Asian Development Bank: Business Report

Profile of Asian Development Bank

The Asian Development Bank, a multilateral development finance institution, was founded in 1966 by 31 member governments to promote the social and economic progress of the Asian and Pacific region. Over the past 31 years, the Bank’s membership has grown to 57, of which 41 are from within the region and 16 from outside the region. The Bank gives special attention to the needs of the smaller or less-developed countries and priority to regional, subregional, and national projects and programs.

Functions

The Bank’s principal functions are
(i) to extend loans and equity investments for the economic and social development of its developing member countries (DMCs)
(ii) to provide technical assistance for the preparation and execution of development projects and programs, and for advisory services;
(iii) to promote and facilitate investment of public and private capital for development purposes; and
(iv) to respond to requests for assistance in coordinating development policies and plans of its DMCs. Developing minds and skills through basic education and vocational training.

Shareholders

The two largest shareholders of the Bank, as of 31 December 1997, were Japan and the United States, each accounting for 16 percent of total subscribed capital. Forty-one regional members accounted for 63 percent of total shareholding, while 16 nonregional members contributed 37 percent of total.

Location

The Bank’s headquarters is located in Manila, Philippines. It has resident missions in Bangladesh, Cambodia, India, Indonesia, Nepal, Pakistan, Sri Lanka, and Vietnam, and has opened resident missions in Kazakstan and Uzbekistan. These resident missions improve the Bank’s coordination with the governments and donor agencies; assist with activities related to country programming and processing of new loan and technical assistance projects; and helps ensure project quality. The Bank has a regional mission in the South Pacific (Port Vila, Vanuatu) which undertakes Bank operations in South Pacific DMCs (Cook Islands, Fiji, Kiribati, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu), particularly strengthening the working relationship between the Bank and South Pacific DMC governments in processing and implementing loan and technical assistance projects in coordination with bilateral and multilateral donor agencies. Three representative offices have been established for Europe (Frankfurt), Japan (Tokyo), and North America (Washington, DC) to strengthen the Bank’s representation in donor countries and assist in its resource mobilization efforts by promoting cofinancing with official and commercial sources.

Bank Operations

Strategic Objectives
The Bank’s strategic development objectives, as defined in the Bank’s Medium-Term Strategic Framework (1995-1998), are to promote economic growth, reduce poverty, support human development (including population planning), improve the status of women, and protect the environment. The desirable project mix between social and economic development adopted by the Bank for all of its public sector lending operations — is a 50:50 ratio. At least 50 percent of the total number of projects will have social or environmental objectives either as primary or secondary objectives; the remaining will support projects with economic growth as the primary objective. In terms of lending volume, the Bank’s desirable lending mix is to have 40 percent of total public sector lending for projects with social or environmental objectives by the end of the decade. Operating objectives in each DMC fall within four areas: policy support; capapacity building for development management; creating/strengthening productive capacity, infrastructure, and services; and regional cooperation.

Sector Coverage
The Bank’s operations cover a wide spectrum of activities and have been classified according to the following sectors:
(i) agriculture and natural resources,
(ii) energy,
(iii) industry and non-fuel minerals,
(iv) finance,
(v) transport and communications,
(vi) Social infrastructure, and combinations of some of the sectors (i) to (vi).

Project Process

Before any project is identified for Bank financing, Bank staff review a country’s economy, particularly its national and sectoral development programs, and determine the prospects for its success. Country programming missions visit DMCs regularly to discuss topics of mutual interest with government officials and to select suitable projects for Bank assistance. Since the levels of economic growth, as well as the priorities for development, vary from one DMC to another, the Bank tries to select those projects that will contribute most effectively to the economic and social development of the country concerned, in conformity with the country and Bankwide strategies. Once it is confirmed that investment in the project is justified, the Bank evaluates the project.
In responding to requests from member governments for loans, the Bank assesses the technical and economic viability, social impact, and financial soundness of projects and the way in which the projects fit into the economic framework and development priorities of the borrowing countries. Standards of accounting and project implementation are maintained. Most contracts are awarded on the basis of international competitive bidding, local competitive bidding, or international shopping, as appropriate. Projects are analyzed and executed and, where appropriate, external consultants are hired to ensure that high standards of performance are achieved throughout the life of the project.

