Transcript of press conference by Haruhiko Kuroda, ADB President, at the close of the 43rd Annual Meeting of the Board of Governors, Tashkent, Uzbekistan

Welcome Remarks from Ann Quon, Principal Director, Department of External Relations:

Good afternoon ladies and gentlemen and welcome to this wrap-up press conference, which brings the 43rd Annual Meeting of the Board of Governors to a conclusion. We are glad that we have the opportunity to meet with friends from the media. It's been a very busy four days so I'm sure that you have lots of questions to ask of President Kuroda. We have simultaneous translation so you have your headsets, please use those. On that note, let me ask President Kuroda to address you.

President Kuroda's Opening Statement:

Thank you very much for joining us today. We just concluded our 43rd Annual Meeting here in Tashkent. I must say that this Annual Meeting, the first ever held in Central Asia, had been a great success, and I would like to express my sincere appreciation to the Government of Uzbekistan for the excellent arrangement and accommodation.

Coming to the substance of the discussions we had, I must say that discussions were very comprehensive and forward–looking and governors discussed wide-ranging issues, including short-term as well as medium– and long–term challenges faced by the Asia and Pacific region. I summed up the discussions at the end of the meeting and that would be shortly distributed to you all so I do not intend to read my closing statement but just highlight a few points of the closing statement.

As I said, governors discussed short-term as well as long-term issues. As we know, Asian economies are recovering from the global financial crisis with very strong momentum. But at the same time there are some countries where the economic recovery is fragile and so we have to be mindful that on the one hand, we have to manage the exit strategies appropriately and at the same time, the necessary assistance to those countries whose recovery is still fragile must still continue.

Governors also appreciated the timely assistance provided by ADB as well as other development partners in Asia and the Pacific. Actually I think the assistance has contributed to faster than expected recovery of the Asia and Pacific region.

Climate change is really the most serious environmental and development challenge of this century, and the Asia and Pacific region has a major role to play. So naturally, governors discussed various aspects of climate change mitigation and adaptation and they supported ADB's climate change initiatives, including the new Asia Solar Energy Initiative.

Also the Annual Meeting provided a good opportunity to examine how accelerating Asian regional integration could contribute to global growth. Regional integration and global integration, regional growth and global growth are complementary. So many governors expressed strong support for regional cooperation and integration taking place in the Asia and Pacific and also ADB's continued support to regional cooperation integration is very much appreciated by governors.

With respect to ADB itself, ADB's Strategy 2020 has provided clear guidelines for poverty reduction and the development in Asia and the Pacific, particularly three principal thrusts: inclusive growth, environmentally sustainable growth, and regional integration have shown how relevant they are during the crisis period. At the same time, the flexibility of Strategy 2020, along with increased ADF and OCR resources, have allowed ADB to respond quickly and effectively to our member countries severely hit by these crises, initially food crisis and then financial and economic crisis on a global scale.

As you know, ADB has made steady progress in improving its development effectiveness. During the meeting in Tashkent we had a very good discussion on the development effectiveness review, we are now annually publishing and the results framework we adopted. And we will continue to focus on various reform agendas and improvement in our bank's efficiency and effectiveness.

So in conclusion, this Annual Meeting has been one of the most successful annual meetings and I hope that the next Annual Meeting, to be held in Hanoi, Viet Nam, would continue our fruitful forward–looking discussions and further step up our efforts to help developing economies in the region and reduce poverty successfully. Here I should stop my initial statement and respond to your questions and comments. Thank you.

Ann Quon (Moderator): Thanks very much President Kuroda. As President Kuroda said he is now happy to take your questions. This is a press conference so we invite questions from our media colleagues.

Q1.  How does ADB decide where to hold its Annual Meeting? And why do you see climate change as a critical problem in the growth of the region?

A1.  For the first question my answer is quite simple. Annual Meetings are hosted by member countries, and a member country may offer to host an Annual Meeting in its city. Then the Board of Directors would decide and accept the offer. Actually the offer was made by the Uzbek government and the ADB's Board of Directors accepted and agreed that the Annual Meeting be held in Tashkent. Likewise the Vietnamese government offered to host ADB's Annual Meeting in Hanoi next year and the Board of Directors accepted and agreed and so the Annual Meeting will be held in Hanoi next year.

