Opening address by ADB President Takehiko Nakao on 4 May 2013 at the 46th Annual Meeting of the Board of Governors.
Excellencies, distinguished guests, ladies and gentlemen:
I am honored to stand before you for the first time as President of the Asian Development Bank. I thank shareholders for entrusting me with this important responsibility, and I eagerly look forward to working with all of you.
Let me first take this opportunity to pay tribute to my predecessor, Mr. Haruhiko Kuroda. Under his strong leadership, ADB has achieved much. It has grown to become a vital institution, with clear direction and a sound sense of purpose.
It is an honor to have His Excellency Manmohan Singh, Prime Minister of India, join us today. I am also happy to join Honorable Chidambaram, Chair of the Board of Governors and Finance Minister of India, in opening ADB's 46th Annual Meeting.
On behalf of all of us today, I offer our sincere thanks to the Government of India for hosting this year's event, and to the people of India for their gracious hospitality.
I am very pleased that our meeting is taking place here in Delhi. Here, we see the rich confluence of India's historical importance as a center of human history and culture, and Delhi's progress as a major center for modern industry. It is an excellent backdrop for our discussions this week about the future of Asia and the Pacific.
I believe it is a bright future - a future of a better life for all. Of course, we face major challenges. But I believe we are up to the task.
Progress and prospects of Asia and the Pacific
Today, the challenges of the Asia and Pacific region are both external and internal. Externally, while the worst of the global economic crisis appears to be over, global growth remains slow. As a result, Asia's growth is also moderating.
But the Asian economy has been more robust than expected after the global crisis, and remains so. Developing Asia is expected to grow by 6.6% this year and 6.7% next year. And we now see increased dynamism from wider areas of the region.
Importantly, Asia is making the transition to growth led by domestic and regional demand. Consumption is becoming a major source of growth, supported by strong demand for both durable and non-durable goods. Once people start enjoying conveniences such as refrigerators, motorcycles and smart phones, this trend cannot be stopped.
This strong demand in the region is in tandem with its expanding supply capacity, including through the region's well-organized cross-border production networks. As a consequence, developing Asia's current account surplus narrowed from 6.5% of GDP in 2007 to 2.0% in 2012.
The process of Asia's rebalancing continues. But Asia cannot be complacent. Asia needs to reinforce its efforts to sustain this pattern of growth in cooperation with its development partners, including ADB and civil societies.
In addition, internally, we have to tackle rising inequality. To be sure, Asia has made major contributions to the achievement of the global Millennium Development Goals (MDGs). However, not all countries are on track. More than 800 million of the region's people still live in absolute poverty. Malnutrition, infant mortality and gender inequities are among the region's persistent challenges. And we must not forget about our environmental challenge.
Innovative, inclusive, integrated: a vision for Asia and Pacific
In the face of all these challenges, it is critical for Asia to maintain its growth momentum to reduce poverty and increase prosperity. To achieve sustainable growth, I believe Asia must become more innovative, more inclusive, and more integrated. Let me touch briefly on each of these.
A more innovative Asia
First is the importance of innovation.
To sustain growth, Asia must be more innovative. Of course, Asia is no stranger to innovation. It has made many significant contributions to human history - from printing and papermaking, to the discovery of the concept of "zero" in mathematics. Three centuries ago, Asia had already pioneered the commodity futures market. In fact, Asia's ability to raise competitiveness and living standards is rooted in its ability to innovate.
The need for continued innovation is perhaps even greater now. A growing number of countries are climbing the economic ladder, but they are facing the challenge of the middle income trap.
But how can we create a more innovative Asia?
Quite clearly, the region needs an enabling environment for the private sector. We need conducive regulatory systems and support for start-ups. We also need a broad-based financial system embracing small and medium sized enterprises, which are often a key source of innovation and job creation.
For innovation, infrastructure development - one of ADB's key strengths - is critical, as the region's infrastructure deficit has often been seen as a barrier to investment.
To enhance innovation, we must invest more in research and development, and in our people. For our people, we should strengthen vocational and tertiary education, and provide accessible, cost-effective health services. And all of these must be underpinned by good governance. The rule of law and its just implementation, accountability, and protection of property rights are essential in building a better climate for investment and innovation.
Innovation will also help Asia move to a cleaner and greener growth path, which is another prerequisite for sustainable growth. Meeting the region's energy demand and addressing climate change are major challenges for Asia. I am very pleased that ADB has made green growth a key priority, with a record $2.3 billion invested in clean energy alone in 2012.
A more inclusive Asia
Second, we should pursue a more inclusive Asia.
For growth to be sustainable, it also needs to be inclusive. In this context, the outcome of ongoing discussions on the post-2015 MDG agenda will be very important.
We must address issues of income inequality, access to good education and health services, gender equity and provision of social safety nets. ADB's efforts to support women's entrepreneurship is an excellent example of empowering women.