Project Quality

The Bank aims to achieve better project quality and development impact. An important ingredient of project quality is effective implementation. While implementation of projects is mainly the responsibility of its DMCs, the
Bank emphasizes project administration and portfolio review to enhance project effectiveness and efficiency. The four attributes of project quality are economic and financial viability, social impact, implementability, and sustainability. Emphasis is placed on the broader objectives of capacity building, beneficiary participation, and project performance, rather than simply on the physical completion of projects.

Operations Evaluation
The Bank evaluates projects and programs financed by it to obtain a systematic and comprehensive assessment of the extent to which the project or program objectives have been or are likely to be achieved. Feedback from this activity is used to improve the Bank’s policies and procedures and the quality of the design and execution of its lending to DMCs. Evaluation activities include
(i) project completion reporting and independent performance evaluation of a project or program, including evaluation of the efficiency of its implementation after the project or program is completed; and
(ii) intensive analysis of both ongoing and completed projects concerning certain specific issues or subjects of broader significance to the Bank’s strategic objectives and policies, and country or sector-specific areas of operational relevance.

Private Sector Development

The Bank helps selected private enterprises undertake financially viable projects that have significant economic merit and for which normal sources of commercial finances are not available. Bank support is provided directly to private enterprises and financial institutions through loans, underwriting, investment in equity securities, cofinancing, investment advisory services, and guarantees. The Bank’s private sector operations focus primarily on assistance to
(i) financial intermediaries involved in leasing, venture capital financing, merchant banking, mutual funds, insurance, securitization, credit enhancement, and credit rating;
(ii) infrastructure projects such as in the power, water supply, transport and telecommunications sectors, including
build-own-operate/build-operate-transfer projects; and
(iii) in limited cases, industrial, agribusiness, and other projects with significant economic merit.

Co-financing

The Bank’s cofinancing and guarantee policy supports the Bank’s emphasis on resource mobilization and catalytic investment strategy. The basic objective of cofinancing operations is to help leverage the Bank’s resources and expand the Bank’s catalytic role in directing official and private financial flows to its DMCs.
The Bank derives its cofinancing funds from
(i) official aid agencies,
(ii) export credit agencies, and
(iii) market institutions.
For every dollar lent by the Bank, an additional 49 cents have been mobilized by way of cofinancing. The Bank’s cofinancing operations include increasing emphasis on commercial cofinancing and the use of credit enhancements such as the Bank’s Complementary Cofinancing Scheme, guarantees, and related services.

Financial Management

Lending Policies

The Bank is authorized to make, participate in, or guarantee loans to its DMCs or their governments or any of their agencies, public or private enterprises operating within such countries, as well as to international or regional entities concerned with economic development in the region. Loans are approved by the Bank only for projects or programs of high development priority. The Bank provides financing to its borrowers to cover foreign exchange expenditures, and also finances local currency expenditures in certain cases.

Financial Resources
The financial resources of the Bank consist of ordinary capital resources (OCR), comprising subscribed capital, reserves, and funds raised through borrowings; and special funds, comprising contributions made by member governments, repayments from past loans, and amounts previously set aside from paid-in capital. Loans from OCR lending operations are generally made to member governments which have attained a somewhat higher level of economic development. Loans from the Asian Development Fund (ADF) are made on highly concessional terms and almost exclusively to DMCs with a low per capita gross national product and limited debt-repayment capacity.

Lending Windows

The Bank has three lending windows for OCR loans. These are
(i) the pool-based multicurrency loan window where loan disbursements are made in a variety of currencies of the Bank’s choice;
(ii) the pool-based single-currency loan window in US dollars; and
(iii) the market-based loan (MBL) window which provides single currency loans to private sector borrowers and to financial intermediaries in the public sector. The MBL window provides single-currency loans in US dollars, Japanese yen, or Swiss francs to private sector borrowers and government-guaranteed financial intermediaries at current terms prevailing in international financial markets. MBL borrowers have the option of having the interest rates of their loans in either fixed or floating rate terms. MBL lending to government-guaranteed financial intermediaries is limited to US$1 billion in loan commitments.

