ADB’s Nakao rebuffs claims of AIIB rivalry
By Anthony Rowley
The head of the Asian Development Bank has dismissed fears that the launch of the China-led Asian Infrastructure Investment Bank (AIIB) will lead to a battle to poach staff and projects.
In an interview with Emerging Markets, ADB president Takehiko Nakao insisted that additional sources of finance such as the AIIB would be welcome. “It is not a zero sum game,” he said.
He pointed to the urgent need for investment in infrastructure where the ADB has estimated the need at some $8tr this decade. “The Asia Pacific region needs money,” he said.
On a visit to Tokyo in March, World Bank president Jim Yong Kim said the infrastructure gap was “enormous” — an estimated $1tr-$1.5tr more is needed every year.
Asked whether the new Beijing-based bank might lure staff away from the ADB, Nakao said it was “not wise to speculate but generally speaking, it is the choice of staff to choose their workplace.
“But I really believe that the ADB will remain a good workplace for staff because of its very good track record for 50 years as a trusted partner for developing countries. I have visited 25 developing countries and I have been impressed by the very strong trust of the ADB.”
He said that China has stressed that even after the establishment of the AIIB the ADB would remain a very important partner for China. “China is a good borrower and wants to continue to borrow from us in areas such as environment protection, climate change and water management,” he said.
While the China-led AIIB has been widely portrayed as a potential competitor, Nakao, who is the latest in a row of Japanese finance ministry officials to head the ADB, said: “Our relations with China are really good. I have visited China many times and discussed development challenges [there].”
On possible co-operation between the AIIB and the ADB, Nakao said: “We should consider appropriate partnerships, including co-financing, when [the AIIB] is formally established.
“We already have answered questions from the AIIB at the staff level about procurement systems and safeguard policies as well as legal issues. There have been some inquiries from the AIIB secretariat and we have been sharing with them.”
Reform efforts
But Nakao acknowledged that the bank needed to embark on initiatives to ensure that it must improve its work in the region. “We must make efforts to reform ourselves by increasing our lending capacity, strengthening knowledge and streamlining procedures,” he said.
Nakao stressed that while seeking greater efficiency in its operations the ADB must also continue adhering to “safeguard policies” covering everything from the environmental impact of its projects to resettlement of individuals displaced by those projects.
“Of course we must try to avoid red tape,” he told Emerging Markets. “That is what I already ask the staff to do, but there are many procedures which are necessary.
“We have so many departments for accountability, such as audit, general counsel and also compliance review, anti-corruption and independent evaluation.
“We need these procedures to keep our operations solid and I would argue that these are services to our [borrowing] countries based on lessons from past mistakes in developed and developing countries.”
Nakao said the ADB still had “a very important role in the Asia Pacific region for 50 years and it will continue to play an important role.
“We are trying to reform ourselves to make our services more speedy and more convenient for [borrowing] countries.”
His comments may be seen as a tacit response to the criticism from AIIB prospective president Jin Liqun — who is a former vice president of the ADB — that existing multilateral development banks are too slow and bureaucratic in processing project approvals and in other aspects of their operations.