By B.Khash-Erdene
Reporting from Nadi, Fiji
Over 2,000 delegates from the Asia Pacific region came together in Nadi, Fiji for the 52nd Annual Meeting of the Asian Development Bank’s (ADB) Board of Governors, which took place from May 1 to 5.
The 2019 annual meeting marks the first time a Pacific developing member country will host ADB’s largest annual gathering, providing ADB Governors an opportunity to discuss important and pressing development issues facing Asia and the Pacific. The theme for this year’s event is “Prosperity Through Unity.”
This year’s meeting focused on sustainable tourism and its potential to boost national and regional development efforts, the role of private sector financing for disaster risk management and climate resilience, and the importance of actions to improve ocean health. Responses to heightening global economic uncertainty, the role of digital technologies for financial inclusion, and new tools for sustainable infrastructure development were also key topics of discussion.
In his opening remarks, the ADB President Takehiko Nakao said the bank expects solid growth for the region, before expressing concerns about trade tensions.
“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.”
“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,” assessed Nakao.
Finance ministers, central bank governors, government officials, private sector representatives, development partners, youth, as well as members of the academe, civil society, and media from Asia and the Pacific, as well as around the world, attended the event.
The Pacific takes center stage at ADB annual meeting
The first day of the annual ADB meeting focused mainly on issues related to the host country, Fiji, and the Pacific region. During the opening, ADB President Nakao pledged to expand support to help the Pacific islands build stronger resilience to global economic shocks, disasters, and climate change.
Speaking to Pacific Developing Member Country (DMC) governors, Nakao said the annual meeting in Fiji is a “historic” occasion, since it is the first held in a Pacific DMC and comes at an important time for the sub region.
“We now have the opportunity to highlight the unique development challenges and significant development progress throughout the region,” said Nakao. “During this annual meeting, the main message I want to share with you, as well as with other governors, development partners, the private sector, and civil society, is that ADB is scaling up our operations in the Pacific.”
During the session with DMC governors, the ADB president highlighted the need to strengthen ADB’s partnership with key development partners such as Australia, New Zealand, Japan, the European Union, the World Bank, and the Pacific Islands Forum.
Finance minister: Liberalizing will bring private investment
Minister of Finance Ch.Khurelbaatar spoke to The UB Post about the ADB annual meeting and lessons from Fiji’s tourism development.
The 52nd ADB annual meeting is taking place in Fiji. Tell us your thoughts on the event?
Today, the 52nd Annual Meeting of the Board of Governors of ADB is taking place on the island of Fiji. I’m participating as the governor representing Mongolia. The main aspect of the meeting concerns ways to attract investment for the private sector and ways to contribute to the development of countries. These are the focus of the main sessions. In the session that happened today I understood that the financial resources are available among countries. There are many ways we can raise funding to support the development of Mongolia and these opportunities are fully open.
In some sectors, it is possible to attract investment for the private sectors just by making policy and legal environment adjustments. In the tourism sector, for example, there is the liberalization of the aviation sector. If we improve the legal environment in this sector and create competition, the private sector can enter the industry. There are many ways to attract massive investments this way, as demonstrated by the examples of other countries.
In the Ipotek market, we have the eight percent interest mortgage in the Mongolian market. For instance, when the private sector wants to invest, they say the rate is not a market rate. Making it market-based, and finding the correct method and mechanism to lower interest rates, there is an opportunity bring in substantial investment from the private sector.
Therefore, if we can adopt good policies and establish a mechanism that is in congruency with the international standard, there is the full opportunity to speed up development in many sectors of Mongolia. The main sessions will be held tomorrow (May 4).
Fiji is a beautiful country that managed to develop its tourism sector extremely well. What can Mongolia learn from Fiji with regard to investment in the tourism sector?
Obviously, this is done by the private sector. For instance, in the aviation sector, there are direct flights to San Francisco and the USA. A country with 900,000 or so people is making direct flights to large cities in the USA. Direct flights to big cities of Asia are also available. This means that when tourists who will spend money in this country come, they are given the opportunity to come at a low cost. I view this as a very important thing.