Technical Assistance

The basic objective of the Bank is to maximize development impact not only in terms of lending volume but also through technical assistance that is not directly related to lending. The emphasis is on support for various DMC programs in terms of policy reforms, fiscal strengthening, support for good governance, capacity building, promotion of financial and capital markets, subregional economic cooperation, environmental protection, and natural resource management. Technical assistance activities are funded by the Bank through grants, loans, or a combination of both. Funds from grants come from contributions to the Technical Assistance Special Fund, OCR net income transfers, a fund donated by the Government of Japan called the Japan Special Fund, and untied grants from bilateral sources. Funding for technical assistance loans comes from OCR, ADF, and other official bilateral sources. Bank technical assistance is -classified under four development activities: project preparatory technical assistance, project implementation technical assistance, advisory technical assistance, and regional technical assistance.

Financial Policy

The Bank was established primarily to perform the financial intermediation role of transferring resources from global capital markets to developing countries to promote socioeconomic development. The ultimate goal of the financial policy of the Bank is to achieve effective financial intermediation. Its major elements include net income and reserves policy, liquidity policy, loan product and credit risk policy, borrowing policy, and capital management policy.

Borrowings

The Bank has been an active borrower in world capital markets since 1969. Its borrowing program is broadly determined by a number of factors, including the Bank’s lending operations, cash flow requirements, its liquidity policy, and its perception of current and future market conditions. In the initial years of operations, the Bank’s capital was the major source of funds for ordinary lending, but since the early 1980s, Bank borrowings have accounted for a greater share than capital and reserves.

Liquidity Management

It is the policy of the Bank to maintain liquid assets amounting to at least 40 percent of the total of undisbursed alances of pool-based loans at the end of the year. The main purpose of the liquidity policy is to ensure the uninterrupted availability of funds to meet loan disbursements, debt servicing, and other expenditures. Investment of liquid assets is governed by the Investment Authority approved by the Bank’s Board of Directors.

History

Twenty-two years ago, when the Asian Development Bank began operations, the first President, Takeshi Watanabe, noted that the Asian and Pacific region was beginning to emerge “from a long sleep” and that “the time has come to roll up our sleeves.” The region has done precisely that. We are proud to play a modest, but significant role in the economic and social development in our developing member countries. Over the years, while needs have changed, the Bank has tried to respond positively and creatively to these changes. This is an overview of our history.

Birth of an Idea

The Asian Development Bank was born at a time of exciting change. The postwar years of rehabilitation and reconstruction had given way to a new era which held the promise of prosperity. Amid the optimism, however, the stark realities of poverty and hardship still dominated the lives of most people in Asia and
the Pacific.

In the early 1960s, the United Nations’ Bangkok-based Economic Commission for Asia and the Far East (ECAFE) estimated that Asia
and the Pacific faced an annual deficit of $1 billion in external assistance. The ADB was conceived as a means of filling that gap.
Following an inaugural meeting in Tokyo in November, 1966, the newly named Asian Development Bank was installed in Manila,Philippines.

1966–1972

The Watanabe Years resident Watanabe, the first President of the ADB, combined idealism with practicality, toughness with compassion. Watanabe once likened the ADB to “a family doctor” who tries to learn about the health of his many patients so he can help in their hour of need. Policies and targets were formulated, and regional surveys were undertaken to develop a fuller understanding of the social and economic conditions of the Bank’s developing member countries.

The Bank approved its first loan — a $5 million to the Industrial Finance Corporation of Thailand for onlending to industrial enterprises — on 23 January 1968, just a little more than a year after it had started business. The Future over the years, the Asian and Pacific region has passed through a period of tremendous economic progress characterized by sharp increases in growth rates, per capita incomes, life expectancy and exports. Four of the Bank’s DMCs – Hong Kong, Republic of Korea, Singapore and Taipei,China – have developed
as newly industrializing economies and graduated from the ranks of the Bank’s borrowing countries.

The Bank is proud to have played a modest, but significant, supporting role in the region’s development. It has supported every major
economic sector in its DMCs, and diversified the scope of its activities and its lending modalities to meet the DMCs’ rapidly changing needs.

In the early years of the Bank, public sector project lending was the main priority and agriculture and agro-industry received the most
attention. Over time, the scope of Bank operations spread to cover industry, energy, and physical and social infrastructure. In the 1980s,
lending for social infrastructure increased to help reduce poverty and meet the basic needs of the poor. The Bank is now paying greater attention to the role of the financial sector in mobilizing domestic and international resources for the socioeconomic development of its DMCs.

