ADB raises climate finance to $100 billion

 The Asian Development Bank (ADB) today announced it is elevating its ambition to deliver climate financing to its developing member countries (DMCs) to $100 billion from 2019 to 2030.

“The battle against climate change will be won or lost in Asia and the Pacific,” ADB president Masatsugu Asakawa said, adding that the climate crisis is worsening daily, prompting many to call for increased climate finance. "We are taking action to meet this call by elevating our ambition to $100 billion in cumulative climate finance from our own resources by 2030."

In 2018, ADB committed to ensuring at least 75 per cent of the total number of its operations support climate action and its own climate finance resources reach at least a cumulative $80 billion by 2030. Today’s announcement elevates the ambition of this financing.

ADB expects the cumulative climate financing from its own resources in 2019–2021 to reach about $17 billion.

The expanded climate finance ambition is a key element of ADB’s efforts to support its DMCs. Facing the interconnected challenges of the coronavirus disease (Covid-19) pandemic and the climate crisis, many DMCs are taking bold action to promote a green, resilient, and inclusive recovery, the mulyilateral development partner said.

The additional $20 billion will provide support for the climate agenda in five main areas:

First, new avenues for climate mitigation, including energy storage, energy efficiency, and low-carbon transport. ADB expects its cumulative climate mitigation finance to reach $66 billion.

Second, a scale-up of transformative adaptation projects. Projects in climate-sensitive sectors, such as urban, agriculture, and water, will be designed with a primary purpose of effective climate adaptation and enhanced resilience. ADB expects its cumulative adaptation finance to reach $34 billion.

Third, an increase in climate finance in ADB’s private sector operations. This includes creating more commercially viable projects for both ADB and private investors. The expansion will be underpinned by improvements in operational efficiencies, a post-pandemic recovery in market demand for financing, new technologies and innovations in climate financing, and new areas of business for private sector climate operations. ADB intends to support these initiatives with $12 billion in cumulative private sector climate finance from its own resources and anticipated crowding in of an additional $18 billion to $30 billion.

Fourth, support for a green, resilient, and inclusive recovery from Covid-19, including through innovative financing platforms such as the ASEAN Catalytic Green Finance Facility and Green Recovery Platform, which are expected to leverage funds from capital markets and private sector investors for low-carbon infrastructure.

Fifth, support to advance reforms in DMCs to unlock actions through policy-based lending to support policies and institutions for enhanced climate resilience and climate mitigation.

Across these areas, ADB will continue to expand access to new, climate-focused technologies and mobilize private capital toward climate finance.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members, 49 from the region.

Asia-Pacific becomes largest destination and source of foreign direct investment

For the first time, the Asia-Pacific region has become the largest destination and source of foreign direct investment (FDI) globally, according to a new report launched by the United Nations (UN) Economic and Social Commission for Asia and the Pacific (ESCAP).
The study ‘Foreign Direct Investment Trends and Outlook in Asia and the Pacific’ finds that the region is expected to maintain steady inflows and outflows of FDI in 2019 and 2020. In 2018, it attracted 45 per cent of global FDI inflows and was responsible for 52 per cent of global outflows. Developing countries in the region attracted 40 per cent of global FDI inflows and were responsible for 37 per cent of global FDI outflows. Despite escalating trade tensions, inflows to China increased from $134 billion in 2017 to $139 billion, making it the largest recipient of FDI inflows to region for the third consecutive year.
The sheer scale of outward FDI in the region raises important questions about its impact on the sustainable development of source countries. The analysis in the study is expected to help policymakers maximize the potential of FDI to contribute to the 2030 Agenda for Sustainable Development and implement sustainable investment promotion strategies for both inward and outward FDI.
One important consideration is the holistic analysis of the region’s FDI flows amid broader economic trends. Despite continuous movement of FDI, sluggish growth in inward greenfield investments may hamper the region’s ability to attract the same levels of investment in 2019, and a decline in investment flows in 2020 is expected if both the uncertainty related to international trade continues and companies consolidate their value chains. Therefore, investment prospects for the region remain tied to unfolding risks of ongoing global political and economic disturbances.
As intraregional FDI flows continue to grow in significance, more opportunities will arise for investment cooperation in the name of sustainable development between the sources and recipients of FDI in the region. During the past decade, the share of intraregional greenfield inflows increased from 40 per cent in 2009 to 53 per cent in 2018. ASEAN member countries attracted the largest share of intraregional flows in 2018, while countries from the East and North-East Asia subregion were the largest sources of intraregional FDI.
The findings of the report were discussed at the 9th Asia-Pacific FDI Network meeting. The FDI Network meeting brings together FDI policymakers, practitioners and experts from around the region and beyond to discuss FDI issues to ensure that FDI better supports the achievement of the 2030 Agenda and increase their knowledge through exchange of experiences and interaction with FDI experts.
The report is the first brief in a new annual publication series by ESCAP called Asia-Pacific Trade and Investment Trends. This will be an annual series which draws on ESCAP’s expertise in trade and investment analysis to highlight the most important trends and forecast their impact in these two areas. The briefs will equip policymakers with the necessary information they need to make timely decisions on trade and investment policies and enable inward and outward FDI cooperation among its member states.