Affordable and accessible infrastructure, inclusive financial systems, investments in human capital and commitment to good governance are as essential to social inclusion as they are to economic growth. Weak governance, in particular, increases the cost of essential services and denies opportunities to those who need them most.
Inclusive growth is ultimately an issue of empowerment - a concept much emphasized by Nobel Laureate Professor Amartya Sen. Empowerment is not just a means of development, but should also be a primary objective of development.
A more integrated Asia
Third, I want to emphasize the importance of integration.
Over the past half-century, Asia has benefited tremendously from regional cooperation and integration. As we seek to integrate more within our region, we must also remain an integral part of the global economy. In other words, we must maintain the open regionalism that has served our region so well in the past. It goes without saying that Asia needs continued supports from partners in other regions to tackle its development challenges.
Regarding regional integration, with ADB support, the countries of the Greater Mekong subregion, Central Asia and South Asia are already reaping the rewards of better connected transport and energy networks. Similarly, improved ICT connectivity will integrate the isolated Pacific island economies more deeply into the Asia and Pacific region.
With the various subregions working together, I believe more can be done toward creating a truly integrated Asia. The recent re-engagement of Myanmar presents a great opportunity for deepening integration, with the promise of substantial gains for Asia and the world as a whole. Together with other development partners, we look forward to helping Myanmar build on the opportunities that the people of Myanmar themselves invited by opening and reforming the country.
Asia's growth in the world economy brings with it a new responsibility - the responsibility to contribute to solving global issues like climate change and the post-2015 MDG agenda. By creating a more innovative, more inclusive and more integrated Asia and Pacific, we can contribute to global development, commensurate with the region's growing economic power.
What value can ADB add?
Let me now turn to ADB itself. In a region with many ongoing challenges and many new ones still emerging, how should ADB strengthen itself to respond? Let me highlight five areas.
First, finance. Operations in 2012 totaled nearly $22 billion, including about $8 billion in cofinancing. While impressive in itself, this figure still falls far short compared with the needs of the region. We must therefore step up efforts to leverage external sources of finance, including bilateral official sources - particularly from new and emerging donors - and private sector finance. Public-private partnerships will be critical in this regard. I will pursue this area more vigorously.
Second, knowledge. ADB and the ADB Institute serve as a vast store of development knowledge and expertise in many of the areas I have mentioned today. Our operations will draw on our own knowledge and experience, as well as those of other partners. This knowledge is essential to modernize policy and institutional development, and imbed new technology.
Together, these represent a "Finance++" model - finance plus leverage plus knowledge. As President, I will combine these elements more closely together.
Third, strategy. Strategy 2020 is the guiding blueprint for ADB's operations and has served us well. We will initiate this year a mid-term review of Strategy 2020 based on the progress of its implementation, and also on developments in Asia since its adoption in 2008. We will also consider a long-term strategic vision for the Asian Development Fund, reflecting the changing needs of our developing member countries.
Fourth, resources. With the tripling of ADB's capital base in 2009 and successful ADF replenishments, ADB has taken important steps to reinforce its financial resources. It will, however, be critical to continue examining how we can secure the resource base needed in order to pursue our objectives well.
Of course, resource is not just about capital. Regarding human resources, ADB is fortunate to have a diverse staff of talented, professional and determined women and men. I intend to promote the potential of all our staff through a proactive talent management process.
Fifth - and perhaps what matters most - is ADB's performance and the results it achieves. In this context, the recent Development Effectiveness Review shows that we need to make a more concerted effort to improve the quality of project design, ensure timely implementation, and achieve desired outcomes. When shareholders and ADB face more stringent constraints over budgets and resources, we should pay increasing attention to outcomes.
Recently, I was asked how a small institution like ADB can deal with the region's many demands. In my view, with a staff of 3,000, we are not such a small institution. In fact, ADB is the largest multilateral institution based in Asia and the Pacific. By playing a more effective role as a catalyst in mobilizing finance and knowledge, we can serve this region even better.
I am happy to say that this Annual Meeting gathering of more than 5,000 people, including business community, academia and media from around the world, itself exemplifies the important role of ADB as a catalyst in this region.
Ladies and gentlemen, let me summarize my remarks today. Asia has achieved a lot. But there still remain developmental challenges like sustaining growth, accelerating poverty reduction and addressing social and environmental issues.
Today, I have expressed my sense of optimism that we can meet these challenges together and create a more innovative, more inclusive, more integrated Asia and Pacific region. I have also touched on the role of ADB and my thoughts as to where ADB should be heading.
Your participation in shaping our institution is critical, and I will have greater dialogue and consultation with all of you, including civil societies, to build a more open, transparent and effective ADB. I will seek every opportunity to visit our developing member countries, the projects ADB is implementing, and our development partners.
Ladies and gentlemen:
As I take on the exciting challenge of leading this great institution, I commit myself and my team to working closely with all of you to help create a better life - and a brighter future - for all the people of Asia and the Pacific.