Asian Development Bank

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Asian Development Bank
Adb-logo-block.jpg
ADB logo
Motto Fighting poverty in Asia and the Pacific
Formation 19 December 1966
Type Multilateral Development Bank
Legal status Treaty
Purpose Social and economic development
Headquarters Mandaluyong, Metro Manila, Philippines
Region served
 Asia-Pacific
Membership
 67 countries
President
 Takehiko Nakao
Main organ
 Board of Governors[1]
Staff
 2997 employees[2]
Website http://www.adb.org
Asian Development Bank member states
  Outside regions
  Asia-Pacific region

The Asian Development Bank (ADB) is a regional development bank established on 19 December 1966[3] which is headquartered in Mandaluyong, a suburb of Manila, Philippines, and maintains 31 field offices around the world,[4] to promote social and economic development in Asia. The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP, formerly the Economic Commission for Asia and the Far East or ECAFE) and non-regional developed countries.[5] From 31 members at its establishment, ADB now has 67 members, of which 48 are from within Asia and the Pacific and 19 outside. The ADB was modeled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with members' capital subscriptions. ADB releases an annual report that summarizes its operations, budget and other materials for review by the public.[6]

At the end of 2014, Japan holds the largest proportion of shares at 15.7%. The United States holds 15.6%, China holds 6.5%, India holds 6.4%, and Australia holds 5.8%.[7]

Organization

ADB Headquarters in Mandaluyong City, Philippines

The highest policy-making body of the bank is the Board of Governors, composed of one representative from each member state. The Board of Governors, in turn, elect among themselves the twelve members of the Board of Directors and their deputy. Eight of the twelve members come from regional (Asia-Pacific) members while the others come from non-regional members.[8]

The Board of Governors also elect the bank's president, who is the chairperson of the Board of Directors and manages ADB. The president has a term of office lasting five years, and may be reelected. Traditionally, and because Japan is one of the largest shareholders of the bank, the president has always been Japanese.

The most recent president was Takehiko Nakao, who succeeded Haruhiko Kuroda in 2013.[9]

The headquarters of the bank is at 6 ADB Avenue, Mandaluyong, Metro Manila, Philippines,[10][11] and it has 25 field offices in Asia and the Pacific and representative offices in Washington, Frankfurt, Tokyo and Sydney. The bank employs about 3,000 people, representing 60 of its 67 members.[12]

List of presidents

Name Dates Nationality
Takeshi Watanabe 1966–1972  Japan
Shiro Inoue 1972–1976  Japan
Taroichi Yoshida 1976–1981  Japan
Masao Fujioka 1981–1989  Japan
Kimimasa Tarumizu 1989–1993  Japan
Mitsuo Sato 1993–1999  Japan
Tadao Chino 1999–2005  Japan
Haruhiko Kuroda 2005–2013  Japan
Takehiko Nakao 2013–  Japan

History

1960s

The concept of a regional bank was formally proposed, as an institution for developing intra-regional trade, at a trade conference organized by the Economic Commission for Asia and the Far East (ECAFE) in 1963 by a young Thai banker, Paul Sithi-Amnuai. (ESCAP, United Nations Publication March 2007, "The first parliament of Asia" pp. 65). The United States was initially opposed to the creation of another regional development bank following the establishment of the Inter-American Development Bank in 1959. However, with the escalation if the Vietnam War, President Lyndon Johnson was persuaded to support the establishment of the ADB in 1964 in an effort the mollify Senator J. William Fulbright (Chairman of the Senate Foreign Relations Committee) who argued that the War would not only bleed American blood and treasure, but would also be very bad for America's image in Asia. President Johnson pressed retired World Bank President Eugene Black into organizing and establishing the new institution.[citation needed]

In the process, Secretary of State Dean Rusk urged that Japan play an important role in the ADB. He argued that the biggest danger to American foreign policy in Asia was Japan's inability to integrate into the Asian society of nations following the animosities of WWII. Indeed, there was sharp Asian opposition to Japan's participation in the institution. After considerable diplomatic effort, Japan was eventually accepted into the organization by the majority of the participating nations, and Tokyo was selected as the site of the bank's headquarters. The Presidency was to rotate between the various countries of Asia. However, at the eleventh hour in a meeting of the delegates in Manila, President Ferdinand Marcos delivered a stinging tirade against the establishment of the ADB with Japanese participation. He threatened to personally travel to every Asian capitol and scuttle the project. Eugene Black, with the assistance of President Johnson was finally able to mollify President Ramos with the promise to locate the ADB in Manila. (In fact, Ramos eagerly volunteered to house the ADB in the newly constructed building on prestigious Roxas Boulevard, which had been designated for the Foreign Ministry.) As a concession to the Japanese, they were given the inaugural Presidency of the institution - a position they have tenaciously held onto ever since.[citation needed]