UN forum spotlights digital trade facilitation measures to boost sustainable progress in Asia-Pacific

The 9th Asia-Pacific Trade Facilitation Forum (APTFF) closed in New Delhi, India today with a strong focus on how digital and sustainable trade facilitation measures and practices can bring prosperity for the region.
Organised by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Asian Development Bank (ADB), in collaboration with the Ministry of Commerce, India and Confederation of Indian Industry, the Forum discussed results of a new Global Survey on the progress made by countries in implementing trade facilitation measures and how to address remaining challenges in this area.
Developed economies aside, the 2019 UN Survey results confirm leadership of several Asian developing countries in digital trade facilitation implementation, notably Republic of Korea and China in East Asia; Singapore, Malaysia and Thailand in South East Asia; Azerbaijan and the Russian Federation in North and Central Asia; and India in South Asia. All 46 Asia-Pacific countries in the Survey made significant progress in making trade easier and more transparent over the past two years, with countries in North and Central Asia, in particular Kazakhstan, making most progress. Cambodia was the best performing among the least developed country (LDC) included in the Survey. Pacific Small Island Developing States are lagging behind as they face particularly difficult implementation constraints.
Over 270 participants from more than 30 countries at the biennial Forum shared experiences and perspectives on different aspects of trade facilitation for sustainable development, including trade finance, cross-border ecommerce, paperless trade and innovative applications of emerging technologies.
“Amidst global trade tensions, regional cooperation to cut red tape and automate trade procedures is more important than ever,” said UN under-secretary general and executive secretary of ESCAP Armida Salsiah Alisjahbana in her opening remarks. “Making trade easier and faster at lower costs by expanding cross-border trade digitalization and the simplification of international trade procedures, will help all firms in the Asia-Pacific region, particularly Small and Medium Enterprises (SMEs),” she added.
At the opening, India’s Minister of Commerce and Industry and Railways Piyush Goyal highlighted that India is working proactively to introduce a plethora of reforms including digitisation of trade procedures as well as ensuring improvements in the trading environment with reduced turnaround time and transaction costs.
The joint Asia-Pacific Trade Facilitation Report 2019 launched by ESCAP and ADB at the Forum noted that aiming for full digital implementation of the WTO Trade Facilitation Agreement (TFA) and enabling seamless electronic exchange of trade data across-border could cut transaction costs for the region by nearly 17 per cent. To accelerate progress in this area, all countries were encouraged to complete their accession to the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific.
The ESCAP-ADB report also highlighted the need to strengthen linkages between trade facilitation and trade finance, with financial technologies such as blockchain and artificial intelligence to be used to enhance the efficiency and availability of trade finance, especially for SMEs in the region.
“There is an enormous untapped potential in the rapidly evolving digital technologies,” ADB vice-president for Knowledge Management and Sustainable Development Bambang Susantono said, adding that emerging new technologies can help address long-standing issues of high transaction and processing costs, while mitigating the huge trade finance gap.
Going forward, the Forum noted the importance of better addressing the needs of SMEs and other more vulnerable groups such as women and those working in the agricultural sector, noting that only very few countries in the region have customized trade facilitation measures to support these groups so far.
Three initiatives were awarded APTFF Trade Facilitation Innovation Awards this year. The International Plant Protection Convention was awarded for its work on the Generic ePhyto National System (GeNS), PSA International Ltd and Global eTrade Services (GeTS) for enhancing digital connectivity for China-ASEAN trade, and Tuticorin CFS Association for its CoDEx: Container Digital Exchange.
ESCAP and IBM also signed an MoU on the sidelines of the Forum to conduct studies on how frontier technologies can be harnessed to make trade more sustainable and inclusive. This includes collaboration on TINA, a new online decision-support tool for trade negotiators from developing countries.

