Speech by Masatsugu Asakawa, President, Asian Development Bank, at the Southeast Asia Development Symposium, 17 March 2021
Your Excellency Secretary Dominguez, Minister Rajah, Under-Secretary-General Alisjahbana, distinguished guests, ladies and gentlemen:
Good morning, and thank you for joining us for the Asian Development Bank’s second Southeast Asia Development Symposium. As countries slowly begin to emerge from the devastating health and economic impacts of the pandemic, we now stand at a critical juncture. The pandemic offers us a unique opportunity to rebuild for a more resilient, inclusive, and sustainable recovery.
For this reason, the overarching theme of today’s event, “Innovation through Collaboration: Planning for Inclusive Post-COVID-19 Recovery” is timely. We have a dynamic lineup of speakers and panelists who will share their insights on this important topic, and I appreciate their participation.
To provide context for this symposium, I would like to describe how ADB has responded to the coronavirus disease (COVID-19) crisis in Southeast Asia through a wide range of innovative and collaborative approaches, and share some key measures countries can adopt to prepare for a strong economic recovery.
I. Innovation and collaboration in ADB’s COVID-19 response in Southeast Asia
When COVID-19 first struck, ADB’s speedy and tailored response began in Southeast Asia by leveraging an existing mechanism for regional collaboration: the Greater Mekong Subregion (GMS) Initiative. By January last year, ADB had already begun helping GMS countries improve communicable disease control in border areas. We helped strengthen their disease surveillance and outbreak response systems by expanding the ongoing Greater Mekong Subregion Health Security project.
The lessons we learned from these early interventions provided valuable inputs as ADB tailored a comprehensive $20 billion assistance package in April 2020 to support our developing member countries in addressing the impacts of COVID-19 on health, livelihoods, and economic activity. To date, ADB’s approved support to Southeast Asia under this COVID-19 response package totals over $6.4 billion. Moreover, by collaborating with bilateral and multilateral development partners, as well as private financial institutions, ADB has helped mobilize an additional $5.3 billion in cofinancing.
We are now seeing encouraging signs that vaccine rollout may help turn the tide of the pandemic. To fully get the pandemic under control, however, we must make every effort to ensure access to safe and effective vaccines for all people, including the poor and vulnerable. This will require cooperation across countries and international organizations. Since safe and effective vaccines are a global public good, it is imperative that we mobilize and deploy resources through a multilateral approach.
In this spirit, ADB, through its new $9 billion vaccine initiative—the Asia Pacific Vaccine Access Facility, or APVAX—has been working closely with COVAX, WHO, the World Bank, and other multilateral institutions to deliver safe and effective vaccines, fairly and equitably. Just last week, ADB approved $400 million in financing to help the Philippines secure safe and effective vaccines against COVID-19. A similar project is also under design for the Republic of Indonesia.
II. Building for recovery through innovation and collaboration
Now let me move on to the theme of today’s symposium: planning for inclusive post-COVID-19 recovery. The pandemic is presenting all of us with unprecedented challenges, and we need to forge a new path forward together, one which taps new ideas and technologies, and leverages our existing platforms for innovation and partnership.
Let me describe three areas that are critical to a strong recovery. These priorities are reflected in a series of important policy briefs that ADB is releasing today.
The first area is green recovery. The COVID-19 pandemic presents an opportunity to rebuild our economy and society with more resilient and sustainable infrastructure. It has opened up new ways of doing business in many sectors.
I see five interrelated green growth opportunities that are particularly relevant for Southeast Asia:
- transforming agricultural practices to improve yields, while enhancing the health of surrounding natural ecosystems;
- recovering healthy and sustainable oceans through a number of measures, including sustainable wild fisheries management;
- building sustainable urban development and transport models, with greater investments in safe, affordable and low-carbon public transportation;
- establishing circular economy models that can convert by-products and waste-streams across various sectors into valuable end products; and
- moving toward clean energy, including the development of renewable energy projects, and enhanced energy efficiency across various sectors.
ADB estimates that these interventions could generate over 30 million jobs in Southeast Asia by 2030.
These green growth opportunities will require financing. One way ADB is collaborating with countries in the region to address these financing needs is through the ASEAN Catalytic Green Finance Facility, which is owned by the finance ministries of the 10 ASEAN member countries and ADB. Southeast Asian countries can use this facility to access finance and knowledge for sovereign green infrastructure projects on sustainable transport, clean energy, and resilient water systems.
The second area is making better use of big data. Southeast Asia’s digital transformation is well underway. Countries can capitalize on this opportunity by making better use of big data to transform key government sectors such as healthcare, social protection, and education, allowing for more effective service delivery. Governments and the private sector can also leverage big data for better supply chain management across Southeast Asia.
One area where innovation and collaboration using big data can play an important role is in supporting safe and effective vaccine programs. Big data solutions can help countries begin preparing for COVID-19 vaccine rollout in several important ways:
- First, by ensuring that supply and demand are well matched both within and across borders;
- Second, by allowing for appropriate amounts of vaccines to be stored within a precise temperature range;
- Third, by preserving vaccine quality along the distribution chain; and
- Fourth, by strengthening pharmacovigilance alerts through data sharing on unexpected side-effects in a timely manner, within and across countries. Machine learning can also produce analyses of populations with health vulnerabilities, which can be used to prioritize vaccine delivery.
Let us pause here for a moment, and ask ourselves: what is needed for governments to make adequate investments in these priorities?
In addition to collaboration, knowledge, and innovation, governments need reliable streams of revenue. This is a sobering reality.
Countries in Southeast Asia have already allocated over $420 billion for COVID-19 response measures. This unparalleled fiscal expenditure has been accompanied by a substantial reduction in the tax base. This is due in part to subdued economic growth. But there are also underlying public finance management issues that have been exacerbated by the pandemic. In fact, even before the pandemic, the average tax yield of most Southeast Asian countries was far below the 15% of GDP threshold required for sustainable development.
With long-term interest rates rising in the US, this may put further pressure on many ADB developing member countries, in terms of macroeconomic management and fiscal policy.
Against this backdrop, the third and final area that I want to highlight today is enhancing domestic resource mobilization, or DRM. As governments help the nascent recovery in the region to gather steam, they also need to begin preparing measures to strengthen domestic resource mobilization.
DRM not only helps secure sufficient funding; it also creates positive conditions to spark greener and more inclusive recovery. Introducing more progressive income tax and property tax systems can help address the worsening income gaps that have proliferated after the pandemic. A carbon tax can also be pursued to accelerate green investment. Moreover—returning to today’s theme of innovation and collaboration—countries in the region can work together to close tax loopholes that multilateral businesses can use to avoid tax burdens.
All of the measures I’ve described require knowledge sharing and collaboration. That is why ADB recently established a regional hub for domestic resource mobilization and international tax cooperation. The hub will promote greater collaboration among the region’s fiscal authorities as they pursue needed reforms. The hub will also serve as a platform for countries and development partners to exchange ideas, knowledge, and best practices; and to better coordinate their actions. ADB plans to officially launch this hub at a high-level regional tax conference this coming May.
To conclude, let me note that Southeast Asia’s recovery from the COVID-19 pandemic can best be achieved by all of us—governments from across the region, the private sector, development partners, and other stakeholders—working together and closely collaborating to address the immense challenges before us.
I hope today’s discussions will offer new and interesting insights as we continue our work together toward a prosperous, inclusive, resilient, and sustainable future for Southeast Asia.
Thank you again for joining us, and I wish all of you good health.