Once the ADB was founded in 1966, Japan took up the Presidency and some other crucial "reserve positions" such as the directorship of the all powerful administration department known as BPMSD (Budget, Personnel, and Management Systems Department) through which they manage the institution. By the end of 1972, Japan had contributed $173.7 million (22.6% of the total) to the ordinary capital resources and $122.6 million (59.6% of the total) to the special funds. In contrast, the United States contributed only $1.25 million to the special fund.[5]

After its creation in the 1960s, ADB focused much of its assistance on food production and rural development. At the time, Asia was one of the poorest regions in the world.[13]

Early loans went largely to Indonesia, Thailand, Malaysia, Republic of Korea and the Philippines, the countries with which Japan had crucial trading ties; these nations accounted for 78.48% of the total ADB loans between 1967 and 1972. Moreover, Japan received tangible benefits, 41.67% of the total procurements between 1967 and 1976. Japan tied its special funds contributions to its preferred sectors and regions and procurements of its goods and services, as reflected in its $100 million donation for the Agricultural Special Fund in April 1968.[5]

Takeshi Watanabe served as the first ADB president from 1966 to 1972.[14][15]

1970s–1980s

In the 1970s, ADB's assistance to developing countries in Asia expanded into education and health, and then to infrastructure and industry. The gradual emergence of Asian economies in the latter part of the decade spurred demand for better infrastructure to support economic growth. ADB focused on improving roads and providing electricity. When the world suffered its first oil price shock, ADB shifted more of its assistance to support energy projects, especially those promoting the development of domestic energy sources in member countries.[13]

Following considerable pressure from the Reagan Administration in the 1980s, ADB reluctantly began working with the private sector in an attempt to increase the impact of its development assistance to poor countries in Asia and the Pacific. In the wake of the second oil crisis, ADB expanded its assistance to energy projects. In 1982, ADB opened its first field office, in Bangladesh, and later in the decade it expanded its work with non-government organizations (NGOs).[13]

Japanese presidents Inoue Shiro (1972–76) and Yoshida Taroichi (1976–81) took the spotlight in the 1970s. Fujioka Masao, the fourth president (1981–90), adopted an assertive leadership style, launching an ambitious plan to expand the ADB into a high-impact development agency.

1990s

In the 1990s, ADB began promoting regional cooperation by helping the countries on the Mekong River to trade and work together. The decade also saw an expansion of ADB's membership with the addition of several Central Asian countries following the end of the Cold War.[13]

In mid-1997, ADB responded to the financial crisis that hit the region with projects designed to strengthen financial sectors and create social safety nets for the poor. During the crisis, ADB approved its largest single loan – a $4 billion emergency loan to the Republic of Korea. In 1999, ADB adopted poverty reduction as its overarching goal.[13]

2000s

In 2003, severe acute respiratory syndrome (SARS) epidemic hit the region and ADB responded with programs to help the countries in the region work together to address infectious diseases, including avian influenza and HIV/AIDS. ADB also responded to a multitude of natural disasters in the region, committing more than $850 million for recovery in areas of India, Indonesia, Maldives, and Sri Lanka hit by the December 2004 Asian tsunami. In addition, $1 billion in loans and grants was provided to the victims of the October 2005 earthquake in Pakistan.[13]

In March of 2008, the Board of Directors formally adopted the Long Term Strategic Framework (LTSF) which stated that assistance to private sector development was the lead priority of the ADB and that it should constitute 50% of the bank's lending by 2020.

