The ADB General Meeting Manila, 4-6 May 1993
The Asian Developing Bank constitutes a key vehicle to the developing economies in Asia in their pursuit of growth and economic modernization. The entry of Tuvalu and the acceptance of Central Asian Republics as future members of the Bank is an indication that the ADB has reponded positively to the request that its activities be extended to the entire Asian region. Consistent with this, Iran's application for membership and Vietnam's request for resumption of funding facilities must be resolved.
As new members join the bank, capital availability to fund members' developmental requirements becomes increasingly urgent. Members seeking to modernise their economy and to shift the pace of economic development into higher gear require massive invesments in infrastructure - power, transport and communications. In a number of countries, these investments have become very urgent to enhance productivity and efficiency. Thus any delay in commitment to increase the bank's capital (GCI) would only undermine the effectiveness of Bank's role as the region's premier development bank.
Asia must not be penalised for its success. If the ADB's primary objective is to promote development through growth, its relevance has become even greater for the struggling millions in South Asia, Indo China and Central Asia. We must not deny them of the capital to undergo the process of virtuous cycle of growth and wealth creation. We hope the developed countries will respond positively to the expectations of developing member countries for a significant capital increase to enable the ADB to increase its lending.
It is essential that the bank continue to facilitate the realization of Asian growth potentials, because this in turn will contribute significantly towards the expansion of global trade. It is to the advantage of the industrialized West that Asia sustain its growth, for this would also mean an expansion of its own market. Asia will continue to require more capital goods and technology as it moves up in the various phases of modernization and industrialization. At the same time, the more successful Asian economies will be diversifying their markets and investments including to the South, hence contributing towards growth and development in other regions.
Since the collapse of Bretton Woods, the global economic environment has regressed into greater disorder, and the developing countries have to bear the greater burden of that instability. In some countries, planning for economic reforms and adjustment, most of the time at the behest of multilateral institutions, is becoming increasingly difficult. National income from exports fluctuates violently not only due to price movements but more so now by the volatility in exchange rates. For almost two decades, the developing countries have to endure the burdens of international economic stability. But we cannot and must not be made to suffer this forever.
The dynamism of the Asian economies, especially in the East Asia, should generate a new sense of confidence among us. Collectively we should utilise the growing Asian economic strength, first to cushion the impact of international economic vagaries and second to contribute towards orderliness and stability in the international marketplace. For us to do this, a shift in our thinking is imperative. We cannot afford to face new global economic configurations with the old mindset. We must have the initiative to take pro-active measures that would deepen intra Asian economic linkages and progressively reduce our dependence on old economic arrangements. New forums need to be established for us to forge common position i ninfluencing the world towards greater openness, and arrest protectionist and narrow inward-looking policies.
The Malaysian initiative for an East Asian Economic Caucus comes out of rational and pragmatic economic considerations. The realization of EAEC should enable East Asia to emerge as a cohesive and positive force, first in Asia then in the global economy, towards economic reforms and liberalization. The stalemate in GATT's Uruguay Round Negotiations should also spur us to look for alternative arrangements. As such we need to prepare ourselves to minimise the impact of such adverse eventualities.
The extreme volatility of currency markets in recent years must prompt the ADB to initiate serious discussions on the necessity to evolve a viable and stable monetary arrangement. The issue of currency exchange will eventually surface as Asia progresses towards economic integration. But with the rapid pace of intra regional trade and cross border investments in the recent years, the issue is likely to surface sooner than expected.
We are happy to note that the bank total lending increased to US$5.1 billion in 1992. However, we note with regret that the imbalance in the distribution of the loans persist. To redress this, the bank should adopt a pro-active loan programme to determine the needs of the least developed member countries and assist them in developing the necessary administrative and implemenation capacity.
I would like to congratulate the bank for another profitable operational year. A 3 per cent increase in its profitability over the previous year is commendable. However, the effectiveness of the bank should not be measured purely by its profitability. A more important measure is the degree of the bank's success in effecting structural and economic reforms among member countries. It should also instill accountability and financial discipline in the projects under its financing.
The board will be approving the Bank's 1993 work programme. The lending commitments are projected at US$6 billion, an increase of 16 per cent over the 1992 lending level. A higher target and a bigger commitment by the bank will be welcomed by member countries.
Finally let me commend Mr. Tarumizu for his able leadership of the Bank and his staff for their exemplary dedication and hard work.