Moderator:  Good morning and thank you for coming today to what I think will be a very interesting hour with the new president of the Asian Development Bank, Mr. Haruhiko Kuroda. I also have the great pleasure of introducing Ambassador Paul Speltz, who is the U.S. executive director to the Asian Development Bank in Manila.

President Bush nominated Ambassador Speltz to that role in 2002. In April of last year, Treasury Secretary John Snow asked Ambassador Speltz to take on the added responsibility of being his personal financial and economic emissary to China, and for 13 months, Mr. Speltz has led the Treasury's program to strengthen economic and financial engagement with China and to help that country prepare for a market-based, flexible exchange system.

Ambassador Speltz, who hails from Texas, for over 25 years has been a prominent member and mentor to the international business community with a focus on Asian business development. He has lived in Asia for many years and is now based in Manila.

Ambassador Speltz will now introduce the new president of the ADB.

Ambassador Paul Speltz:  Good morning. There is a comma between 25 years and Ambassador Speltz. Actually, I haven't been in Texas for 25 years. I've been working out in Asia.

It's a great honor to be here with President Kuroda this morning and also here in Washington, D.C. Also it's a great honor to see my friends and colleagues who were with the bank, both at the USED - Chantale Wong and Cinnamon Dornsife - and some of the other folks who are here - Karti Sandilya, formerly with ADB. I think that's a tremendous measure of respect for staying together as a team.

But I think most of all what I'd like to talk about is our new president. Mr. Kuroda is a very special person, a very special president, and I say that because he is bringing a perhaps different insight into the bank as president. His background - although I see you can all read it in the material that was presented, but what I'd like to do is highlight the fact that until he came to Manila, he was special adviser to (Japanese) Prime Minister, Koizumi. Actually, he and I worked together, cooperated together in discussions and philosophy on matters in China.

At the same time, he was professor at the Graduate School of Economics in the university in Tokyo - and I can't pronounce that name, I'm sorry - (laughter) - forgive me. And before that also was vice minister of finance for international affairs with a significant background in many of the work - much of the work he was doing throughout the world and also in conjunction with the United States.

I'd like to stress for those of you who are here and meeting Mr. Kuroda that the purpose of his visit here is that he is able to come to Washington as a signal of the importance and relevance of the Asian Development Bank. The Asian Development Bank is a long way from here, and a lot of people are either reluctant to or don't have the time - which is understandable - to go to Manila. And yet it's a very, very important institution. And one of the things that has also been done while he's been here, which I'm sure he'll get into is in the last 36 hours since he touched base with his colleagues here, he has already been in private meetings with Bob Zoellick, with Secretary Snow, with Andrew Natsios at USAID, with Wolfowitz, and very important, for the first time ever, up on the Hill yesterday having a very lengthy meeting with Senator Sarbanes. As a matter of fact, the two of them were talking about Oxford, and I was looking at my watch trying to wonder when this meeting was ever going to get over. This is the first time that's ever happened that a president of the bank has gone up on the Hill, and I think that's an excellent measure of the importance and relevance of the Asian Development Bank.

So without further note, I'd like to turn this over to my colleague, President Kuroda.

Haruhiko Kuroda:  Thank you very much, Ambassador Speltz, for your very kind words.

I'm very pleased to be here. This is my first visit to Washington as president of the Asian Development Bank. I assumed the presidency just five months ago, but I know Washington very well because Washington was my home 30 years ago. But many things have changed since then. The world has also changed tremendously. For instance, who would have thought 30 years ago that the president of the United States would be hosting the prime minister of Vietnam at the White House this week?

During that time, Asia has moved from being a turbulent region to one of peace and prosperity with annual growth well over five percent, and intraregional trade between countries in Asia has surpassed the volume of trade between the United States and Europe.

Many Asian countries are creating closer trading partnerships, breaking down barriers and putting in place progressive policies. This will allow them to buy, sell, and trade goods and services much more freely. This is the definition of economic integration: a region that is working together towards a common objective of equal prosperity for all.