In 2009, ADB's Board of Governors agreed to triple ADB's capital base from $55 billion to $165 billion, giving it much-needed resources to respond to the global economic crisis. The 200% increase is the largest in ADB's history, and the first since 1994.[13]

2010s

Asia moved beyond the economic crisis and by 2010 had emerged as a new engine of global economic growth though it remained home to two thirds of the world’s poor. In addition, the increasing prosperity of many people in the region created a widening income gap that left many people behind. ADB responded to this with loans and grants that encouraged economic growth.[13]

In early 2012, began to re-engage with Myanmar in response to reforms initiated by the government. In April 2014, ADB opened an office in Myanmar and resumed making loans and grants to the country.[13]

In 2017, ADB will combine the lending operations of its Asian Development Fund (ADF) with its ordinary capital resources (OCR), which will increased its annual lending and grants to as high as $20 billion—50% more than the previous level.[13]

Objectives and Activities

Aim

The ADB defines itself as a social development organization that is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. This is carried out through investments – in the form of loans, grants and information sharing – in infrastructure, health care services, financial and public administration systems, helping nations prepare for the impact of climate change or better manage their natural resources, as well as other areas.[16]

Focus Areas

Eighty percent of ADB’s lending is concentrated in five operational areas.[17]

  • Education - Most developing countries in Asia and the Pacific have earned high marks for a dramatic rise in primary education enrollment rates in the last three decades, but daunting challenges remain, threatening economic and social growth.[18]
  • Environment, Climate Change, and Disaster Risk Management - Environmental sustainability is a prerequisite for economic growth and poverty reduction in Asia and the Pacific.[19]
  • Finance Sector Development - The financial system is the lifeline of a country’s economy. It creates prosperity that can be shared throughout society and benefit the poorest and most vulnerable people. Financial sector and capital market development, including microfinance, small and medium-sized enterprises, and regulatory reforms, is vital to decreasing poverty in Asia and the Pacific.[20]
  • Infrastructure, including transport[21] and communications,[22] energy,[23] water supply and sanitation,[24] and urban development.[25]
  • Regional Cooperation and Integration - Regional cooperation and integration (RCI) is a process by which national economies become more regionally connected. It plays a critical role in accelerating economic growth, reducing poverty and economic disparity, raising productivity and employment, and strengthening institutions.[26]

Lending

The ADB offers "hard" loans on commercial terms primarily to middle income countries in Asia and "soft" loans with lower interest rates to poorer countries in the region. Based on a new policy, both types of loans will be sourced starting January 2017 from the bank’s ordinary capital resources (OCR), which functions as its general operational fund.[27]

In 2014, ADB lent $11.2 billion to its member governments – known as "sovereign" lending – and invested another $1.7 billion in private enterprises, as part of its "nonsovereign" operations. ADB’s operations in 2014, including grants and other assistance, totaled $22.93 billion.[28]

ADB obtains its funding by issuing bonds on the world's capital markets. It also relies on the contributions of member countries, retained earnings from lending operations, and the repayment of loans.[29]

Private Sector Investments

ADB provides direct financial assistance, in the form of equity investments in private companies, to projects that have clear social benefits beyond the financial rate of return. ADB’s participation is usually limited but it leverages a large amount of funds from commercial sources to finance these projects.[30]

Cofinancing

ADB partners with other development organizations on some projects to increase the amount of funding available. In 2014, $9.2 billion—or nearly half—of ADB’s $22.9 billion in operations were financed by other organizations.[31]

Funds and Resources

More than 50 financing partnership facilities, trust funds, and other funds – totaling several billion each year – are administered by ADB and put toward projects that promote social and economic development in Asia and the Pacific.[32]

Access to Information

ADB has an information disclosure policy that presumes all information that is produced by the institution should be disclosed to the public unless there is a specific reason to keep it confidential. The police calls for accountability and transparency in operations and the timely response to requests for information and documents.[33] ADB does not disclose information that jeopardizes personal privacy, safety and security, certain financial and commercial information, as well as other exceptions.[34]

Notable projects and technical assistance

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Criticism

Since the ADB's early days, critics have charged that the two major donors, Japan and the United States, have had extensive influence over lending, policy and staffing decisions.[45]

Oxfam Australia has criticized the Asian Development Bank for insensitivity to local communities. "Operating at a global and international level, these banks can undermine people's human rights through projects that have detrimental outcomes for poor and marginalized communities."[46] The bank also received criticism from the United Nations Environmental Program, stating in a report that "much of the growth has bypassed more than 70 percent of its rural population, many of whom are directly dependent on natural resources for livelihoods and incomes."[47]

There had been criticism that ADB's large scale projects cause social and environmental damage due to lack of oversight. One of the most controversial ADB-related projects is Thailand's Mae Moh coal-fired power station. Environmental and human rights activists say ADB's environmental safeguards policy as well as policies for indigenous peoples and involuntary resettlement, while usually up to international standards on paper, are often ignored in practice, are too vague or weak to be effective, or are simply not enforced by bank officials.[48][49]

