Speech by Masatsugu Asakawa, President, Asian Development Bank, at the ASEAN Finance Ministers’ Meeting (AFMM), 2 October 2020
It is an honor to join ASEAN Finance Ministers Meeting in this virtual setting. Today, l will briefly present ADB’s response to the coronavirus disease (COVID-19) pandemic, and then focus on five important policy issues for ASEAN members to build a more resilient and sustainable future.
Let me summarize what we have done to date to support ADB’s developing members across Asia and the Pacific. Since the announcement of a $20 billion support package on April 13, ADB has committed $11.9 billion through grant and loan to both the government and to private companies. The new financing instrument, called COVID 19 Pandemic Response Option (CPRO), played a key role in providing quick-disbursing budget support to help governments finance their countercyclical economic stimulus packages. Out of $8.2 billion that we committed to date for 19 countries, four ASEAN countries received in total $3.5 billion through CPRO. Working closely with development partners has been one of our key principles, which helped us mobilize $7.3 billion in co-financing.
As we eventually move past the pandemic and onto recovery, ASEAN economies should consider five key policy issues.
First, let me stress that despite the border closures and travel restrictions, I believe globalization will eventually come back, but will take a different shape.
To be ready for this, we need to strengthen regional cooperation and integration, by deepening and diversifying trade, supply chains, and investment.
Let us also build resilience, especially against health security risks. To ensure equitable access and delivery of vaccines and treatments, ADB supports ASEAN Vaccine Security and Self-Reliance, which was adopted by ASEAN leaders in Bangkok last November. We also support a stronger regional disease surveillance system to contain the threat of future pandemics, through establishing the ASEAN Center for Public Health Emergencies and Emerging Diseases.
A second policy issue is to address worsening income inequality and poverty by investing more in education, health, and social protection. We should focus more on socially excluded and underprivileged populations including women, children, migrants, and persons with disabilities.
Investing in quality infrastructure will be a key third priority to help the region rebuild smarter and greener, and get back on track to achieve the Sustainable Development Goals.
For quality infrastructure investment, the region can leverage innovative financing mechanisms to mobilize domestic and private resources. The ASEAN Infrastructure Fund, or AIF, is one of the region’s largest financing initiatives. With ASEAN members and ADB as shareholders, AIF’s equity and commitments, which are already close to $500 million, supported 9 projects, amounting to $3 billion in value. AIF has proven to be a game-changer in regional infrastructure finance, including financing from domestic capital markets.
The new $1.4 billion ASEAN Catalytic Green Finance Facility, under the AIF, will also help advance green quality infrastructure development and attract private investment. We may need to expand the capacity of this important facility in order to advance the recovery agenda.
Increasingly, we see the use of information communication technology and big data to expand access to critical health, education, and financial services. To harness their vast potential to achieve socioeconomic benefits, it is important as a fourth policy priority to address the digital divide and enhance digital connectivity. Let us build quality mobile broadband infrastructure and expand affordable internet access and coverage.
Investing in training for digital skills and literacy is also critical; along with creating a smart, robust, and transparent regulatory system to protect personal data, prevent illegal activities, and strengthen cybersecurity.
Once the region is on track for recovery, governments should, as a fifth policy area, carefully and incrementally strengthen domestic resource mobilization, or DRM. Appropriate tax policy measures will be critical at this stage.
International tax cooperation, or ITC, is crucial to strengthen domestic resource mobilization in a post-pandemic recovery. A coordinated regional and international response is also needed to develop digital tax policies, including closing tax loopholes in the digital economy.
As of now, six out of ten ASEAN members have joined the Inclusive Framework on BEPS to address aggressive tax planning by multinational businesses. I am also glad to know that eight out of ten ASEAN countries are members of the Global Forum, demonstrating a firm commitment to the automatic exchange of information, which is critical to combat tax evasion.
We have more work to do on this issue, which is why I announced at our annual meeting this year that ADB will establish a regional hub on DRM and ITC in Asia and the Pacific. The hub will serve as an inclusive platform where countries and development partners can share experiences, strengthen our collective knowledge, and coordinate on development support, including adopting international standards on anti-BEPS practices and tax transparency. To get the ball rolling, we will hold an international conference next year, and your participation and support will be greatly appreciated.
I’ll stop here and look forward to further discussion.