Last year, the positive results of economic integration continued. Asia achieved its best growth performance since the 1997 financial crisis. Real GDP expanded over 7 percent last year. This is quite an impressive achievement for a region that only a few years ago was struggling to be competitive.

But before I can portray an accurate picture of Asia, we must also reveal the often-hidden story; the one that shows two-thirds of the world's poorest people - 700 million people - are living on the streets and in villages on less than a dollar a day. We support the Millennium Development cause of halving poverty by 2015 because Asia's poverty challenge is still formidable and requires a global commitment.

A large part of ADB's forecast is on sustainable growth to improve the lives of poor people in Asia. For instance, we have helped to build roads that connect rural villages to urban markets where they can trade goods and access health care and other services. We are providing access to clean drinking water, sanitation and electricity. We are helping to preserve ecosystems and reduce harmful carbon emissions.

We are also empowering women elected to public office under a project led by a local NGO in South Asia. We are helping to train and increase women's capacity to participate in local government.

The world has changed. It has become more interdependent. In April, 24 finance ministers met at the IMF meeting in Washington, and all were agreed that joint action is necessary to resolve the current global imbalance. The ministers concurred that the U.S. must reduce its fiscal deficit, and Europe and Japan should continue to accelerate structural reforms.

The United States' role in this global economy is key. As the global engine of growth, it has economic, strategic and humanitarian interests in Asia. The U.S. supports regional stability, cooperation, and provides many economic opportunities for Asia and the United States in trade, manufacturing, and foreign direct investment through its membership at ADB.

I believe that this great movement toward integration brings tremendous benefits to both the United States and Asia. First, it brings economic growth, which creates stability. Countries that are economically viable are less likely to turn to terrorism or war. Most important, integration forces countries to adopt an open, transparent and fair system that benefits everyone.

Let me give you an example. The Greater Mekong Subregion is a perfect model of countries working together. Within that framework, the East-West economic corridor, made up of Vietnam, Laos and Thailand, promotes agro-industry and light manufacturing and builds trade and tourism. Countries from the South China Sea to the Andaman Sea are now linked under this program.

In Central Asia, ADB helped establish a cutting-edge program that gives these countries better access to outside markets in key areas such as transport, energy and trade. This program is known as CAREC - or the Central Asia Regional Economic Corporation program. Similar initiatives are taking place in other parts of Asia.

The private sector has also been very important. Through loans, equities, guarantees, we design investment funds for small- and medium-sized enterprises and provide advisory services to entrepreneurs and corporations.

ADB also protects against political and economic risk through guarantees. In the last two years, our private sector department increased its equity and investment by 49 percent to almost one billion dollars. This provides a good illustration of the tremendous opportunities available in Asia.

We also provide emergency assistance in times of need, such as the recent tsunami. The region couldn't have pulled through without global support, including U.S. support. ADB was quick to respond. We have put together over $600 million in grants for a tsunami trust fund for Indonesia, India, Sri Lanka and the Maldives. We are confident that Asia will rise to the challenge.

Before taking your questions, I would like to take this opportunity to thank the government and the people of the United States for their support of the Asian Development Bank. The United States is a valuable partner in the fight against poverty in Asia, and one of ADB's two largest shareholders.

I look forward to continuing this partnership in coming years. Thank you.

Moderator:  We'll now take your questions. If you could please give us your name and your affiliation, we'd appreciate it. Thank you.

Parasuram, Press Trust of India:  There is a reference in one of the publications to the possibility of setting up an Asian reserve bank - Asian reserve bank. I was wondering if anybody would elaborate on that. What are the possibilities of setting up such a bank, whether any progress has been made?

Mr. Kuroda:  Asian reserve bank? As far as I know, during the currency crisis in 1997, a proposal to establish a Asian monetary fund rather than a reserve bank was proposed by Japan and ASEAN countries. That proposal itself was shelved, so to speak, after some discussions among related parties.

However, in the last several years, the so-called ASEAN Plus Three countries - ten ASEAN countries plus China, Japan and Korea - came up with the so-called Chiang Mai initiative under which a network of bilateral swap arrangements was established. Already the swap arrangement has put out nearly $40 billion, and recently ASEAN Plus Three finance ministers decided to double the amount.

