Asian Development Bank

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Asian Development Bank

ADB logo
Motto	Fighting poverty in Asia and the Pacific
Formation	19 December 1966
Type	Regional organization
Legal status	Treaty
Purpose	Crediting
Headquarters	Mandaluyong, Metro Manila, Philippines
Region served	Asia-Pacific
Membership	67 countries
President	Takehiko Nakao
Main organ	Board of Directors
Staff	3,051
Website	http://www.adb.org

Asian Development Bank member states

  Outside regions

  Asia-Pacific region

The Asian Development Bank (ADB) is a regional development bank established on 22 August 1966 which is headquartered in Metro Manila, Philippines, to facilitate economic development in Asia. The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP, formerly the Economic Commission for Asia and the Far East or ECAFE) and non-regional developed countries. From 31 members at its establishment, ADB now has 67 members, of which 48 are from within Asia and the Pacific and 19 outside. The ADB was modeled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with members' capital subscriptions. Since 2014, ADB releases annual report of Creative Productivity Index and comparatively includes Finland and United States for the list of Asia-Pacific members.

At the end of 2013, Japan holds the largest proportion of shares at 15.67%. The United States holds 15.56%, China holds 6.47%, India holds 6.36%, and Australia holds 5.81%.

Organization

ADB Headquarters in Mandaluyong City, Philippines

The highest policy-making body of the bank is the Board of Governors, composed of one representative from each member state. The Board of Governors, in turn, elect among themselves the twelve members of the Board and their deputy. Eight of the twelve members come from regional (Asia-Pacific) members while the others come from non-regional members.

The Board of Governors also elect the bank's president, who is the chairperson of the Board of Directors and manages ADB. The president has a term of office lasting five years, and may be reelected. Traditionally, and because Japan is one of the largest shareholders of the bank, the president has always been Japanese.

The most recent president was Takehiko Nakao, who succeeded Haruhiko Kuroda in 2013.

The headquarters of the bank is at 6 ADB Avenue, Mandaluyong, Metro Manila, Philippines, and it has representative offices around the world. The bank employs 3,051 people, of which 1,463 (48%) are from the Philippines.

List of presidents

Name	Dates	Nationality
Takeshi Watanabe	1966–1972	Japan
Shiro Inoue	1972–1976	Japan
Taroichi Yoshida	1976–1981	Japan
Masao Fujioka	1981–1989	Japan
Kimimasa Tarumizu	1989–1993	Japan
Mitsuo Sato	1993–1999	Japan
Tadao Chino	1999–2005	Japan
Haruhiko Kuroda	2005–2013	Japan
Takehiko Nakao	2013–	Japan

History

1962–1972

The concept of a regional bank was formally mooted at a trade conference organized by the Economic Commission for Asia and the Far East (ECAFE) in 1963 by a young Thai banker, Paul Sithi-Amnuai, for developing intra-regional trade. (ESCAP, United Nations Publication March 2007, "The first parliament of Asia" pp. 65) Once the ADB was founded in 1966, Japan took a prominent position in the bank; it received the presidency and some other crucial "reserve positions" such as the director of the administration department. By the end of 1972, Japan contributed $173.7 million (22.6% of the total) to the ordinary capital resources and $122.6 million (59.6% of the total) to the special funds. In contrast, the United States contributed only $1.25 million for the special fund.

The ADB served Japan's economic interests because its loans went largely to Indonesia, Thailand, Malaysia, South Korea and the Philippines, the countries with which Japan had crucial trading ties; these nations accounted for 78.48% of the total ADB loans between 1967 and 1972. Moreover, Japan received tangible benefits, 41.67% of the total procurements between 1967 and 1976. Japan tied its special funds contributions to its preferred sectors and regions and procurements of its goods and services, as reflected in its $100 million donation for the Agricultural Special Fund in April 1968.

Takeshi Watanabe served as the first ADB president from 1966 to 1972.

1972–1986

Japan's share of cumulative contributions increased from 30.4% in 1972 to 35.5% in 1981 and 41.9% in 1986. In addition, Japan was a crucial source of ADB borrowing, 29.4% (out of $6,729.1 million) in 1973–86, compared to 45.1% from Europe and 12.9% from the United States. Japanese presidents Inoue Shiro (1972–76) and Yoshida Taroichi (1976–81) took the spotlight. Fujioka Masao, the fourth president (1981–90), adopted an assertive leadership style. He announced an ambitious plan to expand the ADB into a high-impact development agency. His plan and banking philosophy led to increasing friction with the U.S. directors, with open criticism from the Americans at the 1985 annual meeting.

During this period there was a strong parallel institutional tie between the ADB and the Japanese Ministry of Finance, particularly the International Finance Bureau (IFB).

