The family doctor

YOKOHAMA – It takes a foreigner to see the glass half full in our chronically dysfunctional democracy.

The Asian Development Bank is celebrating a milestone in this Japanese port city, marking 50 years of providing development financing in Asia-Pacific economies.

It is testament to the Philippines’ position in the regional pantheon at the time that the ADB picked the country over Japan in 1965 for the bank's headquarters. The ADB never relocated to another country, although it moved to a new home in Mandaluyong in 1991.

Takehiko Nakao, who was unanimously reelected to a second term as ADB president last year, has always been bullish about the Philippines since being assigned in Manila.

His outlook remains positive in the ADB’s golden year. The bank now has 67 member economies with $147 billion in capital, and has provided development financing since 1966 totaling $250 billion. Not bad for a bank that started with just 31 member states and a capital of $1.1 billion.

In 1965, Nakao recalls, setting up a regional development bank was considered “a bold idea.” He remembers the first ADB president, Takeshi Watanabe, describing the ADB as the region's "family doctor."

“Today,” Nakao states in his anniversary message, “as I view the cranes that dominate the skyline outside my office window… I consider the idea both bold and visionary.”

He’s referring to his office in Mandaluyong, a stone’s throw from traffic-choked EDSA. The message can be touching for those of us who see only the congestion, pollution, inefficiency and general unsustainability of Metro Manila.

“The Manila skyline is a visible reminder of the remarkable transformation that has taken place across Asia and the Pacific in the past 50 years,” Nakao declares. 

He repeats something he had told me in previous interviews: “When ADB was established in 1966, Asia was poor and one of the most important challenges was how to feed the large and growing population. The region has achieved a lot since then in terms of economic development and poverty reduction.”

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The view from the top is typically better than at the bottom. Even the dirty, congested city of Manila can look good from the ninth floor and penthouse of a hotel in Intramuros.

The ADB understands the need to make the benefits of economic growth trickle down to the grassroots. In 1999, poverty reduction became the ADB’s primary objective. The bank is one of the biggest supporters of the conditional cash transfer in the Philippines.

Making growth inclusive is one of the priorities of the ADB, which notes that the income gap in Asia’s developing countries is widening.

About 330 million people – nine percent of the total population in the Asia-Pacific – still live in extreme poverty, subsisting on less than the $1.90 daily threshold. In 2012 when the figure stood at 450 million, nearly half of the poor lived in only six Asian countries, according to the ADB: Bangladesh, China, India, Indonesia, Pakistan and the Philippines.

It’s been a comedown for the Philippines since the ADB’s establishment and the creation of the Association of Southeast Asian Nations in 1967.

Yesterday Nakao launched a book on the ADB's first 50 years. Titled “Banking on the Future of Asia and the Pacific” and written by Australian economist Peter McCawley, the book provides a glimpse of what went wrong for the Philippines, and also how it is recovering.

Here’s an excerpt: “The Philippines, which had taken advantage of the postwar boom, was an exception to the grim picture of Southeast Asia in the 1950s and early 1960s. It was among the most progressive economies in Southeast Asia and, for a time, had a higher per capita income than Taipei, China or the Republic of Korea... However, the Philippines was overtaken by an authoritarian and protectionist regime and in the 1970s and early 1980s was beset by problems of crony capitalism and rising foreign debt. The result was that the Philippines fell behind its neighbors and settled in one of the rear rows of the flying geese formation.”

The “flying geese” is a development paradigm in Asia, which sees less developed economies flying in wild geese formation and benefiting from the industrialized lead goose. In the 1950s the lead goose was Japan. Four of the geese flying with it later developed into Asian tigers: South Korea, Singapore, Taiwan and Hong Kong.

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The Philippines must have strayed from the formation. Today we can’t even provide clean water to our people. The ADB estimates that only 25 percent of households in Philippine rural areas and 50 percent in cities in the provinces have water and sanitation facilities. 

Amy Leung, deputy director general and concurrent chief thematic officer of the ADB, attributes such situations in the region to poor governance and weak institutions in developing countries.

The ADB, Leung said, is currently identifying water and sanitation “hot spots” for priority in the allocation of $4.2 billion that the bank has set aside for 2017 for water and sanitation projects, including one in Angat Dam in Bulacan, the main fresh water source for Metro Manila.

Apart from water and sanitation, the ADB still sees tough challenges ahead in the region in terms of gender equality, access to and quality of health and education, sustainable development and climate action.

By 2020, the ADB, which provided $900 million in assistance to the areas ravaged by Super Typhoon Yolanda, intends to double its climate financing to $6 billion annually. That’s about 30 percent of the bank’s total operations. The bank is also helping to develop smart cities and promote climate-smart agriculture to boost efficiency and fight global warming.

Nakao steers away from commenting on Philippine politics and prefers to focus on assisting the government in development efforts. Another focus of the ADB is to help middle-income economies in the region progress to high-income. 

Today many economic analysts see the Philippines’ sound macroeconomic fundamentals and are bullish on the country. We were poised for economic takeoff 50 years ago, but we got left behind. With help from the family doctor and other friends, we can realize our full potential.