Today, sectorwide activities, credit lines to development finance institutions to support private sector activities and policy-based lending
are growing in importance for the Bank.

However, much remains to be done in the region, which has the largest concentration of the world’s poor people. Moreover, even as
economic growth increases, the region’s natural resources are dwindling and the problems of poverty are compounded by the steady increase
in population.

Objectives

n 1995, the Bank adopted Medium-Term Strategic Framework(MTSF) (1995-1998), which sets out five strategic development objectives: economic growth, reducing poverty, supporting human development, improving the status of women, and protecting the environment, in fulfilling the Bank’s mandate to contribute to the sustainable development of the region’s countries.

In 1997, for the third consecutive year, the Bank exceeded its target of a 50:50 split between the number of projects for economic growth and for social and -environment projects. The share of social and environment projects in the total number of projects reached 61 percent in 1997.
In terms of volume of lending, the share of social and environment projects was 56 percent (excluding the large Financial Sector Program for the Republic of Korea).

Economic Growth

In 1997, the Bank lent $6.4 billion for 28 traditional growth projects. The unusually large volume of lending for economic growth projects was
because of the program loan to the -Republic of Korea. Excluding the Financial Sector Program for the Republic of Korea, the total lending for
growth projects would be of $2.4 billion. These projects covered most of the Bank’s DMCs and were widely spread across sectors, including agriculture, energy, industry, finance, and transport and communications.

Agriculture: In the agriculture sector, the projects with a growth focus had diversified emphases: from building irrigation systems in
Indonesia, to developing rural financial institutions in the Kyrgyz Republic.

Energy: Energy projects financed power transmission in People’s Republic of China (PRC), Lao People’s Democratic Republic (Lao
PDR), Maldives, Philippines, and Viet Nam, and LPG transmission in India. The broad focus for the energy sector was restructuring of the
power sector, expansion of power supply, and enhancement of power companies’ operational efficiency.

Transport and communications

The largest number of growth projects was in the transport and communications sector (ten projects), including three airport projects (Indonesia, Nepal, and Philippines), two port projects (Indonesia and the PRC), two railway projects (Bangladesh and the PRC), and three road projects (Fiji, Lao PDR, and Sri Lanka). Significant emphasis was placed on promoting sector and institutional reforms to enhance the commercialization of, and private sector -participation in, the provision and operation of transport and communications infrastructure. The Bank also assisted in the improvement of ports and air transport network in Indonesia to support growth initiatives in the East Asian region.

Capital and financial markets: The numerous projects in the capital and financial markets sectors reflected the key role that these sectors play in the development process, and the Bank’s emphasis on being a catalyst of financial resources rather than simply a provider of financial assistance. The role of the Bank in promoting reforms in the capital and financial markets -became particularly critical in the wake of the financial crisis shaking East Asian markets. The five financial sector loans included, among -others, a $4 billion financial sector program for the Republic Korea, as part of a total assistance package amounting to more than $57 billion to be contributed by the ADB, IMF, World Bank, and bilateral sources. In addition, the Bank provided $300 million for the financial market reform program in Thailand, which is part of the Bank’s pledge of $1.2 billion in the context of the assistance package to be provided also by the ADB, IMF, World Bank, and several bilateral donors.

Technical Assistance

The Bank’s technical assistance -program was an integral component of efforts to promote economic growth. Technical assistance operations continued to support the preparation of numerous projects promoting economic growth and to assist in policy reforms, institution building, and the creation of an enabling environment for private sector development. Examples include technical assistance for investment promotion in the Pacific DMCs, which assisted improvements in the policy, regulatory, and institutional framework relating to foreign direct investment; and technical assistance -complementing the first major power project with private sector -participation in Bangladesh (Meghnaghat Power), which assisted the Government in developing procedures, guidelines, and documents for bidding, as well as evaluation of proposals. The Bank also continued to assist the People’s Republic of China in the competitive bidding process for build-own-transfer power projects using the Changsha BOT Power Plant in Hunan Province as a pilot project. Technical assistance was employed to back up subregional growth efforts in the Greater Mekong Subregion (GMS), Central Asian Republics (CARs), and the recently identified South Asia Growth Quadrangle (Bangladesh, Bhutan, India, and Nepal).

