25TH ANNUAL MEETING OF THE ASIAN DEVELOPMENT BANK 4 - 6 MAY, 1992, HONG KONG
During our last meeting in Vancouver, we have noted with hope that changes in the international political scenario would bring about global economic development and prosperity. We observed not only the collapse of Communism but also the dismantling of apartheid in. More significant to us are the political solutions being achieved in Cambodia and more recently the success of the Mujahideen struggle in Afghanistan. However, the world is not enjoying the full benefits of the `peace dividend.' Political problems within the former Soviet republics and the Palestinian issue seem a long way from being settled.
The international economic situation remains uncertain. While there are indications of an upturn in the economies of the developing countries, this may not be sustainable due to the slow recovery in the industrial countries. The growth rate for industrial countries is projected by the IMF at 1.8 per cent, as against the world-wide growth rate of 2.7 per cent. We hope that the world economy would gain momentum next year, in line with the IMF projection for world output growth of 3.6 per cent.
The uncertainties and low growth rates in developed countries will make it difficult for developing countries to undertake economic adjustments and restructuring. This is further aggravated by the tendency of the developed countries to ignore the plight of the developing countries while attempting to solve their own economic problems. For example, the emergency economic measures being taken by the Japanese government are meant to contribute to a domestic-oriented non-inflationary sustainable growth, which the Japanese Government feels can lead to a better quality of life in Japan and to the stable development of the world economy. However, those measures, will reduce the flow of capital and resources internationally, and as a result, the developing countries will face severe resource constraints.
We believe that resources to the developing countries can be increased through a growing volume of world trade but this has not materialized. The decade of the nineties will continue to be plagued by unresolved international trade issues. The Uruguay Round trade negotiations have yet to be concluded. The developed countries continue to adopt protectionist measures and close their markets.
We believe that an early and successful conclusion of the Uruguay Round talks is crucial for the survival of the multilateral trading system. The negotiation process has stretched to the limit with the resulting frustration of all parties. The process is indeed in limbo. What is indeed surprising is that the expected North-South tussle in the negotiation process has not materialized. Rather it is the North-South rift on key issues such as farm subsidies that is delaying completion of the negotiations.
Nothing short of complete political commitment on the part of the developed countries to the concept of free trade is required. Developing countries have been very accommodating in these negotiations, but the same spirit seems to be absent from the developed countries. They continue to give rein to protectionist tendencies and narrow sectoral interests.
The move towards a more liberal international trade regime has suffered a setback with the creation of regional trading blocs. We note that the European Single Market program (EC 1992) introduced in 1985 is to be completed this year with the removal of internal trade barriers and the elimination of national trade restrictions. The establishment of the North American Free Trade Area is another example of a regional trading bloc. It seems hypocritical to us in the developing world that while the industrialized countries continue to justify the adoption of such restrictive and protectionist trade arrangements for themselves, they make it a cause to censure and hinder any attempt by developing countries to forge regional economic integration. In the case of the East Asian Economic Caucus, we have not even talked about a single market yet, but we have already been subjected to severe pressures.
Developing countries face a double task. They must ensure the continuous inflow of capital for development. At the same time, that development itself must be sustainable. The pursuit of economic growth must not be at the expense of the environment. The environment has become a burning issue in international affairs. We are all environmentalists. Unfortunately some, especially in the rich North have found it convenient and perhaps profitable to take a holier-than-thou attitude vis-a-vis the poorer countries struggling to develop but utilizing their natural resources. Our attitude towards environmental issues must neither be romantic nor opportunistic. It is unfair to expect the burden of environmental protection and preservation to be shouldered by the developing countries alone. Countries which are enjoying the benefit of uncontrolled exploitation of the world's natural resources in the past must not shirk their own responsibility to assist with their wealth and technological expertise. We expect the industrial countries to welcome positively the Kuala Lumpur Declaration on Environment and Development and the call for funding by developed countries of measures to rehabilitate and protect the global environment. It is a test of the sincerity of the industrialized countries and the genuineness of their concern for the environment.
At the same time, it is indeed critical that a balanced approach be adopted to integrate the environmental factor in the economic growth equation. The developing countries will continue to be tested on their ability to achieve sustainable economic development, a task that is extremely challenging in the context of widespread mass poverty and scarce resources.
The role of the Asian Development Bank in the continued development of Asian countries is critical. We are happy to note that the Bank has resumed its lending activities to China since 1991. The time has come for the Bank to consider supporting economic development in Indochina. Vietnam, for instance, has taken firm measures to liberalize its economy. We urge the Bank to appraise the situation and make policy changes, if necessary, to help these countries. The Bank's management should act in similar fashion to the move by the World Bank in regard to the Commonwealth of Independent States.
We are happy to note that the Bank's total lending and investment in 1991, for both public and private sector, amounted to US$5 billion, an increase of 25 per cent over 1990. However, it is noted that 90 per cent of the total loans had been taken up by only seven countries. This situation needs to be improved. There are twenty five developing member countries of the Bank and the distribution of the total loans seems very unsatisfactory. It is our belief that many of these developing countries have not developed the infrastructure to implement development programmes and projects. These countries need technical assistance which the Bank and developed member countries can provide. Malaysia, on her part, will be more than willing to extend technical assistance for developing member countries. We have, under the Malaysia Technical Cooperation Programme, trained participants from developing countries in the field of administration, education and agriculture. As part of our effort to support the least developing member countries, Malaysia is in the process of finalizing a memorandum of understanding that will enable the Bank's member countries to participate in our technical cooperation programme.
Besides the normal loan from the ordinary capital resources, member countries are also relying on the Asian Development Fund (ADF). We are happy to note that the replenishment of ADF VI was finally concluded. All donor countries must be congratulated for the sacrifices they have made. The demand for the Fund continues to grow and it is not surprising that traditional ADF borrowers be given early access to the fund, if there be savings of funds. We do recognize that the ADF does play an important role especially for the least developed countries. Views had been expressed that certain conditions under the ADF may be too stringent and, it is felt timely that various aspects of the ADF be reviewed.
The bank will continue to face challenges in the years to come. The experience gained in the last twenty-five years should provide a strong foundation for the Bank to move forward more efficiently. The management, under the leadership of Mr. Tarumizu, should provide undivided loyalty and total commitment to the Bank. Member countries are placing their hope on the Bank for their economic growth and prosperity.
Let us conclude by congratulating Mr. Tarumizu, for being reelected as president of the ADB for the next five years. We would also like to welcome new members i.e. Mongolia, Nauru and the Republic of Turkey. We do hope the new members will contribute in making this Bank a more effective financial institutions to serve all of us.