The bank has been criticized over its role and relevance in the food crisis.The ADB has been accused by civil society of ignoring warnings leading up the crisis and also contributing to it by pushing loan conditions that many say unfairly pressure governments to deregulate and privatize agriculture, leading to problems such as the rice supply shortage in Southeast Asia.[50]

The bank has also been criticized by Vietnam War veterans for funding projects in Laos, because of the United States' 15% stake in the bank, underwritten by taxes.[51] Laos became a communist country after the U.S. withdrew from Vietnam, and the Laotian Civil War was won by the Pathet Lao, which is widely understood to have been supported by the North Vietnamese Army.

In 2009, the bank endorsed a $2.9 billion funding strategy for proposed projects in India. The projects in this strategy were only indicative and still needed to be further approved by the bank's board of directors; however, PRC Foreign Ministry spokesman Qin Gang claimed, "The Asian Development Bank, regardless of the major concerns of China, approved the India Country Partnership strategy which involves the territorial dispute between China and India. China expresses its strong dissatisfaction over this.... The bank's move not only seriously tarnishes its own name, but also undermines the interests of its members."[52]

There has been considerable criticism of management for its reluctance to implement the Long Term Strategic Framework (LTSF) which (as noted above) was formally adopted in March of 2008. Indeed, whereas the Private Sector Operations Department (PSOD)closed out that year with financings of $2.4 billion, the ADB has significantly dropped below that level in the years since and is clearly not on the path to achieving its stated goal of 50% of financings to the private sector by 2020. Critics also point out that the PSOD is the only Department that actually makes money for the ADB. Hence, with the vast majority of loans going to concessionary (sub-market) loans to the public sector, the ADB is facing considerable financial difficulty and continuous operating losses.

List of 20 Largest Countries and Regions by Subscribed Capital and Voting Power

The following table are amounts for 20 largest countries by subscribed capital and voting power at the Asian Development Bank as of December 2014.[53]

The 20 Largest Countries by Subscribed Capital and Voting Power at the Asian Development Bank
Rank Country Subscribed Capital
(% of Total)		 Rank Country Voting Power
(% of Total)
World 100.000 World 100.000
1  Japan 15.677  European Union 15.724
2  United States 15.567 1  Japan 12.840
 European Union 14.429 2  United States 12.752
3  China 6.473 3  China 5.477
4  India 6.359 4  India 5.386
5  Australia 5.812 5  Australia 4.948
6  Canada 5.254 6  Canada 4.502
7  Indonesia 5.131 7  Indonesia 4.404
8  South Korea 5.060 8  South Korea 4.347
9  Germany 4.345 9  Germany 3.775
10  Malaysia 2.735 10  Malaysia 2.487
11  Philippines 2.393 11  Philippines 2.213
12  France 2.338 12  France 2.169
13  Pakistan 2.188 13  Pakistan 2.049
14  United Kingdom 2.051 14  United Kingdom 1.940
15  Italy 1.815 15  Italy 1.751
16  New Zealand 1.543 16  New Zealand 1.533
17  Thailand 1.368 17  Thailand 1.393
18  Taiwan 1.094 18  Taiwan 1.174
19  Netherlands 1.030 19  Netherlands 1.123
20  Bangladesh 1.026 20  Bangladesh 1.119

Members

Asian Development Bank - Developing Member Countries (DMC) graduation stages[54]
  Outside regions
  Asia-Pacific region developed members
  DMC graduated from assistance, Group-D
  Ordinary Capital Resources (OCR) financing, Group-C
  OCR and ADF blended financing, Group-B
  Asian Development Fund (ADF) financing, Group-A

ADB has 67 members (as of 2 February 2007): 48 members from the Asian and Pacific Region, 19 members from Other Regions.[55] Notable non-members are Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, North Korea, Oman, Qatar, Saudi Arabia, the United Arab Emirates, and Yemen. Names are as recognized by ADB.
The year after a member's name indicates the year of membership. At the time a country ceases to be a member, the Bank shall arrange for the repurchase of such country's shares by the Bank as a part of the settlement of accounts with such country in accordance with the provisions of paragraphs 3 and 4 of Article 43.[56]