Poverty Reduction

Poverty reduction is a strategic objective of the Bank. Poverty remains a trap for more than 950 million people in the Asian and Pacific region, with a large part of this total facing absolute poverty. The total number of poor in the region represents nearly three quarters of all the world’s poor. While the absolute number of poor persons in the region is expected to decrease -gradually, by the year 2000, the region will still have more than half of the world’s poor. The roots of poverty lie in a complex fabric of social and -economic factors, making poverty reduction one of the most persistent -development challenges the Bank addresses. Further exacerbating the challenge of poverty is that with its complexity and multifaceted nature, there is difficulty in defining and measuring the many aspects of poverty.

Poverty reduction has been an implicit element of all operations since the Bank was established. The Bank pays close attention to poverty reduction issues in the formulation and implementation of its project and technical assistance activities. The Bank also provides support for policy reform in individual countries that would provide more opportunities for the poor. In terms of specific projects, during 1997 two projects approved had poverty reduction as a specific -primary objective: the Rural Income Generation Project in Indonesia and the D.G. Khan Rural Development Project in Pakistan. Ten additional projects had poverty reduction as a secondary objective.

One approach in the Bank’s poverty reduction efforts is the promotion of broad-based economic growth and support for targeted interventions.

This approach is based on the experience of countries that have been most successful in reducing poverty. Sustained rates of economic growth in turn provide opportunities for the poor to participate in and benefit from this growth. Support for basic social services, particularly education and health services, helps the poor participate more -effectively.

At the same time, the Bank pursues poverty reduction through initiatives that are oriented toward the needs of specific countries. These initiatives are based on particular country-level conditions and concerns and have a specific country-based focus. Poverty reduction efforts increasingly are becoming an element of country strategy -studies and country programming processes.

 

Supporting Human Development
The Bank has continued to emphasize its strategic objective of -promoting human development by expanding investments in the critical sectors of education, health and nutrition, water supply and sanitation, and urban development. Human development is an expanding area of activity for the Bank. Of a total of 72 projects approved during 1997 excluding private sector and engineering technical assistance loans, 27 projects had human development as either their primary (22) or secondary (5) objective.

Supporting human development is not only a means to achieving sustainable and long-term development, but is also an end in itself.

Sustained economic growth requires educated, skilled, and healthy people. At the same time, the objectives of reducing poverty, meeting basic needs, and providing access to a better quality of life now and for future generations cannot be achieved without investing in human development.

 

Education:

The Bank aims to support the education sector in its DMCs by investing in basic education, improving the quality of education, and making education in general – and skills training in particular – more relevant to market needs. Consistent with the Bank’s goal of investing in projects with the highest returns, new Bank projects in Bangladesh, Indonesia, Kazakstan, Uzbekistan, and Viet Nam emphasize basic education. A project in Indonesia aims to improve the quality, management, and access to school for students in poor, rural areas. Bank projects in Malaysia and Sri Lanka focus on improving the quality of technical and higher education system in order to address the key constraint of the shortage of engineers and technically skilled labor. A sector development project in the Kyrgyz Republic supports a comprehensive review of education sector policies and provides investments for education infrastructure. A project in Uzbekistan supports the development of textbooks in basic education, incorporating new areas of knowledge and skills required for the transition to a market economy.

Health and nutrition: The Bank’s main strategies for supporting the health improvement efforts of its DMCs are to focus on primary
health care services, the control of communicable diseases, and -capacity building. An innovative Bank project in Bangladesh seeks
to improve the provision of primary health care in four large urban areas by contracting services to NGOs and the private sector
(Box___, page ___. ) A new project in Indonesia supports government efforts to control communicable diseases, since such
efforts have large positive externalities, and self-target the poor.