ILO assistant director general concludes her four-day mission to Kathmandu

ILO assistant director general and regional director for Asia and the Pacific Tomoko Nishimoto has wrapped up her four-day visit to Nepal today with a call to all constituents to ‘work beyond the normal’ to help realise social justice and decent work for all.
The visit was part of her commitment to reinforce relations with ILO constituents, comprising the government, and organisations of employers and workers, and to generate general public discourse on the ILO Centenary Initiative on the Future of Work.
Nishimoto paid a courtesy visit to Prime Minister KP Sharma Oli yesterday where she briefed the premier on the ILO's Centenary Initiatives on the Future of Work. On the occasion, Prime Minister Oli highlighted the reforms being made by Nepal, including increment on minimum wages, launching of contribution based social security scheme and labour legislations. He also appreciated the role of the ILO in promoting fundamental rights at work, equality and social justice.
Likewise, in her meeting with finance minister Dr Yuba Raj Khatiwada, she discussed the challenges and opportunities of Nepali labour market and translating provisions outlined in the contributory social security law for workers. She also shared the ILO initiative on the Future of Work, and made references to the experiences of ASEAN countries in this regard. Dr Khatiwada highlighted some of the key initiative taken by the ministry in support of application of minimum wage, contribution-based social security, labour rights, and strengthening of labour administration including inspection.
Also, the ILO assistant director general called on minister for Labour, Employment and Social Security Gokarna Bista and took stock of the developments in the labour administration of Nepal. Bista, on the occasion, spoke on the key priorities of the government including application of labour legislations, contribution-based social security scheme and creation of employment in the country. He also emphasised on the need of more ILO technical support as Nepal is passing through a very crucial stage of political transformation. Similarly, secretary at the Ministry Mahesh Prasad Dahal briefed Nishimoto about the initiatives of the ministry, the need to enhance capacity of labour administration towards protecting and promoting the rights of Nepali workers. He also said that the government is mulling to ratify some ILO conventions relevant to Nepal this year.
Similarly, Nishimoto held separate meetings with Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Bhawani Rana and prominent trade union leaders on contemporary issues related to labour, social and economic changes unfolding in the world of work and how growth could go alongside unionism. During her stay in Nepal, she also had separate discussions with representatives of a number of development partners in Nepal, including UN Resident Coordinator Valerie Julliand.

