Opening Address by ADB President Takehiko Nakao at the Opening Session of the Board of Governors at the 52nd ADB Annual Meeting on 3 May 2019 in Fiji
ADB Governors, distinguished guests, ladies and gentlemen:
It is my privilege to join His Excellency Josaia Voreqe Bainimarama, the Prime Minister of the Republic of Fiji, and the Honorable Minister Aiyaz Sayed-Khaiyum, Chair of the Board of Governors, in welcoming all of you to the 52nd Annual Meeting of the Asian Development Bank.
I would like to thank the Government of Fiji for its warm hospitality and excellent arrangements. ADB has been supporting Fiji’s development since Fiji joined ADB in 1970. We have worked closely with Fiji through investments in transport, water supply and sanitation, disaster recovery, and public sector management. Today, Fiji is growing steadily with a strong service sector and robust inward foreign direct investment.
This is the first time ADB is holding its annual meeting in a Pacific developing member country. I am pleased that through this meeting we can showcase the development gains taking place across the Pacific. In the Pacific region, there are a lot of opportunities such as internet and digital technologies which overcome remoteness. The region also faces challenges such as extreme weather events caused by climate change.
Pacific island countries have always been an important focus for ADB. Since Samoa joined ADB as a founding member in 1966, the number of Pacific island member countries has increased to 15. The newest, and 68th, member is Niue.
Welcome to ADB.
ADB’s operations in the Pacific have increased significantly in recent years. Our ongoing projects in the region amount to $3 billion, six times as much as in 2005. To support this expanding portfolio, ADB is increasing our physical presence in the Pacific. We are establishing country offices in 11 Pacific developing member countries, in addition to our existing offices in Fiji, Papua New Guinea, and Timor-Leste.
II. Regional economic outlook
I would now like to turn to the economic outlook for Asia and the Pacific.
Economic growth in the region remains solid, while there is much discussion about a slowdown and uncertainties in the global economy. Domestic consumption and investment have provided a strong growth foundation. In some countries, growth is even accelerating. Countries need to continue to pursue prudent macroeconomic policies, implement structural reforms, and invest in human capital and infrastructure.
ADB forecasts that the region will expand by 5.7% this year. Excluding the four newly industrialized economies (Hong Kong, China; Republic of Korea; Singapore; and Taipei,China), Asia and the Pacific is expected to grow 6.2% this year. If we can grow 6% annually, the economy will double in 12 years.
The People’s Republic of China is projected to grow at 6.3% for the year. India’s growth will remain solid at 7.2%. Southeast Asia will sustain growth at close to 5% this year and next. In Central Asia, growth will be 4.2% this year. And, while the Pacific was negatively impacted by an earthquake in Papua New Guinea last year, growth is projected to rebound to 3.5% this year.
Trade tensions remain a concern. If tensions escalate, they could seriously undermine consumer and investor confidence and weaken growth in the region. Maintaining open trade and investment regimes is key to vibrant and sustainable growth. In this respect, the ongoing efforts by Asian governments to promote new multilateral trade agreements within the region and beyond are encouraging.
III. The year in review: Achievements and innovation
Let me now report on our achievements in the past year.
ADB's new lending and grant operations in 2018 grew to a record $21.6 billion, an increase of nearly 10% from $19.7 billion in the previous year. Compared to $13.9 billion in 2013 when I became ADB President, this is an increase of 55%. Such an expansion became possible thanks to the much larger equity from the successful merger of the ordinary capital resources balance sheet and Asian Development Fund (ADF) concessional lending operations in 2017.
Going forward, I am of the view that ADB should intensify its focus on quality and innovation in our operations, while maintaining moderate volume growth.
ADB is strengthening its knowledge work. In 2018, we published a number of knowledge products and hosted important knowledge-exchange forums on clean energy, sustainable transport, water, climate actions, and digital transformation. We are also continuing efforts to incorporate innovative ideas and advanced technologies into our projects and programs.
IV. Direction of ADB operations
Ladies and gentlemen:
Last July, ADB adopted Strategy 2030. We are now taking steps to implement the strategy. We are preparing seven operational plans as well as action plans for private sector operations and knowledge management. We are also developing a new corporate results framework to measure progress in implementation.
Today, I would like to highlight six areas which will be key to the success of Strategy 2030.
First, ADB’s priority will continue to be addressing remaining poverty and reducing inequalities. We will strengthen our support to the poorest and most vulnerable countries in the region including those in fragile and conflict-affected situations and many small island developing states.
We are increasing our operations in health and education. We are supporting this year’s G20 initiative of universal health coverage. In the Pacific region, ADB’s support for financial inclusion is helping to provide microfinance services to people in remote areas.
Second is accelerating progress in gender equality. By 2030, we have committed to ensure that at least 75% of our operations by number will actively promote gender equality. We will develop a stronger pipeline of projects integrating gender equality designs into a wide range of operations, including transport, energy, and urban infrastructure.
ADB is also supporting a transformative gender agenda such as promoting women’s land title ownership, which is a basis for women’s economic empowerment. In the Pacific, we are supporting the training and recruitment of women for quality jobs.
Third is climate change. For ADB, 2018 was another strong year for climate investments, reaching almost $3.6 billion in approvals for climate change adaptation and mitigation. By 2030, at least 75% of ADB’s operations will support mitigation and adaptation efforts.
