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Asian Development Bank Introduces New Strategy for Booming Continent

As parts of Asia soar economically, the Asian Development Bank has adopted a new strategy to meet the needs of the region. The bank will be doing more to support private sector projects to drive growth, rather than working mostly through governments as in the past. In addition, the environment will take a higher priority. Douglas Bakshian reports from Manila.

By 2020 the Asian Development Bank says about 50 percent of its activities will be in private sector development and operations, double the current amount.

The development lender's new strategy focuses on two fronts. At one level, the bank will work directly with private companies that want to invest in developing Asian nations, but need the security of ADB backing for their investments.

Rajat Nag is ADB managing director general.

"So we will provide (loan) guarantees, we will actually participate in the projects by putting in our own money as equity," Nag explained. "Basically to give the comfort to these private investors that these are good deals and risks worth taking."

At another level, the Asian Development Bank will work with governments to ensure that the legal framework is in place that will help companies operate more securely in Asia.

Environmental projects will also be an expanded priority in the new ADB strategy. As Asia industrializes, pollution is taking a toll on the water, land and air. Nag says the ADB will pursue projects to safeguard these resources and to promote sustainable development.

"Water supply services to metropolitan cities in Asia will be a very major infrastructure project, but it will also have a very major environmental impact in terms of getting better and cleaner water," Nag said. "We could also take an example of a reforestation project in Vietnam which will be very important to make sure that the greenhouse emissions are better controlled."

Burning fuels such as oil and coal for cars and factories releases greenhouse gases, which are believed to increase global warming. Nag says the Asian Development Bank will work to modify power stations in Asia to make them cleaner and more efficient.

The bank in the past has been criticized for some ineffective projects as well as not keeping pace with the rapidly changing economy in Asia.

University of the Philippines Economics Professor Benjamin Diokno says new ADB strategy confirms the traditional approach to development did little to help the poor.

"I think it is in a way an admission that development banks, not only ADB but the World Bank and other regional development banks, have not really contributed to a significant decline in poverty worldwide after 50 years of lending," Diokno said.

Diokno, who is also a former Philippines budget secretary, welcomes ADB support for private sector involvement in development. He says market economics have propelled Asian growth over the past few decades.

"Asia itself has boomed and I think this is basically because they have embraced the market orientation. Many of the former socialist countries have gone market, you have China, you have Vietnam. And I think this should continue," Diokno said.

The ADB's Nag acknowledges that private sector development has pushed Asia ahead, but says the growth has been uneven. More than 600 million people still survive on one dollar a day in Asia, according to the Asian Development Bank, and Nag says these two faces of Asia - rich and poor - must be brought closer together.

"The shining face of Asia - yes you see the glitzy towers of Shanghai, or Mumbai, or Jakarta," Nag said. "And yes, there is a lot of economic growth and a lot to celebrate in Asia. The other face, which is not so shining, is the face where girl children still do not go to school. Or if they do go to school they drop out by the primary level. Where water scarcity still keeps people from access to sanitation and clean water, where maternal mortality is still very high. So we have got these two faces of Asia and we have got to do our best to make these to faces converge."

The Asian Development Bank approved $7.4 billion in loans and $242 million in technical assistance in 2006. For years, most of its projects helped governments build basic infrastructure - roads, ports, dams, power plants. Now, the bank's managers hope the new strategy will allow millions of the region's poor to use that infrastructure to build better futures.