New UN-ASEAN study reveals slow but devastating impacts of drought in the region

Future scenarios of drought in many parts of South-East Asia may become even more frequent and intense, if actions are not taken now to build resilience, according to the latest joint study by the United Nations (UN) Economic and Social Commission for Asia and the Pacific (ESCAP) and the Association of Southeast Asian Nations (ASEAN).
Launched today at the 34th meeting of the ASEAN Committee on Disaster Management, the study Ready for the Dry Years: Building Resilience to Drought in South-East Asia offers clear analysis on the principal risks in the region. The study is released against the backdrop of the ongoing drought in almost all countries in South-East Asia with social and economic impacts already being felt very strongly in Cambodia, the Philippines, Thailand and Viet Nam.
As reported by the study, the cumulative impacts of drought in the region strikes hardest at the poor and heightens inequality, as well as degrades land and increases the prospects of violent conflict. Droughts can also be particularly damaging in countries where many people rely on agriculture for primary employment (61 per cent in Lao PDR, 41 per cent in Viet Nam, 31 per cent in Indonesia, 27 per cent in Cambodia and 26 per cent in the Philippines). 
Over the past 30 years, droughts have affected over 66 million people in the region. However, due to their slow-onset, droughts are often under-reported and under-monitored, resulting in conservative estimates on its impact in the region. The study points out that the future could be even worse. With climate change, many more areas are likely to experience extreme conditions with severe consequences.
“More dry years are inevitable, but more suffering is not," UN under-secretary-general and executive secretary of ESCAP Armida Alisjahbana said, adding that timely interventions now can reduce the impacts of drought, protect the poorest communities and foster more harmonious societies.
Increasing resilience to drought will require much better forecasting and more efficient forms of response, at both national and regional levels. Ready for the Dry Years proposes three priority areas of intervention for ESCAP and ASEAN – strengthening drought risk assessment and early warning services, fostering risk financing instruments that can insure communities against slow-onset droughts and lastly, enhancing people’s capacities to adapt to drought.
"The priority areas of intervention highlighted in this report will contribute to the development of policy responses to mitigate the impact of future drought and eventually will strengthen efforts on building the ASEAN Community that is resilient to drought,” said secretary-general of ASEAN Dato Lim Jock Hoi.
The study was produced as part of ESCAP and ASEAN’s close collaboration on disaster risk reduction under the ASEAN-UN Joint Strategic Plan of Action on Disaster Management.

Nepal 3rd most competitive economy in South Asia

Nepal has improved its score in Global Competitiveness Index (GCI), becoming third most competitive economy in South Asia, according to a report.
According to the Global Competitiveness Report 2015-2016 published globally today by World Economic Forum, Nepal ranked 100 – with a score of 3.9 – among 140 economies in the world. With improved score, Nepal is the third most competitive counry for investment in South Asia. The more the score – measured from 1 to 7 – the more competitive is the economy.
With score of 3.8, Nepal was ranked 102 in the Global Competitiveness Report 2014-2015, among 144 economies in the world, the report said, adding that the macroeconomic environment, and health and education – two of the 12 pillars that gauge the competitiveness of the economy – have improved. "Nepal ranks among the factor-driven countries," said country coordinator for the report Prof Dr Ramesh Chandra Chitrakar.
India (55) is the most competitive economy followed by Sri Lanka (68) and Nepal (100) in South Asia. Bhutan ranks 105, Bangladesh is in 107th position and Pakistan ranks 126 in the index.
The set of institutions, policies, and factors determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy, Chitrakar added.
The ranking – based on the assessment of 140 economies on parameters such as infrastructure and institutions, macroeconomic environment, health and education, among others – claimed that quality of Nepal's institutions has also improved apart from macro-economic environment, health and education.
However, Nepal needs to improve its technological readiness and efficiency enhancers to graduate to the efficiency-driven economy from current-factor driven economy, he said, adding that the graduation of Nepal to developing country by 2022 will also be determined by the increased competence. "The report encourages the government to fix policy, institutions, and factors to make the economy more competitive or productive that can propel economic growth."
Switzerland, Singapore and the US are the top three ranked economies, unchanged from the previous year, according to the report. Three Asian countries – Singapore, Japan and Hong Kong – are in the top ten ranking of the report. Likewise, in Asia, Malaysia ranked 18th, up two places, Indonesia ranked 37th, down three notches, while Thailand ranked 32nd, down one position.
The report also stated that emerging and developing Asia is the world's fastest-growing region since 2005 but it will retain for medium term. "The region accounts for some 30 per cent of global GDP, with China alone accounting for 16 per cent," it reported, adding that ASEAN bloc is performing well, but no countries in SAARC is above the rank of 50.

IMF suggests tight liquidity to tame inflation

International Monetary Fund (IMF) has suggested a tight liquidity conditions to guard against risks of rising inflation and reduce inflation expectations.

Deputy Managing Director of the International Monetary Fund (IMF) Naoyuki Shinohara at the concluding ceremony of the South East Asian central banks' (SAECEN) Governors conference, here today, hailed Nepal's fiscal policies. "In terms of macroeconomic management, the fiscal policies have been prudent and revenues have been rising strongly, thanks to the authorities’ efforts at improving tax administration," he said, adding that Nepal’s peg to the Indian rupee has served as a valuable anchor for macroeconomic policies.