Country Date of Accession
 Afghanistan 1966
 Australia 1966
 Cambodia 1966
 India 1966
 Indonesia 1966
 Japan 1966
 Korea, Republic of 1966
 Lao People's Democratic Republic[57] 1966
 Malaysia 1966
   Nepal 1966
 New Zealand 1966
 Pakistan 1966
 Philippines 1966
 Samoa 1966
 Singapore 1966
 Sri Lanka 1966
 Taipei,China[58][59] 1966
 Thailand 1966
 Viet Nam, Socialist Republic of[60] 1966
 Hong Kong, China[61] 1969
 Fiji 1970
 Papua New Guinea 1971
 Tonga 1972
 Bangladesh 1973
 Burma 1973
 Solomon Islands 1973
 Kiribati 1974
 Cook Islands 1976
 Maldives 1978
 Vanuatu 1981
 Bhutan 1982
 China, People's Republic of 1986
 Marshall Islands 1990
 Micronesia, Federated States of 1990
 Mongolia 1991
 Nauru 1991
 Tuvalu 1993
 Kazakhstan 1994
 Kyrgyz Republic 1994
 Uzbekistan 1995
 Tajikistan 1998
 Azerbaijan 1999
 Turkmenistan 2000
 Timor-Leste 2002
 Palau 2003
 Armenia 2005
 Brunei Darussalam 2006
 Georgia 2007
Country Date of Accession
 Austria 1966
 Belgium 1966
 Canada 1966
 Denmark 1966
 Finland 1966
 Germany[62] 1966
 Italy 1966
 Netherlands 1966
 Norway 1966
 Sweden 1966
 United Kingdom 1966
 United States 1966
  Switzerland 1967
 France 1970
 Spain 1986
 Turkey 1991
 Portugal 2002
 Luxembourg 2003
 Ireland 2006

See also

References

  1. ↑ About: Management, adb.org.
  2. ↑ ADB Annual Report 2014 - Staff Representation of ADB Members
  3. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  4. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  5. ↑ 5.0 5.1 5.2 Lua error in package.lua at line 80: module 'strict' not found.
  6. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  7. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  8. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  9. ↑ New ADB President Takehiko Nakao Assumes Office
  10. ↑ "Contacts." (Archive) Asian Development Bank. Retrieved on April 21, 2015. "6 ADB Avenue, Mandaluyong City 1550, Philippines"
  11. ↑ "Contacts: How to Visit ADB." (Archive) Asian Development Bank. Retrieved on April 21, 2015.
  12. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  13. ↑ 13.0 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9 Lua error in package.lua at line 80: module 'strict' not found.
  14. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  15. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  16. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  17. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  18. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  19. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  20. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  21. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  22. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  23. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  24. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  25. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  26. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  27. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  28. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  29. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  30. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  31. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  32. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  33. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  34. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  35. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  36. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  37. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  38. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  39. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  40. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  41. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  42. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  43. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  44. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  45. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  46. ↑ Oxfam Australia. "The Mekong and Asian Development Bank
  47. ↑ IPS. "UNEP faults Asian development project."
  48. ↑ " LOCAL CONCERNS IGNORED Large-scale ADB projects draw criticism"
  49. ↑ NGO criticises ADB and questions its ability to reduce poverty
  50. ↑ "ADB to meet amid food crisis, growing poverty"
  51. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  52. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  53. ↑ Members, Capital Stock, and Voting Power (December 2014)
  54. ↑ ADB Graduation policy
  55. ↑ Members, Capital Stock, and Voting Power (December 2013)
  56. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  57. ↑ Joined as  Kingdom of Laos, succeeded by Lao PDR in 1975
  58. ↑ Taipei,China's Fact Sheet on the ADB website
  59. ↑ Joined as  China, Republic of representing not only Taiwan Area, but also nominally Mainland China until 1986. However, its share of Bank capital was based on the size of Taiwan's capital, unlike the World Bank and IMF where the government in Taiwan had had a share. The representation was succeeded by  People's Republic of China in 1986. However, the ROC was allowed to retain its membership, but under the name of Taipei,China (space deliberately omitted after the comma)[1] — a name it protests. Uniquely, this allows both sides of the Taiwan Straits to be represented at the institution.
  60. ↑ Formerly  Viet Nam, Republic of until 1975
  61. ↑ Joined as "Hong Kong", not "Hong Kong, China"
  62. ↑ Founding member; joined as West Germany.

External links

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