A sector development program in Mongolia is supporting a comprehensive reform of health sector policies, including the introduction of private sector delivery of health services and key investments. In a sector development program in Papua New Guinea, the focus is on introducing key reforms in the health care delivery system, including the establishment of a -competency-based health
personnel training system.
Water supply and sanitation: The Bank’s main objective for the water supply and sanitation subsector is to increase the availability
of safe drinking water and adequate sanitation facilities. Appropriate water and sanitation services are essential for the health and
well-being of the population, and the provision of such services should be cost-effective, sustainable, and affordable. In addition to
financing stand-alone projects, the Bank typically incorporates water supply and sanitation components into integrated urban development
projects to provide a balanced package of development benefits. The Bank also supports institutional strengthening and capacity-buildin programs aimed at improving service provision, financial management, cost recovery, and facility maintenance. Private sector participation, protecting the environment, and involving NGOs and local communities in project selection, design, and implementation are promoted and were continued in 1997.

Urban development: Addressing the rapid pace of urbanization throughout Asia is a formidable challenge facing the majority of the
Bank’s DMCs. The Bank encourages an integrated approach to urban development by supporting investments for a balanced range of
-infrastructure and services, targeted at meeting the basic needs and improving the living conditions of the urban poor. Subsectors incorporated into integrated urban development projects include water supply and sanitation, solid waste management, flood control, drainage, roads, urban transport, land development, slum improvements, and low-income housing. The Bank considers
institutional capacity -building as essential for promoting the efficient delivery, management, and maintenance of urban services on a
sustainable basis. Urban development projects also promote private sector participation, especially in the water supply, wastewater, and
solid waste subsectors. Technical assistance and training activities for urban sector projects introduce relevant institutions and agencies
to different techniques and approaches for recovering costs, mobilizing local resources, and collecting revenues.

During 1997, the Bank approved an integrated urban development project in the Lao PDR which will support the development of primary urban infrastructure in the four largest secondary towns of Luang Prabang, Pakse, Savannakhet, and Thakhet. The project also includes an extensive capacity building component aimed at -strengthening the urban services management capabilities of local administrations. The Bank also approved a housing finance project for India which is designed to

(i) expand the national housing finance system by establishing lending linkages between the formal
housing finance sector and community-based finance institutions, thereby increasing access to housing finance by low-income households;

(ii) increase the availability of housing finance by leveraging public and
private sector capital;

(iii) support innovative projects for low-income housing slum improvements; and and

(iv) expedite policy reforms in the sector to alleviate existing constraints to effective housing -delivery.

 

Gender Development

Improving the status of women is one of the strategic objectives of the Bank. Gender and development is no longer seen as merely an issue of human rights or social justice; investment in women now is widely recognized as crucial to achieving sustainable development.

Economic analysis recognizes that low levels of education and training, poor health and nutritional status, and limited access to resources not only depress the quality of life for women, but also limit the productivity of women and their contribution to economic efficiency, economic growth, and development.

Public policies and investments that raise the status of women have specific benefits such as improved public health, lower infant and maternal mortality, lower fertility rates, increased life expectancy, and reduced welfare costs.

Development programs that include measures to expand economic opportunities for women and increase their incomes, combined with efforts to improve women’s health and education, result in greater economic efficiency and decreased levels of poverty.

Discrimination against women, whether in the household, in the public realm or in markets, carries both personal costs for the individual and social and economic costs for society at large.

View the policy in Word 97 or Acrobat PDF.

he Bank first adopted a Policy on the Role of Women in Development (WID) in 1985. Like other development agencies, the Bank’s approach to WID was to implement a range of activities within its regular operational program that emphasized women as a special target group. Since
formulating its WID Policy in 1985, the Bank’s approach to dealing with WID issues has evolved from its cumulative experience along very similar lines to that of other development agencies. The Bank has progressed from a WID to a Gender and Development (GAD) approach that allows gender to be seen as a cross-cutting issue influencing all social and economic processes.

In 1992, the Bank Policy on WID gained reinforcement and added momentum by being included as one of the Bank’s five strategic
development objectives (SDOs) alongside economic growth, poverty reduction, human development including population planning, and sound management of natural resources and the environment. This elevated women into the mainstream of the Bank’s development agenda. The new emphasis on women in the Bank’s development agenda led to some refocusing of direction and shift in emphasis from addressing women only in projects in the social sectors to considering gender implications in all aspects of Bank operations. A mainstreaming approach was developed and largely adopted.

In this respect the Bank’s Policy on WID is now out of date, as the mainstreaming approach is not made explicit. Actual practices have moved
beyond the Policy. This revised Policy on GAD, aside from the change in name, will codify and give formal recognition to existing Bank requirements and practices. It will also introduce new institutional mechanisms for increasing and improving the Bank’s performance and activities directed to improving the status of women.

