Spurred on by radical changes in Asia’s economic landscape, a group of outside experts or “wise men” is set to be appointed by the ADB later this year to focus on an equally radical change for the bank. President Haruhiko Kuroda hopes to have a formula for a new look ADB ready for next year’s annual meeting, a senior bank official told Emerging Markets yesterday.
“We may ask some outside experts to provide input and then start a review of the long-term strategy framework sometime next year,” Kuroda told Emerging Markets last month, adding that the committee will probably consist of senior representatives from business and finance as well as academics and government officials. Yesterday vice-president Geert van der Linden confirmed that the hope is to have the blueprint ready for the Kyoto meeting in Japan next May.
Some wonder whether the ADB, which will celebrate its 40th anniversary in December this year, is facing a “mid-life crisis.” It has to cater to 46 developing nations spread across Asia-Pacific, the most vast and populous region in the world where abject poverty coexists with conspicuous prosperity and where the range of development challenges is equally vast.
Observers feel that such a review is overdue. Charles Dallara, managing director of the Washington-based Institute of International Finance told Emerging Markets yesterday that all regional banks, not only the ADB, should take a hard look at their future role in a world where globalization and economic progress have brought enormous changes and where financial markets are playing a much larger role.
Proposals were advanced a few years ago by the quasi-official Northeast Asian Development Forum for a separate North East Asian Development Bank (NEADB) to be formed, which would have carved off a major slice of the Manila-based ADB’s territory. That proposal has gone nowhere, but the ADB could possibly end up being a “small bank for small countries,” van der Linden suggested.
The ADB currently covers not only a
vast range of countries but also tasks. It addresses “30 sector and thematic policies,” van der Linden noted. “We need to define our core business,” he said. Infrastructure provision is likely to remain one of these activities but some regional members of the ADB have a need for policy advice in much more “sophisticated” areas than those at an early stage of development, he added.
Dallara, speaking on behalf of several hundred global financial institutions in membership of the IIF, suggested the ADB could focus on “soft” as well as “hard” infrastructure. Developing countries in Asia need to improve their legal and other frameworks so as to attract more foreign investment and to smooth the way for the local private sector, he said.