There is also the fact that big international hotel chains are already here. Practically all of the big names are here and operating. Therefore, in my view, first we must achieve liberalization in a fast and efficient manner in Mongolia. There are those who say we must protect the interests and rights of national companies such as MIAT Mongolian Airlines, but expanding the tourism sector is more beneficial to these national companies. All sides need to realize and acknowledge this fact, and make correct political decisions will less hurdles.
‘A’ for ADB
The “2018 Development Effectiveness Review” (DEfR), the 12th in the series of annual performance reports prepared by ADB, was launched in Nadi, Fiji, at the 52nd ADB annual meeting. The report, based on ADB’s corporate results framework, assesses the bank’s performance and progress in implementing its strategy across various results indicators.
“The 2018 DEfR highlights ADB’s efforts, and successes, in delivering on its mission of helping the Asia and Pacific region become more prosperous, inclusive, resilient, and sustainable,” said the Director General of ADB’s Strategy, Policy, and Partnerships Department Tomoyuki Kimura. “ADB will continue enhancing its operations to help more people in the Asia and Pacific region.”
ADB operations in 2018 continued to grow, with commitments including loans and grants, reaching 21.6 billion USD, up 10 percent from the 19.7 billion USD committed in 2017. Direct value-added co-financing signed last year hit a record high of 14 billion USD, up from 11.8 billion USD in 2017, while disbursements also reached its highest ever at 14.2 billion USD in 2018, which is 2.7 billion USD more than the previous year.
“ADB's new lending and grant operations in 2018 grew to a record 21.6 billion USD, an increase of nearly 10 percent from 19.7 billion USD in the previous year. Compared to 13.9 billion USD in 2013 when I became ADB President, this is an increase of 55 percent. 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,” said ADB President Nakao. “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’s response to climate change and support for gender equality accelerated, according to the report. The share of ADB operations supporting climate change adaptation and mitigation during the 2016–2018 review period reached 56 percent, surpassing the 2020 target of 45 percent. Meanwhile, the share of committed sovereign operations supporting gender mainstreaming increased to 52 percent, exceeding the 2020 target of 50 percent of overall ADB operations. Achievement of gender equality results also remained above target, with 76 percent of completed operations successfully delivering their intended results in this priority area.
Financing for private sector operations also reached new heights, with commitments increasing by 37 percent to 3.1 billion USD in 2018 from 2.3 billion USD in 2017. Private sector operations’ share of the total signed ADB financing, meanwhile, rose to 19.3 percent in 2018 from 13.3 percent in 2017, putting it on track to reach the 2020 target of 20 percent.
Education and health financing are also on track to meet their 2020 targets. Education commitments reached a record 7.5 percent share of total commitments in 2018 —achieving for the first time, the six percent to 10 percent 2020 target range — with volume of commitments more than doubling to 1.6 billion USD, comprised of 13 loans and grants. Financing for health rose to 2.4 percent of total operations, the highest figure since 2010 and on track to meet the three percent to five percent 2020 target range. Health financing also more than doubled to 515 million USD in 2018, with 13 loans and grants committed. ADB’s social protection support, however, declined to 4.9 percent in 2016–2018 from 5.1 percent of the bank’s total operations in 2015–2017, remaining short of the six percent target.
In 2018, ADB operations in the Asia and Pacific region have helped 1.2 million students receive training and education under improved quality assurance systems; built and upgraded 8,400 kilometers of roads; reduced 2.4 million tons of annual greenhouse gas emissions; provided new or improved water supplies for 413,000 households; improved people’s and businesses’ access to finance through 2.4 million microfinance loan accounts opened; and enhanced regional and international trade with 6.7 million tons of annual cross-border cargo volume facilitated.
South Korea’s Incheon will host the 53rd ADB annual meeting in 2020 under the theme “Asia 2020: Innovation, Inclusiveness and Integrity. South Korean is considered ADB’s crucial partner which contributes to the bank’s development work through capital, special funds, co-financing, trust funds, and knowledge sharing.