Since 1986

Japan's share of cumulative contributions increased from 41.9% in 1986 to 50.0% in 1993. In addition, Japan has been a crucial lender to the ADB, 30.4% of the total in 1987–93, compared to 39.8% from Europe and 11.7% from the United States. However, different from the previous period, Japan has become more assertive since the mid-1980s. Japan's plan was to use the ADB as a conduit for recycling its huge surplus capital and a "catalyst" for attracting private Japanese capital to the region. After the 1985 Plaza Accord, Japanese manufacturers were pushed by high yen to move to Southeast Asia. The ADB played a role in channeling Japanese private capital to Asia by improving local infrastructure. The ADB also committed itself to increasing loans for social issues such as education, health and population, urban development and environment, to 40% of its total loans from around 30% at the time.

Lending

The ADB offers "hard" loans from ordinary capital resources (OCR) on commercial terms, and the Asian Development Fund (ADF) affiliated with the ADB extends "soft" loans from special fund resources with concessional conditions. For OCR, members subscribe capital, including paid-in and callable elements, a 50% paid-in ratio for the initial subscription, 5% for the Third General Capital Increase (GCI) in 1983 and 2% for the Fourth General Capital Increase in 1994. The ADB borrows from international capital markets with its capital as guarantee.

In 2009, ADB obtained member-contributions for its Fifth General Capital Increase of 200%, in response to a call by G20 leaders to increase resources of multilateral development banks so as to support growth in developing countries amid the global financial crisis. For 2010 and 2011, a 200% GCI allows lending of $12.5 billion to 13 billion in 2010 and about $11 billion in 2011. With this increase, the bank's capital base tripled from $55 billion to $165 billion.

Notable projects and technical assistance

• Afghan Diaspora Project
• Funding Utah State University led projects to bring labor skills in Thailand
• Earthquake and Tsunami Emergency Support Project in Indonesia
• Greater Mekong Subregional Program
• ROC Ping Hu Offshore Oil and Gas Development
• Strategic Private Sector Partnerships for Urban Poverty Reduction in the Philippines
• Trans-Afghanistan Gas Pipeline Feasibility Assessment
• Loan of $1.2 billion to bail it out of an impending economic crisis in Pakistan and ongoing funding for the countries growing energy needs, specifically Hydro-power projects
• Micro finance support for private enterprises, in conjunction with governments, including Pakistan and India.
• The Yichang-Wanzhou Railway project in the mountainous area of western Hubei Province and north-eastern Chongqing Municipality, China. (A US $500 million loan, approved in 2003.)
• Ulaanbaatar Airport and National Air Navigation Development Projects: Chinggis Khaan International Airport
• Colombo Harbour Expansion Project
• Asia Climate Partners, a joint venture between ADB, ORIX Corporation, and Robeco Institutional Asset Management, that funds green-energy projects.

Effectiveness

Given ADB's annual lending volume, the return on investment in lesson-learning for operational and developmental impact is high, and maximizing it is a legitimate concern. All projects funded by ADB are evaluated to find out what results are being achieved, what improvements should be considered, and what is being learned.

There are two types of evaluation: independent and self-evaluation. Self-evaluation is conducted by the units responsible for designing and implementing country strategies, programs, projects, or technical assistance activities. It comprises several instruments, including project/program performance reports, midterm review reports, technical assistance or project/program completion reports, and country portfolio reviews. All projects are self-evaluated by the relevant units in a project completion report. ADB’s project completion reports are publicly disclosed on ADB’s website. Client governments are required to prepare their own project completion reports.

Independent evaluation is a foundation block of organizational learning: It is essential to transfer increased amounts of relevant and high-quality knowledge from experience into the hands of policy makers, designers, and implementers. ADB’s Independent Evaluation Department (IED) conducts systematic and impartial assessment of policies, strategies, country programs, and projects, including their design, implementation, results, and associated business processes to determine their relevance, effectiveness, efficiency, and sustainability following prescribed methods and guidelines. It also validates self-evaluations. By this process of evaluation, ADB demonstrates three elements of good governance: accountability, by assessing the effectiveness of ADB's operations; transparency, by independently reviewing operations and publicly reporting findings and recommendations; and improved performance, by helping ADB and its clients learn from experience to enhance ongoing and future operations.

Operations evaluation has changed from the beginnings of evaluation in ADB in 1978. Initially, the focus was on assessing after completion the extent to which projects had achieved their expected economic and social benefits. Operations evaluation now shapes decision making throughout the project cycle and in ADB as a whole. Since the establishment of its independence in 2004, IED reports directly to ADB’s Board of Directors through the Board's Development Effectiveness Committee. Behavioral autonomy, avoidance of conflicts of interest, insulation from external influence, and organizational independence have made evaluation a dedicated tool—governed by the principles of usefulness, credibility, transparency, and independence—for greater accountability and making development assistance work better. Independent Evaluation at the Asian Development Bank presents a perspective of evaluation in ADB from the beginnings and looks to a future in which knowledge management plays an increasingly important role.