So although the so-called Asian monetary fund proposal was not realized, instead of that a financial safety net is now created, established in the region to avoid the recurrence of currency crises, like those experienced in 1997-8. So there was significant progress to secure financial and macroeconomic stability in the region.

Q:  I'm from Voice of America. I have two brief questions. The first one is about the RMB, the Chinese currency, and I read in the news that you just stated a couple of days ago, talking about that if the Chinese government revalued the Chinese currency that will not hurt the Asian economy. So do you think that for the Chinese financial system, and it is for China to revalue the currency right now?

The second one is about the - I think that you have mentioned some kind of like unified currency in Asia, something like Europe. And I also talked to another scholar and he said that probably it's not, you know, a practical thing to consider right now, so what do you think about that? Thank you.

Mr. Kuroda:  Two very interesting questions you raise. On the first question, I must say that Chinese authorities have made significant progress in the financial sector. They accelerated financial sector reform in the last couple of years, so I think the Chinese financial sector has become strong - stronger than it used to be.

Of course there are still some changes, for instance, to reduce non-performing loans further and to improve the governance of commercial banks. But I think the financial sector has become much stronger in China.

On the second question, yes, this is - theoretically as well as from a policy point of view, a quite interesting issue. I agree that at this stage a common currency or single currency in Asia or even in East Asia is unrealistic.

If you look at the European situation, the euro was created in 1999, after almost three decades after they started to discuss, consider, and they intended to create a new single currency. So even in Europe, it took so many years to finally create a common currency.

Asia is quite diverse, changing quite rapidly, and at this stage, there is no single market in Asia. In order to have a single currency, you have to have a single market beforehand; otherwise, a single currency doesn't work. So at this stage a single currency is unrealistic, but I think Asian countries are aiming at a single market, free of barriers and with prospects of rapid growth and improvement. So let's see that - whether free trade and free movement of goods and services develops in Asia or not. Single currency is only after a single market is created.

Richard Finney, Radio Free Asia: Does the ADB have any projects underway now or contemplated for the Tibetan regions of China?

Mr. Kuroda:  As you know, China is a vast country. Its population is 1.3 billion. Although the Chinese economy is growing quite fast, its per capita income is still in the range of 1200 to 1300 U.S. dollars. So the country as a whole is still poor. And income disparity between provinces and regions is quite big. So certainly ADB is intending to diversify our assistance geographically as well as - (unintelligible) - but at this stage, we have no concrete project/plans in the region you mentioned.

(Inaudible) - from Agence France-Presse:  Against the backdrop of the constitutional crisis in Europe, do you see some sense of caution within Asia in relation to breaking down barriers and bringing about a single market, which you see as a pace setter for a single currency, and how do you see - I mean, when do you think such a regional integration could unify the forces or -- (unintelligible) - could unify to bring about a single market and a single currency? Thank you.

Mr. Kuroda:  At this juncture, people tend to think that European integration is in great risk or danger. I don't think so. Certainly the new constitution for the European Union was rejected by the French and Dutch people at this stage. But you have to recall that this was a very ambitious - (unintelligible) - to further integrate, further strengthen the European Union. That certainly was turned down at this stage, but that does not mean that the European integration back tracked. That is not the case. Current status quo remains. That is one point.

The second point is European integration proceeded substantially and significantly in the last 50 to 60 years. Compared with the European situation, Asian integration is still very early and at a low stage. So I - from these two perspectives, I don't think the Asian countries, the Asian people should not aim for further economic integration in the region. I don't think so. It's appropriate and necessary for Asian countries, Asian economies to strengthen the economic cooperation, integration in coming years to accelerate growth, and second, to reduce income disparity between countries and within countries.

If you look at those economies which are, unfortunately at this stage, left behind in the rapid growth of Asia, those economies are not well connected with growth centers in Asia and not well connected with the global economy. So regional economic integration and the regional economic cooperation effort would be required to reduce poverty, reduce income disparity in the region. And I think economic integration is key to sustaining of economic development in Asia.

