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Statement at the 49th Annual Meeting of the ADB (Frankfurt, Germany / May 4, 2016)

Statement by the Honorable Taro Aso
Deputy Prime Minister of Japan and ADB Governor for Japan
at the Forty-Ninth Annual Meeting of the Board of Governors of
the Asian Development Bank
(Frankfurt, Germany, May 4, 2016)

Mr. Chairperson of the Board of Governors, Mr. President, Governors, and Distinguished Guests:

I would like to express my sincere gratitude to the Government of Germany and the citizens of Frankfurt for their warm welcome.

For the last five decades, the ADB has been leading economic development and poverty reduction in the Asian region. I would like to share my thoughts on the major challenges facing the ADB to play a greater role in further developing the region.

Promoting Quality Infrastructure
Improving the quality of infrastructure and enhancing investment in quality infrastructure are critical to achieve sustainable economic development in Asia. Based on this recognition, Japan launched in last May an initiative called Partnership for Quality Infrastructure, or the PQI, under Prime Minister Abe’s leadership, followed by specific actions announced in November.

Under the initiative, Japan established a new trust fund in the ADB to mobilize private sector investment in infrastructure in March this year. Japan will invest up to 1.5 billion U.S. dollars through the trust fund over 5 years. Another contribution pledged by Japan includes 40 million U.S. dollars to the Asia Pacific Project Preparation Facility, or the AP3F, which started its operation in January this year. In collaboration with the AP3F, Japan will support preparation of PPP projects and help accelerate mobilization of private finance in infrastructure.

As another major pillar of the PQI, a framework to support public infrastructure projects as a partnership between the Japan International Cooperation Agency, or JICA, and the ADB was launched. This framework enables the two institutions to extend strategic and comprehensive assistance to developing countries. JICA and the ADB will provide up to 10 billion U.S. dollars, and Japan will also utilize the Japan Fund for Poverty Reduction (JFPR) to provide technical assistance for project preparation. By supporting project development from the upstream, Japan will help develop quality infrastructure that fits the actual needs of the developing countries.

As the most important development partner in the region, the ADB needs to pursue policies to improve the quality of its projects. With this view point, I strongly expect the Bank to strengthen measures to incorporate high technologies into its projects, including introduction of procurement systems that is anchored by the concept of Value for Money.

Establishing a strong institution and skilled human resource pools are also important for the ADB. In this respect, I strongly support the institutional reforms that President Nakao has been advancing for effective and efficient business operation. Japan will also work hard to contribute to the ADB’s operations by making use of its human resources with high technology skills and experiences. I believe that these efforts will further strengthen the collaboration between Japan and the ADB, and help promote quality infrastructure in Asia.

The role of ADB and Japan’s Contribution
In responding to the massive needs for infrastructure investment in the region, it is extremely important that the ADB effectively utilizes its limited resources, taking full advantage of the ADF-OCR combination which will be implemented in January 2017. I strongly expect that the quantitative expansion of ADB operations through the balance sheet combination and ADB’s actions to improve quality of projects will function as the two pillars of the ADB’s infrastructure initiative.

The 12th replenishment of the Asian Development Fund, or the ADF, will also start from the beginning of the next year. Since Asia is a region frequently hit by natural disasters and pandemic diseases, ADF 12 should effectively address these challenges, taking measures to prevent and respond to the emerging risks. Recognizing these regional challenges and the importance of assistance to low income countries, Japan will continue to take the responsibility as the largest donor for the ADF 12.

As a country with abundant experience and knowledge in tackling natural disasters, Japan puts emphasis on supports to disaster-related sectors. In response to the earthquake in Nepal and the floods in Myanmar last year, Japan is supporting their recovery through the use of JFPR projects based on the concept of Build-Back-Better, in addition to our bilateral assistance. Under the JFPR, we are also supporting projects in the healthcare sector in Lao and Mongolia, and a pandemic risk management project in the GMS region.

Now that the new global development goals have been identified by the Sustainable Development Goals, the ADB should work toward revising its new long term strategy looking into year 2030 by clarifying the challenges facing the region and the ADB. The new strategy should appropriately reflect responses to emerging risks in the region, such as disaster prevention and response, regional health security. Since many developing countries are expected to achieve middle-income-country status by 2020, it is important that the ADB selectively and strategically engage with middle income countries. Strategy 2030 should also maintain the ADB’s nature of project-centered institution, while effectively providing program loans to support developing countries’ structural reforms. Furthermore, it will be necessary to strengthen measures to respond to economic crises in order to build a crisis-resilient Asia.

Building Together the Prosperity of Asia
As already stated, the expectation for ADB’s contribution to regional development is increasing in terms of both quantity and quality. In order for the ADB to play a greater role in this circumstance, the President’s strong leadership is indispensable. Since his inauguration in April 2013, President Nakao has demonstrated his superb leadership in undertaking various reforms of the Bank, including the ADF-OCR combination, operational reforms of the institution, and the policy to double Bank’s climate financing. Taking all these into consideration, I strongly expect that the ADB continue to contribute to further development of the region under the strong leadership of President Nakao.

The 50th anniversary of the ADB’s Annual Meetings will be held in Yokohama next year. I am honored to host this memorable meeting at this juncture when both the Asian region and the ADB are moving towards the new stage. Yokohama is a city that has been leading Japan’s development and internationalization since the opening of Japan in the late 19th century; therefore, I am confident that Yokohama is the most suitable place to discuss our future path towards the prosperity of Asia. Japan will make our best efforts to host a successful and memorable meeting in Yokohama.

Thank you.