In recent years, there has been a major shift in the nature of IED's work program from a dominance of evaluations of individual projects to one focusing on broader and more strategic studies. To select priority topics for evaluation studies, IED seeks input from the Development Effectiveness Committee, ADB Management, and the heads of ADB departments and offices. The current thrusts are to improve the quality of evaluations by using more robust methodologies; give priority to country/sector assistance program evaluations; increase the number of joint evaluations; validate self-evaluations to shorten the learning cycle; conduct more rigorous impact evaluations; develop evaluation capacity, both in ADB and in DMCs; promote portfolio performance; evaluate business processes; and disseminate findings and recommendations and ensure their use. IED's work program has also been reinterpreted to emphasize organizational learning in a more clearly defined results architecture and results framework. It entails conducting and disseminating strategic evaluations (in consultation with stakeholders), harmonizing performance indicators and evaluation methodologies, and developing capacity in evaluation and evaluative thinking. All evaluation studies are publicly disclosed on IED's website (some evaluations of private-sector operations are redacted to protect commercially confidential information). IED's evaluation resources are displayed by resource type, topic, region and country, and date. Learnings are also gathered in an online Evaluation Information System offering a database of lessons, recommendations, and ADB Management responses to these. Details of ongoing evaluations and updates on their progress are made public too.

Beginning 2006, acting within the knowledge management framework of ADB, IED has applied knowledge management to lesson learning, using knowledge performance metrics.

Learning Lessons in ADB sets the strategic framework for knowledge management in operations evaluation. Improvements have been made that hold promise not only in IED but, more importantly, vis-à-vis its interfaces with other departments and offices in ADB, developing member countries, and the international evaluation community. In the medium term, IED will continue to improve the organizational culture, management system, business processes, information technology solutions, community of practice, and external relations and networking for lesson learning. Among the new knowledge products and services developed, Learning Curves are brief references designed to feed findings and recommendations from evaluation to a broader range of clients Evaluation News report on events in monitoring and evaluation. Evaluation Presentations offer short photographic or PowerPoint displays on evaluation topics. Auditing the Lessons Architecture highlights the contribution that knowledge audits can make to organizational learning and health.

Of the 1,106 ADB-funded projects evaluated and rated as of December 2007, 65% were assessed as successful, 27% partly successful, and 8% as unsuccessful.

Criticism

Since the ADB's early days, critics have charged that the two major donors, Japan and the United States, have had extensive influence over lending, policy and staffing decisions.

Oxfam Australia has criticized the Asian Development Bank of insensitivity to local communities. "Operating at a global and international level, these banks can undermine people's human rights through projects that have detrimental outcomes for poor and marginalized communities." The bank also received criticism from the United Nations Environmental Program, stating in a report that "much of the growth has bypassed more than 70 percent of its rural population, many of whom are directly dependent on natural resources for livelihoods and incomes."

There had been criticism that ADB's large scale projects cause social and environmental damage due to lack of oversight. One of the most controversial ADB-related projects is Thailand's Mae Moh coal-fired power station. Environmental and human rights activists say ADB's environmental safeguards policy as well as policies for indigenous peoples and involuntary resettlement, while usually up to international standards on paper, are often ignored in practice, are too vague or weak to be effective, or are simply not enforced by bank officials.

The bank has been criticized over its role and relevance in the food crisis.The ADB has been accused by civil society of ignoring warnings leading up the crisis and also contributing to it by pushing loan conditions that many say unfairly pressure governments to deregulate and privatize agriculture, leading to problems such as the rice supply shortage in Southeast Asia.

The bank has also been criticized by Vietnam War veterans for funding projects in Laos, because of the United States' 15% stake in the bank, underwritten by taxes. Laos became a communist country after the U.S. withdrew from Vietnam, and the Laotian Civil War was won by the Pathet Lao, which is widely understood to have been supported by the North Vietnamese Army.

In 2009, the bank endorsed a $2.9 billion funding strategy for proposed projects in India. The projects in this strategy were only indicative and still needed to be further approved by the bank's board of directors; however, PRC Foreign Ministry spokesman Qin Gang claimed, "The Asian Development Bank, regardless of the major concerns of China, approved the India Country Partnership strategy which involves the territorial dispute between China and India. China expresses its strong dissatisfaction over this.... The bank's move not only seriously tarnishes its own name, but also undermines the interests of its members."

United Nations Development Business

The United Nations launched Development Business in 1978 with the support of the Asian Development Bank, the World Bank, and many other major development banks from around the world. Today, Development Business is the primary publication for all major multilateral development banks, United Nations agencies, and several national governments, many of whom have made the publication of their tenders and contracts in Development Business a mandatory requirement.