Likewise, he also hailed the country's progress in achieving the Millennium Development Goals (MDGs), particularly on poverty reduction and on health and sanitation. "I would also like to congratulate the authorities and the people of Nepal on their successful conduct of the Constituent Assembly (CA) elections," he said, adding that the IMF will continue to support the authorities through policy advice and technical assistance in their work to maintain economic stability and accelerate growth.

He also reiterated the IMF's support in the efforts to improve regulation and supervision to ensure financial stability, while expanding access to financial services. "The upcoming assessment under the Financial Sector Assessment Programme (FSAP) that the IMF and the World Bank will conduct jointly will contribute to mapping out further reform steps."

In my meetings, I commended the SAECEN authorities for their work in maintaining strong external accounts and a strong fiscal position, Shinohara said, adding that they discussed on how to accelerate and sustain growth, and ensure macroeconomic and financial stability. "In this context, I support the authorities’ aim to boost the economy’s potential, including by taking advantage of the resource inflows from remittances. Important contributions in this regard can be made by raising public capital spending and improving the business climate to create an attractive environment for private investment."

Shinohara, also held discussions with central bank governor Dr Yub Raj Khatiwada, on the sidelines of the SAECEN Governors meeting that started in the capital on Wednesday and concluded today.

The representatives of the Asian Development Bank, IMF, World Bank and various international experts took part in the seminar that focused on Financial Sector Development Strategy for Inclusive Growth. SAECEN has 19 central banks of South East Asian countries.

Challenge for Asia to maintain growth momentum: ADB

Continued tepid demand from the major industrial economies coupled with slower growth in the People’s Republic of China (PRC) are weighing on the outlook for developing Asia, says a new Asian Development Bank (ADB) report.

The latest Asian Development Outlook Supplement released today trimmed the 2013 growth forecast for the 45 developing member countries of ADB to 6.3 per cent and cut its 2014 forecast to 6.4 per cent. In April, ADB had predicted the region to grow 6.6 per cent this year and 6.7 per cent next year.

“The drop in trade and scaling back of investment are part of a more balanced growth path for PRC, and the knock-on effect of its slower pace is definitely a concern for the region. But we are also seeing more subdued activity across much of developing Asia,” said ADB chief economist Changyong Rhee.

The PRC - home to developing Asia’s largest economy - is likely to see its economy expand by 7.7 per cent this year and 7.5 per cent in 2014 after growth of 7.8 per cent in 2012. The report notes that import and export growth has slowed given weak external demand, but notes continuing robust consumer confidence. Slower growth in the PRC has subdued the outlook for the entire East Asia region, as well as, to a lesser extent, for Southeast Asia, where the Philippines and other large ASEAN countries are otherwise seeing solid growth.

In India, meanwhile, slow progress in pushing through the reforms needed to ease business bottlenecks means growth is likely to be 5.8 per cent this year, slower than the previously forecast six per cent.
ADB maintains its 2014 forecast of 6.5 per cent for 2014. Elsewhere in South Asia, Sri Lanka continues to grow strongly while other parts of the region will see softer than anticipated growth.

The report has also trimmed forecasts for Central Asia, reflecting the sluggish economic performance of Kazakhstan and Georgia, and for the Pacific where Timor-Leste is seeing a slowdown in government spending.

Inflation pressures, meanwhile, are waning on the back of declining energy and food prices, given slower global demand for fuels and bumper grain harvests.

Improved South Asia-Southeast Asia connectivity key to boosting trade

Better connectivity between South Asia and Southeast Asia — through hardware and associated software — can unlock the full benefits of closer economic ties between the two sub-regions and help re-balance Asian growth toward domestic and regional markets, delegates at the 46th annual meeting of the Asian Development Bank (ADB) were informed today.

'Connecting South Asia and Southeast Asia,' an interim report by the ADB and ADB Institute (ADBI), shows that South Asian and Southeast Asian economies have grown rapidly during an era of fragile world economic growth beset by risks. "The process has been fuelled by expanding regional production networks, integration into the global economy, foreign direct investment, falling trade and investment barriers, a commodity boom, and heightened demand from a rising Asian middle class," it says.