Climate change is really important and crucial for not only the environment but also to the sustainable economic development of all Asia and Pacific and the world at large. Climate change impact has many aspects. One is the impact on water supply, another is the impact on the sea level and also the impact from various natural disasters including floods and so on and so forth. The most direct impact in the world would be felt on agricultural production because even now more than 70% of global water supply is used for agricultural production. The remainder is used for drinking water, industrial use and other uses. But really the impact is most severely felt in the agricultural production. So water, agricultural production, these are among some of the most important aspects of climate change.

You mentioned our sea problem. As you know various countries as well as international institutions have been engaged in dialogues and instructions on how to improve the situation surrounding our seas. I sincerely hope that through coordinated and cooperative actions by respective countries and the international institutions and donor countries the problem surrounding our seas should be solved. It's a big challenge. But the environment, this is the key to sustainable development. If you disregard the negative impact on the environment you cannot sustain your economic development. So I think these are relevant challenges faced by not only the region but also by the world.

Q2.  How important is CAREC in promoting regional cooperation in Central Asia?

A2.  As you may know, ADB has been cooperating with Central Asia to promote regional connectivity. CAREC, as I mentioned in my opening remarks yesterday, is really promoting regional connectivity through cooperation in the field of transport, energy, and trade facilitation. You mentioned now one of the special regional hubs for transport and trade. We highly appreciate the effort made by many countries in the CAREC program, including Uzbekistan, to finally improve connectivity with several Asian governments, and for instance Afghanistan, and land–locked countries. Regional connectivity improvement would facilitate intraregional trade as well as trade with global markets. So we will continue to support, through CAREC and other ways, to improve transport facility in the region.

Q3.  Are there political conditions or requirements to become a member of ADB? Can Russia, for instance, become a member of ADB?

A3.  I would say the membership issue is decided by shareholders. At this moment, ADB has 67 countries that are members. Membership decisions require three-fourths majority. But it has been a well–established practice in ADB to invite new members with consensus decision. I think there are no political conditions or requirements. ADB is a non–political institution devoted to poverty reduction and economic development in Asia and the Pacific. For sure there are shareholders who would care to consider if Russia applies to join ADB from the basis of economic and financial objectives.

Q4.  What is your view on the financial regulations being implemented in the US?

A4.  These financial regulations have been discussed for some time particularly after the global financial crisis worsened because of the Lehman shock in September 2008 and as you know already three G20 summits were held and all of them discussed this important issue of financial sector regulation because, after all, this financial crisis emanated from the US and some European countries involved a lot, and I understand the US government has allocated substantial financial sector reform including the regulatory reforms and also various European countries in favor of financial sector regulatory reform and as such I think President Karimov's support for the US initiative would make significant financial regulatory reform quite appropriate and relevant and will continue to encourage and guide global economies to improve substantially regulations in their countries. If you look at the communiqués furnished by the three G20 summits you can find many items on financial regulations in developed and developing countries.

Q5.  What is your view on the (People's Republic of) China's idea of setting up a kind of regional investment fund?

A5.  I know that the Chinese government has been in favor of setting up such kind of investment fund for the region. Actually there are many governments in Asia, for instance ASEAN finance ministers have been for some time discussing the idea of establishing the ASEAN Investment Fund for infrastructure. All of those proposals are complementary to ADB's efforts to improve infrastructure investment. Actually, for instance, I was invited to the ASEAN Finance Ministers Meeting in Viet Nam when they discussed the ASEAN Investment Infrastructure Fund and we actually support such an idea. Of course it's up to the ASEAN Finance Ministers to decide what kind of infrastructure fund they would like to establish. And also probably ASEAN+3 Finance Ministers may also discuss this financial scheme. I think we capture these Asian countries' large foreign exchange reserves. Certainly that means there should be a better way to utilize those accumulated savings in for instance improving infrastructure in the Asia-Pacific. So we would support those ideas, we would cooperate with those Asian countries to realize such fund operation facilities to improve infrastructure in Asia.

Q6.  How were the arrangements for this Annual Meeting? How does ADB see the Uzbek economy performing amidst the global financial and economic crisis?

A6.  On the first point I must say that the arrangements made by the Uzbek government for the Annual Meeting as well as various regional meetings and seminars, were excellent and we benefited from this extremely. And as I said on the outset, discussions during this Annual Meeting in Tashkent were very constructive and cooperative and we certainly benefited from this.