Cinnamon Dornsife, former ADB USED:  Recently, the Asian Development Fund was successfully replenished and there has been some authorizing legislation talking about encouraged reforms in transparency and accountability at the Asian Development Bank in particular. I wonder if you would brief us on your own actions and ideas for a commitment to increasing the transparency and accountability of the institution. Thank you.

Mr. Kuroda:  As you may know, ADB recently adopted the new public communications policy under which ADB will be at the forefront of transparency and accountability. And I'm sure that the new public communications policy will provide huge access to information, policies, strategies pursued by ADB. And that is, on one hand, necessary for the people who would like to know what exactly the ADB is doing, trying to pursue and so on, but also it is necessary for ADB to further improve our operations activities because, if left out of independent, outside criticisms, any institution tends to be complacent, self-righteous and so on. That is the thing we must avoid.

So, in short, transparency and accountability is key for any MDB, including the ADB, and I am very much proud of the new public communications policy, which would further improve transparency and accountability.

Reporter from Nikkei:  I'd like to ask the current focus of the Asian economy. According to your forecast, the growth rate will be 6-point - or 5 percent this year. That situation has changed because oil prices are going higher than before. Do you think you have to revise the forecast downward?

Mr. Kuroda:  Again, this is very interesting as well. It's a crucial question to be posed by anyone interested in Asia's economy.

In April, we made forecasts for developing Asia. Last year, by the way, developing Asia, as I said during my initial statement, recorded actually 7.3 percent growth, which is the highest after the currency crisis in 1997, and also very importantly, almost all of developing countries in Asia achieved five percent or more growth last year.

This year we anticipate some slowdown reflecting high oil prices, global slowdown of economic activities, so we predicted 6.5 percent growth. Now any forecast must be based on some assumptions. One of the assumptions was that oil prices will gradually decline toward $40 per barrel by the end of next year or early next year. It was based on the market information related to the market price of oil and so on when the prediction was made. Also we predicted some slowdown of economic activity in the United States, in Japan and in Europe.

Based on these assumptions, we predicted 6.5 percent growth this year. Now, oil prices went up toward $60 per barrel. That will certainly depress gross forecasts, gross prospect of developing Asia.

But at the same time, the Chinese economy continued to grow quite rapidly. Originally we expected Chinese growth will decelerate from 9.5 percent to 8.5 percent, but at this stage there is no sign of such a significant slowdown.

The Japanese economy showed remarkable recovery in the past quarter - about - nearly 5 percent growth in annualized term. The U.S. economy continues to grow in a very robust way. So oil prices are higher than we assumed, but the major economies are showing stronger-than-anticipated performance. All in all, at this stage I don't think we need to revise downward the 6.5 percent growth for Asian countries this year, but by September, when we usually revise forecasts, we may have to amend - revise upward or downward. That's up to the situation in coming months. But at this stage, Asian economies are on track.

Karti Sandilya, former head of ADB's North American Representative Office:  Mr. Kuroda, the ADB has been in the forefront of the development - international development effort in Afghanistan, but we read in the papers that conditions are still quite unsettled in that country. Could you let us know a little bit about how the ADB program is proceeding in that country?

Mr. Kuroda:  In Afghanistan, we committed a significant amount of financial assistance to rehabilitate infrastructure, and almost all of our commitments have been implemented. We are very proud of this achievement. Of course Afghanistan is still difficult and in cooperation with other development partners - bilateral donors as well as multilateral donors like the World Bank - we have been collaborating, cooperating, and this collaboration/cooperation is extremely important.

Although Afghanistan's situation may continue to be difficult, we intend to be engaged in Afghanistan in coming years because Afghanistan is so important. It is key for regional or sub-regional economic development in Central Asia Republics and South Asia. Central Asian republics are land-locked; they have no seaports. South Asia has many seaports. If you can link Central Asia and South Asia through Afghanistan, that will improve economic performance, and living standards, not only in Central Asia, but also Afghanistan and South Asia. So Afghanistan is a key area for ADB efforts.

