Statement of Haruhiko Kuroda, ADB President, at the Firfth BIMP-EAGA Leaders Summit, Hua Hin, Thailand.
Your Majesty, and Excellencies, Ladies and Gentlemen.
Thank you for inviting me to join you at this 5th BIMP-EAGA Leaders Summit.
It is a time of considerable challenge for us. The events in the past year that have shaken the US financial system have had serious adverse ramifications for global finance as well as global economic growth and other associated economic indicators. Despite the unprecedented stimulus packages in many countries, it is likely that the current financial turmoil will persist. The real effects on the economies of the US, Europe, and Japan are still unfolding.
Asia remains vulnerable because of its strong trade links with the industrialized world. Declining exports have slowed growth in industrial production. Loss in consumer confidence is affecting retail sales. Factory closures are increasing and millions of workers in the region are at risk of losing their jobs. In addition, overseas remittances, a major source of income and foreign exchange for many regional economies, are expected to weaken as the regional and global economies suffer. But this should not lead to a sense of despair and despondency. Further strengthening of regional cooperation can play an important role in turning this challenge into an opportunity by way of greater cross border cooperation, coordination in trade, infrastructure, and extension of production chains.
An important lesson from the 1997 financial crisis was that financial crises can impact the less developed regions more than they do the capitals. While corporations and big businesses were the most visible victims of the previous financial crisis, the hardest hit and the least able to cope were the region's poor. It is estimated that roughly 50 million people went into poverty as a consequence of the 1997 financial crisis. Our task ahead is to ensure that any economic stimulus packages are inclusive and that they include specific actions to mitigate the impact of the crisis on the region's poor and the poorer regions. We should commit to insulate subregional cooperation in BIMP-EAGA from being adversely affected by short-term macroeconomic constraints that likely lie ahead.
I am encouraged by the progress of BIMP-EAGA in implementation of its development roadmap. Transport connectivity has improved with the rapid implementation of the agreements signed in 2007. A trade facilitation agreement is being pursued to streamline and simplify border formalities. Upgrading of infrastructure facilities in ports and airports is either ongoing or being planned. Economic corridors are being established to advance the development of more efficient transport and trade logistics within the subregion.
Looking ahead, let me share some thoughts on priorities for BIMP-EAGA development and on the support ADB can provide in partnership with your Governments.
Global food supplies have been under increasing pressure in recent years from expanding demand for food, feed, and biofuels; increasing land and water scarcity; and the adverse effects of climate change. Notwithstanding the recent downturn in food prices, the long-term trends suggest the need for increased focus on agricultural productivity and food security. BIMP-EAGA could become a major player in the regional and global food market if it is able to harness its vast agriculture and marine resources. To increase productivity in the agriculture sector, increased investment is needed in infrastructure development, technology upgrading, and marketing support. Policies involving trade in agriculture products also need to be reviewed and reforms implemented, where necessary, to eliminate non-tariff trade barriers.
The subregion's natural environment is among some of the best in the world, but most tourism assets remains untapped. Eco-tourism in particular can be developed substantially through provision of appropriate infrastructure, and it can be made more inclusive through community participation. Among others, this will require local government supported small-scale infrastructure projects such as water supply and distribution, sanitation and waste management facilities, and renewable energy sources.
Programs to protect, conserve and sustainably manage natural resources are already ongoing with the Heart of Borneo, Sulu-Sulawesi Marine Ecoregion and the Coral Triangle initiatives. Lessons from the past show that issues like the environment and climate change may be neglected during crisis, creating future burden on natural resources. BIMP-EAGA needs to actively maintain its support and focus on the environmentally sustainable development.
As a long-term partner, ADB remains committed to the BIMP-EAGA Initiative. ADB will continue its technical and lending assistance to BIMP-EAGA to:
- develop investment projects, including infrastructure to support transport networks, trade logistics, and modernization of agriculture;
- enhance support for community-based ecotourism development;
- hasten implementation of projects that advance the environment management and climate change agenda;
- strengthen relationships with local governments and the private sector; and
- intensify capacity development for BIMP-EAGA institutions.
Let me assure you that ADB will continue to strive to mobilize financial and intellectual resources from the larger international community. And, we would earnestly request your strong support for an immediate and substantial capital increase for ADB, for us to keep playing an active role in the social and economic development of the region during these very difficult times. We are, after all, your development partner for the long term.