During the decade since the Bank’s Policy on WID was initially formulated and adopted (1985), there have been significant changes in the Region; in the field of women in development; in the issues and concerns of women; and in the Bank itself. A revised Policy is needed to (i) reflect the changing environment, (ii) codify the Bank’s transition from WID to GAD, (iii) incorporate current thinking on gender and development issues, (iv) generate an increase in Bank activities directly benefiting women, (v) provide the appropriate policy framework for the new approaches and practices, and (vi) introduce the institutional mechanisms to operationalize the Bank’s SDO of improving the status of women.
Environmental Protection

The Bank’s commitment to the principles of sustainable development and environment protection is one of the primary strategic objectives of the Bank.

The Bank’s major environmental activities in 1997 included (i) providing financial and technical assistance to facilitate -institutional and policy reforms, and build staff capacity in environmental agencies, enabling them to effectively carry out their mandate for -environmental protection and management; (ii) promoting cooperation among -countries in the region or subregion to address transboundary -environmental concerns, and to enhance possible environmental benefits occurring from subregional cooperation; (iii) ensuring, through the use of environmental assessment and review procedures, that Bank-funded projects are environmentally sustainable; (iv) financing projects that promote the sound management of natural resources, and rehabilitate and protect the environment; (v) undertaking resource center -activities to enhance Bank and DMC staff awareness on current and emerging environmental issues; and (vi) ensuring interagency collaboration to avoid costly duplication of efforts, and to enable the Bank to focus its assistance in critical areas.

The Bank’s achievements in 1997 were in the following areas: (i) capacity building of the environmental institutions or agencies in key ministries; (ii) preparing investment projects with environmental objectives; (iii) conducting comprehensive environmental impact assessment to ensure that the impacts of development projects on environment are within acceptable level; (iv) promoting subregional and interagency cooperation on selected environmental themes; and (v) undertaking key environmental studies and training activities of interest to DMCs and Bank operations.

Financial and technical assistance amounting to over $5 million were provided to PRC, Kyrgyz Republic, Nepal, Sri Lanka, and Uzbekistan to
build or strengthen their environmental institutions or agencies in key line ministries. The primary objective of Bank -assistance was to enable these institutions to carry out their mandate for -environmental protection. Specifically, the Bank assisted in building human capacity in environmental impact assessment and planning through training and education programs; developing guidelines, -systems, and procedures for environmental appraisal; improving the -administration of environmental impact assessment requirements of the government; and developing and environmental monitoring and enforcement capacity. The Bank also assisted three provinces in the PRC by conducting sector- and industry-specific analyses of the -suitability of different market-based instruments to achieve effective environmental management.

The Bank funded various technical assistance projects -amounting to nearly $20 million, aimed at improving the efficiency of resource management and pollution prevention and control in the agriculture, fisheries, forestry, water resources, energy, and industry sectors. The Bank also provided technical assistance to study the establishment of a national biodiversity information network in Indonesia; strengthen urban waste management policies and strategies in Indonesia; -promote industrial pollution control management in Malaysia; strengthen land use policies in Mongolia; implement the pesticides regulatory -framework in Nepal; improve air quality in Metro Manila, Philippines; and -rehabilitate and manage the Pasig River, also in Metro Manila, -Philippines. In the PRC, the Bank’s technical assistance
covered capacity-building activities for energy conservation, wastewater -treatment operations, identification of financing mechanisms for energy efficiency investment, environmental improvement in two provinces, and a study of clean-coal integrated gasification combined-cycle -technology. Various technical assistance projects focused on coastal environmental management and urban development in Karnataka, India; fisheries management in the Marshall Islands; capacity building for waste management administration in Thailand; and -environmental improvement in Ho Chi Minh City, and Red River basin water -resources management in Viet Nam.

Members

The ADB was founded by 31 member governments in 1966. Over the past 31 years, the Bank’s membership has grown to 57, of which 41 members are from within the region and 16 from outside.