Strategy 2020

Strategy 2020 is The Long-Term Strategic Framework of the Asian Development Bank and wide strategic framework to guide all its operations to 2020.

List of 20 Largest Countries and Regions by Subscribed Capital and Voting Power

The following table are amounts for 20 largest countries by subscribed capital and voting power at the Asian Development Bank as of December 2014.

The 20 Largest Countries by Subscribed Capital and Voting Power at the Asian Development Bank

Rank	Country	Subscribed Capital (% of Total)	Rank	Country	Voting Power (% of Total)
	World	100.000		World	100.000
1	Japan	15.677		European Union	15.724
2	United States	15.567	1	Japan	12.840
	European Union	14.429	2	United States	12.752
3	China	6.473	3	China	5.477
4	India	6.359	4	India	5.386
5	Australia	5.812	5	Australia	4.948
6	Canada	5.254	6	Canada	4.502
7	Indonesia	5.131	7	Indonesia	4.404
8	South Korea	5.060	8	South Korea	4.347
9	Germany	4.345	9	Germany	3.775
10	Malaysia	2.735	10	Malaysia	2.487
11	Philippines	2.393	11	Philippines	2.213
12	France	2.338	12	France	2.169
13	Pakistan	2.188	13	Pakistan	2.049
14	United Kingdom	2.051	14	United Kingdom	1.940
15	Italy	1.815	15	Italy	1.751
16	New Zealand	1.543	16	New Zealand	1.533
17	Thailand	1.368	17	Thailand	1.393
18	Taiwan	1.094	18	Taiwan	1.174
19	Netherlands	1.030	19	Netherlands	1.123
20	Bangladesh	1.026	20	Bangladesh	1.119

Members

Asian Development Bank - Developing Member Countries (DMC) graduation stages

  Outside regions

  Asia-Pacific region developed members

  DMC graduated from assistance, Group-D

  Ordinary Capital Resources (OCR) financing, Group-C

  OCR and ADF blended financing, Group-B

  Asian Development Fund (ADF) financing, Group-A

ADB has 67 members (as of 2 February 2007): 48 members from the Asian and Pacific Region, 19 members from Other Regions. Notable non-members are Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, North Korea, Oman, Qatar, Saudi Arabia, the United Arab Emirates, and Yemen. Names are as recognized by ADB.
The year after a member's name indicates the year of membership. At the time a country ceases to be a member, the Bank shall arrange for the repurchase of such country's shares by the Bank as a part of the settlement of accounts with such country in accordance with the provisions of paragraphs 3 and 4 of Article 43.

Country Date of Accession Afghanistan 1966 Australia 1966 Cambodia 1966 India 1966 Indonesia 1966 Japan 1966 Korea, Republic of 1966 Lao People's Democratic Republic 1966 Malaysia 1966 Nepal 1966 New Zealand 1966 Pakistan 1966 Philippines 1966 Samoa 1966 Singapore 1966 Sri Lanka 1966 Taipei,China 1966 Thailand 1966 Viet Nam, Socialist Republic of 1966 Hong Kong, China 1969 Fiji 1970 Papua New Guinea 1971 Tonga 1972 Bangladesh 1973 Burma 1973 Solomon Islands 1973 Kiribati 1974 Cook Islands 1976 Maldives 1978 Vanuatu 1981 Bhutan 1982 China, People's Republic of 1986 Marshall Islands 1990 Micronesia, Federated States of 1990 Mongolia 1991 Nauru 1991 Tuvalu 1993 Kazakhstan 1994 Kyrgyz Republic 1994 Uzbekistan 1995 Tajikistan 1998 Azerbaijan 1999 Turkmenistan 2000 Timor-Leste 2002 Palau 2003 Armenia 2005 Brunei Darussalam 2006 Georgia 2007

Country Date of Accession Austria 1966 Belgium 1966 Canada 1966 Denmark 1966 Finland 1966 Germany 1966 Italy 1966 Netherlands 1966 Norway 1966 Sweden 1966 United Kingdom 1966 United States 1966 Switzerland 1967 France 1970 Spain 1986 Turkey 1991 Portugal 2002 Luxembourg 2003 Ireland 2006

See also

• Asian Infrastructure Investment Bank (AIIB)
• Asian Development Bank Institute (ADBI)
• African Development Bank
• Asia Cooperation Dialogue
• Asian Clearing Union
• International Monetary Fund
• World Bank
• South Asia Subregional Economic Cooperation

External links

• Bank Information Center
• The ADB website
• ADB Institute
• "Inequality Worsens across Asia", Dollars & Sense magazine, November/December 2007. Article discussing recent reports from the ADB.
• "The right business environment" Youth unemployment in Asia. An interview with Jesus Felipe, advisor in the Economics and Research Department of ADB.