For countries that are most vulnerable to climate change, including in the Pacific, we will provide a wide range of assistance. For example, ADB will make Nauru’s main harbor more resilient to rising sea levels. We have scaled up our disaster contingent financing in the Pacific. This allows countries to access financial resources immediately in the wake of a disaster, based on predetermined criteria.
Fourth, ADB will continue to foster regional cooperation and integration. Building on ADB-led subregional cooperation platforms in the Greater Mekong Subregion, Central Asia, South Asia, Southeast Asia, and the Pacific, we will further enhance regional connectivity through transport, energy, and trade facilitation; (2) promote regional public goods such as tackling communicable diseases; (3) help strengthen cooperation in financial sector and macroprudential policies; and (4) encourage knowledge sharing including in such areas as education and agriculture.
Fifth, on private sector operations. New lending, equity investments, and guarantees to private companies were $3.1 billion in 2018, a 37% increase from the previous year. ADB will continue to expand our private sector operations. It will reach one-third of total operations in number by 2024. We will also target a substantial increase in commercial cofinancing.
ADB’s private sector operations will widen geographic coverage by entering into new markets. We will also broaden our business reach to support social sectors, namely, education and health, as well as agribusiness companies. For example, in countries such as Papua New Guinea and Timor-Leste, ADB is providing loans to agribusiness companies to improve the agricultural value chain.
We will make greater use of risk management products to help projects become bankable. ADB recently approved a $100 million Pacific renewable energy program, which includes credit enhancement for private sector investments in renewable energy in the Pacific.
We are bringing our private sector operations closer to clients by outposting more staff to resident missions. We will open an office in Singapore by the end of this year to facilitate engagement with private sponsors and financiers.
Sixth, ADB will continue to use concessional resources effectively to support poverty reduction, gender equality, climate actions, and disaster prevention and responses. We will develop a detailed proposal for the next ADF replenishment—ADF 13—for grant support covering the period 2021–2024. We will also continue to seek strong donor support for our trust funds. In addition, we are mobilizing concessional resources from bilateral and multilateral partners including the Green Climate Fund and Global Environment Facility.
V. Ocean health and sustainable tourism
I would now like to turn to two topics of this annual meeting—ocean health and sustainable tourism, which are interlinked.
Healthy oceans are essential to our planet and for the millions of people in Asia and the Pacific, especially those who depend on oceans for their food and livelihoods. But our oceans are in danger. Increasing water temperatures, untreated wastewater and plastic pollution, and unsustainable fishing practices are all damaging the oceans. If we do not act now, by 2050, 90% of the region’s coral reefs will be dead, and there will be no commercially exploitable wild fish stocks left.
Oceans are a public good and their protection requires collective action. ADB is already playing a catalytic role in this area through support for large regional programs such as the Coral Triangle Initiative. Across the region, ADB helps to reduce ocean pollution through investments in wastewater treatment and solid waste management systems.
At this annual meeting, we have launched an Action Plan for Healthy Oceans and Sustainable Blue Economies. We will increase ADB investment and technical assistance to $5 billion in this area by 2024. Through this plan, we will help countries reduce, reuse, and recycle plastic waste, and address other forms of marine pollution. We will support sustainable fisheries and measures to protect and restore key marine and river ecosystems.
Now I would like to talk about sustainable tourism. In the past, tourism was a luxury, accessible to a limited number of privileged people. Today, so many people globally and in this region are enjoying tourism. The number of tourists has dramatically increased, thanks to a growing middle class, more leisure time, budget airlines, the influence of social media, better quality tourist infrastructure, and policies to promote the tourism industry.
In 2018, about 350 million international tourists arrived in Asia and the Pacific countries. This number has more than doubled since 2005. There is an increasing number of Asian tourists. For instance, foreign visitors to Japan increased from 10 million just five years ago to 31 million last year, and 27 million of them came from Asia.
Income from tourism is an important source of gross domestic product (GDP) for many countries. In Fiji, tourism was about 14% of GDP in 2017. If we include indirect contributions such as hotel construction, the share was about 40% of GDP.
Tourism is important for job creation due to the labor-intensive nature of its services. As robotics and artificial intelligence become more common, there will be a natural desire for more human interactions and seeing real things.
We can make tourism more human and inclusive by investing in the right skill sets of people. We must also pursue sustainable tourism by protecting nature, the environment, cultural heritage, and local communities. Otherwise, cities, beaches, and forests lose their attraction. Appropriate policies and regulations are essential.
ADB is supporting sustainable tourism through infrastructure investments, policy reforms, and institutional development. ADB will promote regional cooperation for tourism and help Asian countries take advantage of their beautiful landscapes, rich cultures and histories, and warm hospitality.
Ladies and gentlemen:
There has been much discussion lately about the value of multilateralism. I am a firm believer in the multilateral system, which includes multilateral development banks such as ADB. National interests and multilateralism go hand in hand because we need international cooperation and collective action for the interests of people in nation states and the world.
Because multilateral development banks leverage taxpayers’ money by tapping capital markets, they can efficiently and effectively support poverty reduction, invest in infrastructure, address climate change, and provide other global and regional public goods. But we must continue to reform and reinvent ourselves to achieve our missions and ensure the support of member countries and their taxpayers.
Today, we are together here in Fiji, surrounded by the beautiful blue ocean. There is a phrase in the Fijian language—dua ga na ua—which means “as one wave,” and it describes the way people move together. This meeting is our opportunity to work together as one wave for the future of Asia and the Pacific.
Thank you very much.