However, integration of trade and investment between the two sub-regions, while having made progress, has been relatively limited, hindered by various bottlenecks in trade infrastructure, residual trade barriers and insufficient regional cooperation.

"The time is ripe for a study of South and Southeast Asia connectivity," said dean and chief executive of ADBI Dr Masahiro Kawai. The political reform process in Myanmar makes it possible to connect South and Southeast Asia, which was not feasible a few years ago.

This is particularly the case for land-based transportation — both highways and railroads — and energy infrastructure. The prospect of further liberalisation between ASEAN and major regional economies (including India) exists with the start of negotiations on a Regional Comprehensive Economic Partnership. It is particularly important in the context of India’s 'Look East' policy. And many South and Southeast economies are contemplating second generation economic reforms to sustain inclusive growth.

Connectivity and associated software refers to physical infrastructure related to transport and energy, as well as the linked issue of trade facilitation. Apart from a focus on connectivity — particularly cross-border infrastructure and trade facilitation — the study also covers the critical issues of infrastructure financing, trade and investment reforms, and institutions for coordination.

The interim report sets out key issues in relation to improving connectivity between South and Southeast Asia and traces their implications. It first reviews evolving economic ties between the two sub-regions and identifies benefits and costs of greater connectivity, then identifies key issues and constraints to greater economic integration.

Finally, it explores implications for fostering better connectivity and closer economic integration, as well as the next steps for the study.

Key preliminary findings and recommendations include identifying specific gaps in road, railroad, and economic corridor links between the two subregions; Myanmar’s potential as an important source of energy trading with South Asia; promoting more automated approaches to trade facilitation; identifying options to expand regional capacity to finance cross-border infrastructure projects; promoting trade and investment liberalisation; and supporting closer cooperation among regional forums related to transport and energy infrastructure.

Speakers at the seminar included ADB vice president Stephen Groff; ADB managing director General Rajat Nag; ICRIER chair Dr Isher Ahluwalia; ICRIER prof Nisha Taneja; Myanmar minister of National Planning and Economic Development Dr Kan Zaw; high commissioner of Singapore to Malaysia Ong Keng Yong, and chief executive and executive managing director of Japan Bank for International Cooperation Hiroshi Watanabe.

Nepal to take part in ADB annual meeting

Nepal will participate in the 46th annual meeting of Asian Development Bank's (ADB) Board of Governors, which begins tomorrow, in New Delhi.
The meeting will discuss ADB's annual programme, assistance strategy and effectiveness of resource mobilisation, said finance secretary Shanta Raj Subedi before leaving for Delhi today.
On the occasion, Nepal will also hold dialogues on bilateral assistance on economic and social development with other participating countries, he said, adding that finance minister Shankar Koirala will lead the Nepali team in the annual meeting on May 2-5.
Delegates from other member countries of ADB have also started reaching New Delhi to register for the meeting.
More than 4,400 delegates — comprising of top policymakers, business leaders, media, academics, civil society, and development institution representatives — will attend the meeting.
High level officials from Asia and the Pacific will join other delegates to discuss a range of topics central to the region’s sustainable growth and development, including job creation, mobilising infrastructure finance, and fostering deeper regional cooperation.
This year’s governors’ seminar, 'Beyond Factory Asia: Fueling Growth in a Changing World', will look at ways the region can transform its economic model, moving from factory-driven manufacturing up the production value chain to alternative growth sources while avoiding the middle income trap.
As host of this year’s meeting, India chose the theme of 'Empowerment through Development,' providing a platform to discuss how vulnerable groups can be provided with better access to health, education and other social services.
Featured panelists represent the African Development Bank, Inter-American Development Bank, Goldman Sachs Asset Management, Harvard University, International Monetary Fund, London School of Economics, Mizuho Financial Group and Standard & Poor’s rating agency.
Representatives of ASEAN+3, which includes the Association of Southeast Asian Nations, China, Japan and South Korea will also hold discussions on the occasion.