The Hindu Business Line : Develop Asian bond market: ADB

Regional development
The Asian region needs massive investments for the infrastructure development.
The Asian countries must improve governance to attract investments.

Hyderabad , May 5

The Asian Development Bank (ADB) has favoured development of a bond market in Asia to effectively address the issue of private savings flowing out of the region.

Addressing the inaugural session of the ADB board of governors here on Friday, the ADB President, Mr Haruhiko Kuroda, said the Asian region needs massive investments for infrastructure development and neither governments nor development institutions would be able to meet the demand.

East Asia alone needs $ 1-trillion over the next few years for transport, energy and utilities. The only way these demands can be met is to substantially increase private sector participation. According to him, the efforts of ADB would be combined with strong measures to improve the regional investment climate.

"Even today, Asia's own large private savings are flowing out of the region, when they could go a long way to meeting investment demands at home. This need not be so. One solution is bond market development. ADB is supporting this development through multi-currency bond offerings, regional guarantee mechanisms, assisting with credit and trading systems, and helping to publicise Asia's investment opportunities to the world," Mr Kuroda said.

Energy sector

Further, he said ADB finds special obligation to help move the region to a more sustainable path, particularly in sectors where it is actively engaged. "With the region's large appetite for energy, this sector must receive our special attention. We cannot continue to rely on fossil fuels and an aging energy infrastructure."

However, he advised the Asian countries to improve governance to attract investments. In this context, he cited a research that suggested that improving even a single aspect of governance such as regulatory efficiency or controlling corruption can, over time, bring about a significant increase in per capita incomes.

"There is a growing commitment among our developing member countries to strengthen public finance and remove market distortions, improve legal and regulatory frameworks, and eliminate corrupt practices. We are prepared to do everything we can to help sharpen the region's competitive edge," he assured.