On the second point, the Uzbek economy although affected of course by the global financial and economic crisis suffered much less than many other Asian countries. One of the reasons is of course the quick response made by the Uzbek government. Infrastructure investment and social protection measures are another, particularly infrastructure investment would benefit not only the Uzbek economy but also the regional economy at large. Another factor which benefited the Uzbek economy which made it possible to avoid a serious recession is of course the Uzbek economy is now very diversified. It has a strong agriculture and mineral sector and a very strong and increasingly important manufacturing sector and the service sector is also sound. This fairly balanced economic structure helped the GDP and the Uzbek economy avoid the worst kind of recession. Actually the Uzbek economy made 8.1% growth last year, a slight deceleration compared to the 2008 growth but this year we expect 8.5% growth and next year 9% growth. These growth prospects are very strong and very positive.

Q7.  What is the difference between IMF and institutions like ADB and the World Bank?

A7.  I think there's a big difference between IMF on one hand and multilateral development banks like World Bank, ADB, and Inter-American Development Bank, EBRD, and so on and so forth, because IMF is not a development bank. IMF is a multilateral institution that provides strong macroeconomic management and provides emergency assistance if there is such a need. On the other hand World Bank, ADB, and other MDBs are development banks that provide long-term development assistance in infrastructure, education, health care, and so on and so forth. So there is clear demarcation between IMF on the one hand and multilateral development banks on the other hand. Now among the five multilateral development banks, World Bank is unique in the sense that it operates globally while four other multilateral development banks are called regional development banks because ADB operates only in Asia and Pacific, Inter-American Development Bank only operates in Latin America, African Development Bank operates only in Africa, EBRD only operates in central and Eastern Europe and former Soviet Union. So regional banks operate only in their regions while World Bank operates globally. But there is not much difference between the World Bank and regional development banks in their response to crisis and response to the monetary needs of economies. For instance, ADB provided during this crisis fast–disbursing countercyclical support assistance, created other facilities for assistance, and also various program loans to address the needs and to provide support to the poor. All MDBs, including the World Bank and the European banks, also provided similar assistance. By the way that is created and solely invested by the G20. They actually asked multilateral development banks to respond to the crisis and provide the various developmental assistance to developing countries during the crisis and I must say that banks responded as requested by the G20 during one of the international forums. Other foras also requested MDBs to assist. We're very happy that we had the opportunity to coordinate and cooperate with other MDBs.

Q8.  Where do you see ADB over the next 12 months?

A8.  On the one hand last year was crisis year, so at the [ADB] Annual Meeting in Bali [Indonesia], governors discussed how to respond to the crisis, how to manage the global financial and economic crisis situation in their economies. This year, the crisis is behind us in most Asian economies but still some economies in the region are struggling. Governors discussed ADB strategies, medium– and long–term challenges and so on and so forth. By next year, hopefully the crisis is completely over and Asian economies, all economies will be on the right track to tackle world challenges of inclusive growth and regional integration. So in the next 12 months ADB would try its best to enhance measures to achieve the general thrusts of Strategy 2020. Of course the ownership of developing countries in these facilities is most important key but at the same time how much, how well ADB can assist in governments and economies that is the challenge ADB faces.

Q9.  How much financial assistance is ADB providing Uzbekistan and how will these assist the country?

A9.  I welcome the question but probably my staff would provide the detailed figures. I would just like to say that the project for loans we have signed would make our assistance in Uzbekistan one step higher because these loans for power, road, water and microfinance would essentially assist the Uzbek economy to become stronger, more inclusive and more environmentally sustainable, and also projects for power, roads will also facilitate the regional integration in the region.

Q10.  How do you gauge the support provided by regional governments to efforts towards regional integration and cooperation?

A10.  I must say that normally regional governments fully support regional cooperation and integration in Asia and the Pacific so I must say that all this financial support accepted by governments inside and outside of the region for regional cooperation and integration, and as you know, regional cooperation and integration has been sustained given such cooperation – financial cooperation and regional cooperation and these are good ideas, so I think and hope that the highest level of regional cooperation and integration would take place in Asia and the Pacific in the coming years.

Ann Quon (Moderator): On that note let me bring this press conference to a conclusion. I think in addition to that, we heard from shareholders a very strong endorsement of our Strategy 2020, and, for the reasons we've just been given, the mandate to support our DMCs [developing member countries], particularly during times of crises. They want us to continue our poverty focus and the strong message to deliver on results. Whether we succeed, as the President has noted, we'll find out next year when we meet again, this time in Viet Nam. So we hope to see you there and in the meantime we wish you all a very safe journey home. Thank you very much.