Opening Remarks at the Book Launch for Indonesia and the Asian Development Bank: Fifty Years of Partnership – Masatsugu Asakawa

Speech | 2 March 2020

Remarks by Masatsugu Asakawa, President, Asian Development Bank, at the book launch for Indonesia and the Asian Development Bank: Fifty Years of Partnership, Ministry of Finance, Jakarta, Indonesia, 2 March 2020

I. Introduction

Vice Minister of Finance Suahasil Nazara, distinguished guests, ladies and gentlemen:

It is an honour and a privilege to be here today during my official visit to Indonesia. Indonesia is ADB’s sixth-largest shareholder and one of our largest borrowers. We very much appreciate this valuable partnership.

While this is my first trip to Indonesia as ADB president, my very first visit here took place thirty years ago, when I was the chief advisor to ADB’s fifth President, Kimimasa Tarumizu. Since then, as an IMF staff member, and as an Japanese government official, I happened to be involved in several major events that affected the course of development of Indonesia: the 1997 Asian Financial Crisis; the Asian tsunami in 2004; and the global financial crisis in 2008.

Because of these personal experiences, I feel a deep emotional attachment to Indonesia’s long journey from a predominantly agricultural economy to one with growing industry and a vibrant society. Just yesterday, I visited South Sulawesi province and could see how it has become a bustling trade hub for the region. I believe that Indonesia is on a path to becoming one of the world’s leading economies. I also feel proud that ADB has been a strong partner for Indonesia throughout the eventful but successful development journey since 1966, when Indonesia became one of ADB’ founding members.

II. The ADB-Indonesia partnership

The book we are launching today, Indonesia and the Asian Development Bank: Fifty Years of Partnership, acknowledges this deep partnership.

This work is inspired by an earlier ADB history book, Banking on the Future of Asia and the Pacific, published three years ago. The earlier book was a record of the history of ADB’s work across the entire Asia Pacific region over the past half century.

The new book that we launch today is focused on the development story of Indonesia and ADB.

I should note that although this book emphasizes ADB’s work with Indonesia, the narrative goes beyond ADB’s activities. In fact, the international development cooperation program that began here in the late 1960s has been one of the largest and sustained international assistance efforts in post-war history. As this book illustrates, ADB worked with the Indonesian government and other development partners to support sustained social and economic progress in the country.

III. Development results over the fifty-year partnership

Looking back to when ADB was established in 1966, one of the urgent needs for development in this region was how to feed a large proportion of the population.

Responding to the priorities of the time, ADB’s earliest activities in Indonesia were in the agriculture sector, where it focused on strengthening food security. In fact, the very first technical assistance project that the bank approved for any individual member country was for a study on ways to improve the food supply in Indonesia in 1967.

The bank’s pipeline of work in Indonesia quickly expanded after this. In 1969, the first ADB project in Indonesia was approved for the Tajum irrigation project in Central Java.

ADB’s relationship with Indonesia has continued to evolve over time, from food security to industrial diversification and structural change, and more recently, social and economic recovery from the Asian financial crisis. But, one thing has remained a constant: the principle of responsiveness to its members’ needs.

For instance, ADB began to pay increasing attention to the need to respond to natural disasters. After the severe earthquake in Flores in December 1992, ADB approved a soft loan to help promote recovery. In 2004, when the Asian tsunami struck Aceh and North Sumatra and nearly 170,000 people died in Indonesia, ADB was able to respond quickly with a range of programs designed to assist rehabilitation and recovery.

With a structured development cooperation program and strong buy-in from both the Government of Indonesia and the international community, we have seen commendable results. To name a few: universal access to education has been achieved; there has been an expansion of the middle class; several tech-unicorns have arisen; and, with gains in the ease of doing business, Indonesia is increasingly becoming a destination of choice for investors.

These results are evidence of the remarkable development strides that Indonesia has made over the last fifty years, along with its program of economic cooperation with ADB and other development partners. ADB is proud to be associated with this strong development program.

IV. ADB’s evolving support to meet Indonesia’s new development needs

As Indonesia’s development needs and capacities have shifted, ADB’s partnership has evolved to provide more responsive and effective support. This is apparent in our innovations in lending modalities. For example, in 2015, we introduced a new results-based lending program, which was applied to the energy and irrigation sectors. Our results-based lending approach is designed to rely more on Indonesia’s country-based systems for implementation of project work as well as risk management.

ADB is also increasingly involved in the preparation of many knowledge products aimed at contributing to Indonesia’s development efforts. Since beginning our work in Indonesia in 1967, ADB has approved many technical assistance projects to support a very large number of policy-oriented studies in Indonesia.

One example of this knowledge work is the major report, Diagnosing the Indonesian Economy, issued in 2012. Another is the 2018 study of productivity and employment issues entitled Indonesia: Enhancing Productivity through Quality Jobs.

Most recently, ADB provided substantive inputs for supporting the preparation of the government’s recently launched medium-term development plan for 2020-2024. Our support covered a wide range of areas including economic transformation, food and water security, energy sector development, and development funding strategy.

We believe that the ambitious policy agenda as set out by President Joko Widodo at the beginning of his second term in October 2019 reflects sound development priorities. ADB always stands ready to provide tailored support to help Indonesia implement the aspirational policy agenda effectively.

Looking ahead, ADB will continue to expand its program of financial assistance and knowledge solutions in response to strong demand in Indonesia from both public and private sector clients. In line with the government’s medium-term priorities, ADB’s strategy will focus on developing human capital, accelerating investment, addressing climate risks, and promoting environmental sustainability. We will strengthen linkages between our knowledge and operations, so that we are best positioned to formulate smart solutions that meet Indonesia’s evolving development needs.

V. Conclusion

To conclude, let me acknowledge once again the excellent work that led to this important new ADB knowledge product. In particular, I am grateful to the author Dr. Peter McCawley, ADB’s resident mission staff, and the many contributors, including current and retired government officials and ADB staff, for preparing this important monograph. It provides an illuminating account of the very fruitful partnership between Indonesia and the Asian Development Bank over the past fifty years.

Vice Minister Nazara, ladies and gentlemen,

Let me reaffirm to you today that ADB stands ready to provide strong and effective support to Indonesia in the years and decades to come.

Thank you very much.