The FDI angle:

  • The ADB is one of the world's largest development finance institutions, with total assets for $290.7bn at the end of 2022. 
  • It provided $6.7bn in climate change mitigation across Asia in 2022, a key enabler of investment and FDI. 
  • 'The battle against climate change will be won or lost in the Asia-Pacific region,' says president Masatsugu Asakawa. 

Three years ago, at the onset of the Covid-19 pandemic, Masatsugu Asakawa took office as president of the Asian Development Bank (ADB). Ahead of the bank’s next annual meeting in Incheon, South Korea, in May, Mr Asakawa reflects on the ADB’s challenges and its progress in tackling extreme poverty, promoting gender equality, and getting more private funds into climate change and infrastructure. 


Q: You started your presidency in 2020 as the pandemic was beginning. How have your priorities changed since then? 

A: In my first address to staff in February of that year, I outlined my vision for ADB to become the partner of choice for our developing members across Asia and the Pacific. Though the pandemic has been a major challenge, I remained committed to this vision while prioritising a swift and effective response to the pandemic.

Addressing the pandemic’s impacts and supporting long-term development are not mutually exclusive. We kept in mind the need to address longer-term challenges, such as climate change — which is a top priority — and domestic resource mobilisation.

Q: Why the focus on domestic resource mobilisation?

A: This is critical for emerging markets to build resilience to future crises, mitigate the impacts of climate change and create a more resilient and inclusive society. To overcome serious weaknesses in our economies exposed by the pandemic, we must mobilise domestic resources and secure tax revenues. This requires smart policy and exploring reforms, including modernising tax administration and more efficient value-added tax systems and environmental taxes, plus participation in international tax cooperation initiatives. 

Q: Economists say developing countries will be hit hardest by the lasting impacts of Covid-19. What funding support is the bank giving these countries in the region?  


A: ADB has introduced various instruments and support measures since the pandemic hit. In 2020, we announced a record $31.6bn package to swiftly tackle the Covid-19 outbreak, support the region’s recovery, and address longer-term development challenges. This included a $20bn response package and a $9bn facility to support equitable and efficient access to safe and effective Covid-19 vaccines. 

Last year, the ADB approved a ceiling of up to $18bn in policy-based lending between 2022 and 2024, and enhanced our crisis response instruments. This ensures we remain responsive to our clients’ needs while also helping to address long-term structural challenges facing the region, such as climate change, building resilience and rising inequality. 

We’ve also allocated at least $14bn over 2022–2025 to a comprehensive programme to ease the region’s worsening food crisis, and to improve long-term food security by strengthening food systems against the impacts of climate change and biodiversity loss. By the end of last year, ADB had committed nearly $3.7bn of this $14bn package.

Q: In 2021, ADB increased its climate finance commitment from $80bn to $100bn. What projects are you targeting?

A: As the region most vulnerable to climate change, and which contributes over 50% of global greenhouse gas emissions, the battle against climate change will be won or lost in the Asia-Pacific region.

As the region most vulnerable to climate change, and which contributes over 50% of global greenhouse gas emissions, the battle against climate change will be won or lost in the Asia-Pacific region.

Masatsugu Asakawa, president, ADB

That’s why we raised our ambition to deliver climate financing to our developing member countries to $100bn from 2019 to 2030. The ADB is aiming to contribute $34bn of this towards climate adaptation, and we expect to crowd in an additional $18bn to $30bn in private sector climate finance.  

We are also working with regional and global partners to scale up climate investments. Our Energy Transition Mechanism Partnership with the governments of Indonesia and the Philippines leverages a market-based approach to reduce the life of fossil fuel plants.

Last year, the ADB signed a memorandum of understanding with partners in Indonesia regarding the early retirement of the first coal-fired power plant under this programme. We are also doing programme feasibility studies in the Philippines and Vietnam. Retiring half the coal fleet in these three pilot countries could cut 200 million tonnes of carbon dioxide annually — the equivalent of taking 61 million cars off the road. 

Q: Two years ago, the ADB launched a platform with private banks to support climate projects in developing countries. How successful has this been?

A: A key challenge to addressing the climate investment shortfall is to create favourable conditions for investment. This includes de-risking marginally bankable projects to increase the flow of private capital. 

Our debt platform in partnership with HSBC, Temasek and Clifford Capital Holdings supports the development and financing of such climate projects in Southeast Asia. It has been successful in sourcing and originating private-sector finance in challenging areas such as water, wastewater and waste management. 

Another initiative for developing countries that we aim to launch at this year’s annual meeting is the Innovative Finance Facility for Climate in Asia and the Pacific. This draws in contingent finance and grants resources from donor countries and philanthropies. I’m excited about this because it has the potential to accelerate billions of dollars in investments to reduce emissions and build climate change resilience.

Further reading on developing Asia:

Q: Income inequality in Asia is persistent and, in some cases, rising. What is ADB doing to ensure the benefits of trade and investment flow to where they are needed most? 

A: We are fully committed to this goal. Our Asian Development Fund, which provides grants to our poorest and most vulnerable developing member countries, catalyses investment in priority regional public goods.

We are also ramping up support for education, recognising its role in promoting resilience and inclusivity. These efforts help developing member countries recover from Covid-19-related learning and earning losses, particularly for women and girls who have been disproportionately affected by the pandemic, and who face increased gender-based violence and school dropouts.  

Q: One of ADB’s Strategy 2030 priorities is gender equality. How much progress has it made in this area?

A: Gender considerations are a top priority. From 2020 to 2022, 99% of our committed operations promoted gender equality through financing and knowledge solutions.

These solutions include improving women’s access to quality jobs, fostering women’s entrepreneurship, and building women’s resilience to climate change. This figure is up from 96% during the two years prior, and is on track to exceed our target of 75% by 2030. 

Q: The ADB plans to invest $20bn to $25bn in India over the next five years. How is it supporting the country’s growing role in the region? 

A: With a fast-growing economy, rapid development and a large, young population, India is a crucial market and a vibrant player in regional and global value chains. The ADB’s forthcoming country partnership strategy with India will help the country meet its global climate action commitments, including by supporting the decarbonisation of transport.

We will also play a crucial role in supporting India’s key infrastructure projects, such as multimodal connectivity in urban centres, which will serve as a blueprint for other cities in the region.  

Q: Foreign currency reserves are falling at several central banks in Asia. Has this impacted the currency mix of the ADB’s activities? 

A: At year-end 2022, 32% of the ADB’s outstanding private sector loans — which equal $2.3bn — were denominated in local currencies. When you add sovereign local currency loans, that increases to $2.5bn. 

The ADB raises funding through local currency bond and derivative markets, and we often do this in line with the bank’s seven operational priorities and the UN Sustainable Development Goals. So far this year, the ADB has issued its first gender bond in Georgian lari, its fourth green bond in Kazakhstani tenge and its first bond denominated in Azerbaijani manat, to support a food supply project. 

We recognise the importance of promoting the use of local currencies and reducing dependence on mainstream currencies, such as the US dollar, and our local currency operations do contribute to financial stability and allow us to reach borrowers that mainstream currency products might not otherwise adequately support. However, our local currency operations are strategic and long-term in nature, and are not directly correlated with the level of central bank foreign exchange reserves. 

This interview has been edited for brevity and clarity

This article first appeared in the April/May 2023 print edition of fDi Intelligence. View a digital edition of the magazine here