Speech by Masatsugu Asakawa, President , Asian Development Bank, at the 9th ASEAN Finance Ministers and Central Bank Governors’ Meeting (AFMGM), 31 March 2023, Bali, Indonesia
Your Excellencies, distinguished guests: Good morning to all.
I am honored to join this 9th ASEAN Finance Ministers and Central Bank Governors’ Meeting.
Let me start by commending Indonesia for its G20 leadership—particularly at a time when the world is recovering from the pandemic, tackling climate change, and working hard to keep its momentum.
Today’s theme—ASEAN Matters: Epicentrum of Growth—couldn’t be timelier as the region grew by 5.6% last year, one of the strongest worldwide.
Still, we cannot be complacent. Growth is forecast to slow. And the region faces two critical development challenges, managing: (i) climate change risks; and (ii) the human impact of the pandemic.
I would like to share my thoughts on how we can work together to scale up sustainable finance to build a more resilient and sustainable future for ASEAN.
Sustainable finance can deliver sustainable development
Presently, the scale of investment needed for rebuilding is beyond what the public sector can provide. Fortunately, sustainable finance from private sources—in particular, green and social finance—is growing rapidly and brings many benefits. It meets the growing "sustainability appetite” of our stakeholders, mitigates sustainability risks, and broadens the financing base for projects. And it will bring positive environmental and social outcomes. According to a 2021 ADB study, about $30 trillion—or a third of all investments managed globally—are guided by “ESG” objectives, with Asia accounting for 20% of global green bond issuances.
Green finance can help manage climate risks
Green finance can be a critical tool in managing climate risks, which if left unchecked will cause significant harm to ASEAN’s economies. Our research shows that the region’s economies could lose up to 30% of annual GDP by 2100 due to climate change.
As we know, ASEAN plans to reduce its energy intensity in 2025 by 32%. And nine of its ten members are also committed to “net zero” emissions by 2050 to 2065. We must work together to expand green finance to support climate mitigation and adaptation.
This is a priority for ADB. And it is driving our efforts to help our developing member countries adapt to climate change and transition to net zero.
Some of our work in this area includes:
- Raising our climate finance target to mobilize $100 billion between 2019 and 2030 from our own resources. Out of this, climate adaptation will account for around $34 billion.
- Using several blended finance platforms that pool public, philanthropic, and development funds. These will support green and blue projects by enhancing credit, lowering project risks, and establishing project development units to crowd-in private and institutional capital.
- One example of blended finance platforms is the Energy Transition Mechanism—being piloted in Indonesia and the Philippines—to accelerate the retirement or repurposing of coal-fired power plants.
- Another example is the ASEAN Infrastructure Fund’s ASEAN Catalytic Green Finance Facility. This will help develop bankable green and blue projects across the region to promote climate and environmental sustainability goals.
- We have also created the Southeast Asia Blue Finance Hub, which aims to develop a pipeline of “blue” projects worth $300 million by 2024.
- And finally, we are now designing the Innovative Finance Facility for Climate in Asia and the Pacific, or IF-CAP. This is an innovative facility that will scale up ADB's financing, up to $5 for every $1 put in. This will frontload our climate action plans and increase our lending capacity, as we partner with investors who will share our default risk.
Investments in health, education, and social protection
As I mentioned, the impact of the pandemic on human development has been severe. As we emerge from the crisis, ADB is also prioritizing health sector investments. We are supporting universal healthcare in ASEAN. This includes strengthening national health insurance systems, building and upgrading health facilities and hospitals, and enhancing health-related human resources.
In education and skills development, ADB is raising our investments to help ASEAN respond to education losses created by school closures during the pandemic. We are also committed to helping workers gain the skills needed for the high-tech jobs of the future
- Along this line, ADB is partnering with the International Fund Facility for Education, or IFFED, to help Indonesia, the Philippines, Timor-Leste, and Viet Nam within Southeast Asia increase financing for quality education. This will help close learning deficits created by the pandemic.
And finally, we are supporting programs to strengthen the quality of STEM teaching and learning, and increasing access to employment and training opportunities—particularly for women and youth. This will lead to better income distribution and allow businesses to better adjust their labor practices to current economic conditions.
In all these interventions, we will continue collaborating closely with governments and development partners to maintain policy dialogue and maximize development impacts. Partnerships with the private sector to leverage more financing will also be among ADB’s key priorities.
In closing, by working together, ASEAN members can transform the climate, human development, and overall growth landscape. It is critical that we continue to collaborate with common purpose to build a greener and more sustainable future for all people within the ASEAN region.