ADB needs to address shocks that could disrupt developing countries’ rise — NEDA chief
THE ASIAN DEVELOPMENT Bank (ADB) has been “responsive” to developing countries’ needs but needs to offer more support in the area of cushioning shocks that could disrupt these countries’ progress towards becoming higher-income economies.
Socioeconomic Planning Secretary Ernesto M. Pernia said at the annual ADB meetings that the Philippines has benefited greatly from ADB assistance, which has brought down the poverty rate to 21.6% in 2015 from 25.2%.
Speaking at the 2017 Development Effectiveness Review seminar on the sidelines of the first day of the 51st ADB Annual Meetings, Mr. Pernia acknowledged ADB support for the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) subregional grouping, the conditional cash transfer program, and investment climate and productivity reforms to strengthen macroeconomic fundamentals “resulting in a higher growth trajectory since 2010.”
However, he said that the bank has done “relatively little” on family planning, “thereby materially delaying the country’s harvest of the demographic dividend,” as well as mitigating inter-regional disparities, improving higher education and health care, as well as promoting science and technology and innovation to prepare for “disruptive industries.”
The National Economic and Development Authority, which Mr. Pernia heads, was providing inputs for ADB’s long-term strategy.
“While ADB’s operational priorities are aimed at reducing inequalities and empowering the vulnerable sector, let me forward other development areas that seem not highlighted in the ADB Strategy 2030 but are of equal importance to the region: macroeconomic stability through surveillance to mitigate potential buildup of economic and financial stresses of household credit and real estate bubble — which can easily spread in the region,” Mr. Pernia said.
He also recommended the “recognition of risks and opportunities brought about by international migration,” while also highlighting the importance of addressing the needs of refugees and stateless individuals.
Stephen P. Groff, ADB’s Vice-President for Operations, meanwhile said that ADB’s approach to addressing the Philippines’ concerns will focus on the development of infrastructure.
“It underpins almost all SDGs (Sustainable Development Goals) in one way or another.What we find out in many of the countries is not just inequality of income, but inequality of access to services, health care, and jobs. Infrastructure plays a critical role in alleviating those,” he said.
ADB President Takehiko Nakao said that the ADB is setting its sights on expanding infrastructure support in Mindanao in addressing the long-standing security issues there.
“We also want to invest more in Mindanao, for sustaining peace in Mindanao. We need to develop Mindanao in a broader sense,” Mr. Nakao said in a separate press briefing yesterday.
He noted that the ADB signed a $380 million loan agreement with the Philippine government to help build 280 kilometers of roads on Mindanao, and may also participate in financing rail projects, to help the island better connect to regional markets.
“The reason Asia is successful is because of open trade and investment regimes, in addition to stable macroeconomic policies,” Mr. Nakao added.
Economists from the bank’s Regional Cooperation and Integration Thematic Group said in a separate forum that the creation of industrial parks and economic zones is seen as immediate measures for encouraging regional cooperation, while also creating “pockets” of growth by attracting business activity towards border areas and away from urban centers.
In particular, Indonesia and Timor Leste are expected to benefit from tourism cooperation, as well as by creating an island-wide livestock zone on the island of Timor, which the two countries share.
Cristelle Pratt, Deputy Secretary General of the Pacific Islands Forum Secretariat, said that effective cooperation requires a “collective effort, robust investment from banks. We need states to work together and it will require some political will.”
Moreover, Mr. Pernia noted that the ADB Strategy 2030 should also address factors contributing to the middle-income trap such as the “low level of economic diversification, inefficient financial market, low level of innovation weak institutions, and an inefficient labor market.”
“The ADB should provide support in enabling middle-income countries to transition to high-income status,” he said. — Elijah Joseph C. Tubayan