There are difficulties, certainly, in Afghanistan, but if you look at it carefully - although we have no major wars in the region, we have some conflict - internal or external - whether in India and Pakistan, in Sri Lanka, in Nepal, in the Philippines, Indonesia. There are some conflicts - internal conflicts. There are some difficulties, but I think by improving people's living standards, I think we can reduce the risk of insurgence, the risk of internal conflict.

Chantale Wong, U.S. Treasury Department:  I'm speaking personally -- and not officially from the Treasury Department and former USED's office.

There's been a lot of talk in Washington, at least in the press, about the impact of the garment quota expiration on U.S. textiles, but not very much information on the impact of the quota expiration on the rest of the countries - besides China. And what do you know about that as well as what is ADB doing to help the rest of the countries?

Mr. Kuroda:  Two things. First, there is much fear about the negative impact on some poor countries which specialize in textiles after the multi-fiber agreement expires. So there is much fear of a negative impact that at this stage has not materialized.

Look at Bangladesh. Bangladesh developed its textile industry in the last couple of decades, and for Bangladesh, the textile industry is so important. Everyone talked, toward the end of last year, what kind of impact - negative impact there would be to the Bangladesh economy. But the Bangladesh textile industry has been adjusting to this event in a well-prepared manner. And so far the industry is doing - overcoming difficulties. Sri Lanka apparently has upgraded, improved the quality of textile products, so as to deal with this event remarkably well.

But of course in some countries, in some regions, their textile industry might be affected, so we have to be careful. But at this stage, the textile industries have been managing well the impact of the expiration of multi-fiber agreement.

So - second part of your question?

Chantale Wong:  Oh, I was saying that we had heard a lot about China's impact on the U.S. textile industry.

Mr. Kuroda:  Yes. This is a question that is a bit difficult to answer because the U.S. economy is one of the most resilient, robust economies in the world. Its industrial structure has changed tremendously the last couple of decades, and the U.S. economy is booming, going very fast with a low inflation rate, low interest rate, and low unemployment rate.

Compared with the Japanese economy, compared with the European economies, the U.S. economy's performance is outstanding, outperforming. Even in such a dynamic economy, there may be some sectors which may require some temporary protection, but basically I am quite sure that the U.S. economy, with its resilience, robustness, strength, can overcome any competition coming from other developed countries or from other countries, including developing countries.

Mr. Speltz:  I'd just like to add to Karti's question a little bit on Afghanistan because, as the president knows - President Kuroda knows, I've spent a fair amount of time there. And Karti, I think, first of all, your question is very good, and I just want to tell you in the last three years it has been remarkable in terms of the progress - the significant progress that's being made not only in Afghanistan, but also - which is why you are not reading it on the front page - but also with regard to the work that's being done by the Asian Development Bank and in conjunction with the other institutions that are there.

Yes, there are still difficulties in Afghanistan and there will be probably for a long time to come. But a couple of points with regard to that, you know - in regard to poppy production, these are things that all of us are looking at, all of us are concerned about, and are being addressed on a long-term basis that tie to alternate crops for these farmers. And also as far as the terrorism or military action for the - those people who wish to disrupt President Karzai and what he's doing, that's likely to continue for awhile, too.

But with ADB, some of the work that we're doing - or a lot of the work we're doing - is not necessarily in those areas, coincidentally, that are being involved right now with some of the military actions. And the bank has now expanded quite a bit from that road, which everybody talked about, to working on upgrading of power systems in the north, upgrading of the irrigation systems that were destroyed during so many years, working on upgrading of small regional airports for the transportation, and working very closely, as President Kuroda has said, with their neighbors in Pakistan and other areas on various programs. So the quiet does not mean that there is not good work going on. There is good work going on, and it will continue.

Moderator:  Any other questions? Okay. Well, thank you very much, and thank you all for coming. This was great.

Mr. Speltz:  Thank you very much for a great event.

Mr. Kuroda:  Thank you.