Regional

• Afghanistan
• Australia
• Bangladesh
• Bhutan
• Cambodia
• China, People’s Republic of
• Cook Islands
• Fiji Islands, Republic of the
• Hong Kong, China
• India
• Indonesia
• Japan
• Kazakhstan
• Kiribati
• Korea, Republic of
• Krygyz Republic
• Lao People’s Democratic
Republic
• Malaysia
• Maldives
• Marshall Islands
• Micronesia, Federated States of
• Mongolia
• Myanmar
• Nauru
• Nepal
• New Zealand
• Pakistan
• Papua New Guinea
• Philippines
• Samoa
• Singapore
• Solomon Islands
• Sri Lanka
• Tajikistan
• Taipei,China
• Thailand
• Tonga
• Tuvalu
• Uzbekistan
• Vanuatu
• Viet Nam
Non Regional
• Austria
• Belgium
• Canada
• Denmark
• Finland
• France
• Germany
• Italy
• Netherlands
• Norway
• Spain
• Sweden
• Switzerland
• Turkey
• United Kingdom
• United States

Anticorruption
The problem of corruption, here defined as the misuse of public or private office for personal gain, has been one of the most enduring dilemmas con-front-ing governments throughout history.

Although differences may exist in the nature and scope of corrupt behavior, and the extent to which anticorruption measures are enforced, the
phenomenon can be found at all times and within virtually every political system. It can also be found within the private sector. Indeed, the linkage between public and private sector corruption is an area of particular concern for both developed and developing countries in the Asian and Pacific Region. Bank Policy Initiatives for the Energy Sector

In the wake of the second oil crisis in 1979, the major international financing institutions decided to reassess their policies relating to energy sector assistance to the developing countries. In that context, the Bank carried out a regional energy survey and submitted a working paper to the Board in March 1981. The purpose of that paper was to define the Bank’s role in the energy sector of its developing member
countries (DMCs) and examine the implications to the Bank’s operations. It envisaged a substantial stepping up of energy sector investments in DMCs in the 1980s, to about three times the level in the preceding decade, and concluded that in the 1980s the Bank should diversify its energy sector portfolio. The 1980s was a decade of major expansion in the DMCs’ energy sector and substantial additions were made to the indigenous sources of supply. The vigorous economic growth in DMCs has resulted in increasing demands for commercial energy. The
current estimate of capital requirements for DMCs’ energy sector development to meet the demand forecast for the 1990s is about $100 billion a year. Such a massive expansion has major financial, environmental, and institutional implications leading to the emergence of new issues and concerns.

Fisheries

The fisheries sector has been a significant recipient of assistance from the Bank, which has become an important source of multilateral financing for fisheries development in a number of its developing member countries (DMCs).

As of the end of 1996, the Bank had approved loans totaling $1,125.78 million for 52 fisheries projects in 18 DMCs, and 105 technical assistance (TA) grants amounting to about $33.19 million.

Fisheries components have also been included in many integrated area development projects. These investments have targeted enhanced
economic growth of the DMCs through increasing production, productivity, and exports, thereby generating and increasing employment and income, particularly for small-scale fishers.

The Bank’s Policy on Forestry

The Bank’s forestry operations began in 1977, with loans totaling more than $250 million over the first decade, complemented by some $15 million in technical assistance (TA) grants. A 1978 Working Paper on the “Role of the Bank in Forestry and Forest Industries Development” guided the Bank’s investments in the sector during this initial period. The Working Paper emphasized production-related aspects of forestry,
agriculture-supportive forestry, watershed rehabilitation and the establishment of forest industries.

THREE-YEAR COUNTRY ASSISTANCE PLANS

The Country Assistance Plans (CAPs) are the core planning documents for the Asian Development Bank’s operations in its developing member countries for the current and next two years. The CAPs are guided by medium-term country operational strategies (COSs) that
are formulated normally every three to five years (more frequently when required to address changing country circumstances). The COSs establish the Bank’s assistance strategies, objectives and priorities for the respective sectors in which it is in a long-term development
partnership with countries. The CAPs document the medium-term operational programs of the Bank in the countries, including the support of policy reforms, support of governance and capacity building programs and regional cooperation programs, as well as the related public
sector lending and technical assistance programs and private sector operations. The CAPs, once formulated, provide the basis for the Bank’s overall Three-year Rolling Work Program and Budget Framework, which in turn underpins the annual Administrative Budget
submission to the Board of Directors.