

In the energy sector, regional impact and global warming issues, such as acid rain and greenhouse gas abatement, require effective crossborder commitment. Increasing the use of renewable energy sources minimizes environmental degradation from energy production, facilitates trading in credits, and increases opportunities for decentralized energy service provision. ADB’s regional cooperation focus in the energy sector has been on energy trade. Energy resources are not always close to demand centers. Often, DMCs with large resource endowments have small populations and low demand, while DMCs with high demand do not have adequate energy resources. Energy trade benefits both groups. In the power sector, for instance, reducing reserve margins leads to lower overall system costs, and the importing DMC can often avoid adding to pollution.

ADB helps DMCs in the Pacific, which have small energy sectors, share information and performance data, and pool resources for skills development and capacity building. Larger countries with proven energy resources beyond their domestic needs can also benefit from regional cooperation—often requiring regional contracts and significant up-front investment to realize the full benefits of these natural resources. ADB assists in project development and financing, and establishing regional trade that can provide large export earnings to countries owning the natural resource.

Combating corruption: Following an inaugural conference in Manila, Philippines, in late 1999, ADB and the Organisation for Economic Co-operation and Development (OECD) have been collaborating to create an anticorruption forum for Asian and Pacific nations to foster regional cooperation in the fight against corruption.

At a conference in December 2000 in Seoul, Republic of Korea, participants from more than 35 ADB and OECD member countries endorsed the ADB/OECD Anti-Corruption Initiative for Asia-Pacific. Its initial objective was to provide a support network for preparing national and regional anticorruption strategies.

At the request of participating countries, ADB and OECD convened expert meetings to draft an action plan based on the priority areas identified in Seoul. The plan includes promoting good governance through legal, institutional, and administrative reforms; strengthening the rule of law; promoting integrity in business operations; and developing proactive strategies to promote citizens’ participation in anticorruption efforts. Seventeen countries²¹ endorsed the Anti-Corruption Action Plan at the third ADB-OECD Conference,²² where participants pledged to undertake reforms to curb corruption in their countries.

The Action Plan rests on three reform pillars: improving the civil service, reducing bribery, and involving civil society. The partnership of international civil society, business community, and funding agencies will reinforce the visibility of the Plan. Countries endorsing the Plan will identify actions within the three pillars, and report reforms undertaken to a peer group. An ADB-OECD Secretariat will support each country in implementing the Plan. At the close of the third Conference a steering Group of 17 countries discussed the next steps and expressed interest in subregional cooperation.

In support of the ADB-OECD initiative ADB instituted a Governance Cooperation Fund, with an initial contribution from Canada, to help countries reform their institutions in fighting corruption. Other funding agencies have expressed interest in supporting the initiative.

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