Asian Development Bank

Asian Development Bank (ADB) is a regional

development bank established on 22 August 1966 to
facilitate economic development of countries in Asia. The
bank admits the members of the UN Economic
Commission for Asia and the Far East (now UNESCAP)
and non-regional developed nations. From 31 members at
its establishment, ADB now has 67 members - of which 48
are from within Asia and the Pacific and 19 outside. ADB
was modeled closely on the World Bank, and has a similar
weighted voting system where votes are distributed in
proportion with member's capital subscriptions. At present,
both USA and Japan hold 552,210 shares - the largest
proportion of shares at 12.756 percent each.

Organization

The highest policy-making body of the bank is the Board

of Governors composed of one representative from each
member state. The Board of Governors, in turn, elect
among themselves the 12 members of theBoard of
Directors and their deputy. Eight of the 12 members come
from regional (Asia-Pacific) members while the others
come from non-regional members.
The Board of Governors also elect the
bank's President who is the chairperson of the Board of
Directors and manages ADB. The president has a term of
office lasting five years, and may be reelected.
Traditionally, and because Japan is one of the largest
shareholders of the bank, the President has always been
Japanese. The current President is Haruhiko Kuroda, who
succeeded Tadao Chino in 2005.
The headquarters of the bank is at 6 ADB
Avenue, Mandaluyong City, Metro Manila, Philippines, and
it has representative offices around the world. The bank
employs approximately 2,400 people, coming from 55 of
its 67 member countries, and with more than half of the
staff being Filipino.

History

1962-1972

ADB was originally conceived by some influential

Japanese who formulated a "private plan" for a regional
development bank in 1962, which was later endorsed by
the government. The Japanese felt that its interest in Asia
was not served by the World Bank and wanted to establish
a bank in which Japan was institutionally advantaged.
Once the ADB was founded in 1966, Japan took a
prominent position in the bank; it received the presidency
and some other crucial "reserve positions" such as the
director of the administration department. By the end of
1972, Japan contributed $173.7 million (22.6 percent of
the total) to the ordinary capital resources and $122.6
million (59.6 percent of the total) to the special funds. In
contrast, the United States contributed only $1.25 million
for the special fund.
The ADB served Japan's economic interests because its
loans went largely to Indonesia, Thailand,Malaysia, South
Korea and the Philippines, the countries with which Japan
had crucial trading ties; these nations accounted for 78.48
percent of the total ADB loans in 1967-72. Moreover,
Japan received tangible benefits, 41.67 percent of the total
procurements in 1967-76. Japan tied its special funds
contributions to its preferred sectors and regions and
procurements of its goods and services, as reflected in its
$100 million donation for the Agricultural Special Fund in
April 1968.[2]
Takeshi Watanabe served as the first ADB president from
1966 to 1972.

1972-1986
Japan's share of cumulative contributions increased from
30.4 percent in 1972 to 35.5 percent in 1981 and 41.9
percent in 1986. In addition, Japan was a crucial source of
ADB borrowing, 29.4 percent (out of $6,729.1 million) in
1973-86, compared to 45.1 percent from Europe and 12.9
percent from the United States. Japanese presidents
Inoue Shiro (1972–76) and Yoshida Taroichi (1976–81)
took the spotlight. Fujioka Masao, the fourth president
(1981–90), adopted an assertive leadership style. He
announced an ambitious plan to expand the ADB into a
high-impact development agency. His plan and banking
philosophy led to increasing friction with the U.S. directors,
with open criticism from the Americans at the 1985 annual
meeting.[2]
During this period there was a strong parallel institutional
tie between the ADB and the Japanese Ministry of
Finance, particularly the International Finance Bureau
(IFB).

Since 1986
Its share of cumulative contributions increased from 41.9
percent in 1986 to 50.0 per- cent in 1993. In addition,
Japan has been a crucial lender to the ADB, 30.4 percent
of the total in 1987-93, compared to 39.8 percent from
Europe and 11.7 percent from the United States.
However, different from the previous period, Japan has
become more assertive since the mid 1980s. Japan's plan
was to use the ADB as a conduit for recycling its huge
surplus capital and a "catalyst" for attracting private
Japanese capital to the region. After the 1985 Plaza
Accord, Japanese manufacturers were pushed by high
yen to move to Southeast Asia. The ADB played a role in
channeling Japanese private capital to Asia by improving
local infrastructure.[2] The ADB also committed itself to
increasing loans for social issues such as education,
health and population, urban development and
environment, to 40 percent of its total loans from around
30 percent at the time.[2]
ADB Lending

The ADB offers "hard" loans from ordinary capital

resources (OCR) on commercial terms, and the Asian
Development Fund (ADF) affiliated with the ADB extends
"soft" loans from special fund resources with concessional
conditions. For OCR, members subscribe capital,
including paid-in and callable elements, a 50 percent paid-
in ratio for the initial subscription, 5 percent for the Third
General Capital Increase (GCI) in 1983 and 2 percent for
the Fourth General Capital Increase in 1994. The ADB
borrows from international capital markets with its capital
as guarantee.
In 2009, ADB obtained member-contributions for its Fifth
General Capital Increase of 200%, in response to a call
by G20 leaders to increase resources of multilateral
development banks so as to support growth in developing
countries amid the global financial crisis. For 2010 and
2011, a 200% GCI allows lending of $12.5-13.0 billion in
2010 and about $11.0 billion in 2011. With this increase,
the bank's capital base has tripled from $55 billion to $165
billion.
Notable ADB projects and Technical Assistance

 Afghan Diaspora Project

 Funding Utah State University led projects to bring
labor skills in Thailand
 Earthquake and Tsunami Emergency Support Project
in Indonesia
 Greater Mekong Subregional Program
 ROC Ping Hu Offshore Oil and Gas Development
 Strategic Private Sector Partnerships for Urban
Poverty Reduction in the Philippines
 Trans-Afghanistan Gas Pipeline Feasibility
Assessment
 Loan of $1.2 billion to bail it out of an impending
economic crisis in Pakistan and on going funding for the
countries growing energy needs, specifically Hydro-
power projects[7]
 Micro finance support for private enterprises, in
conjunction with governments,
including Pakistan and India.
 The Yichang-Wanzhou Railway project in the
mountainous area of western Hubei Province and north-
eastern Chongqing Municipality, China. (A US $500,000
loan, approved in 2003.)
Effectiveness

Given ADB's annual lending volume, the return on

investment in lesson learning for operational and
developmental impact is likely to be high and maximizing it
is a legitimate concern. All projects funded by ADB are
evaluated to find out what results are being achieved,
what improvements should be considered, and what is
being learned.
There are two types of evaluation: independent and self-
evaluation. Self-evaluation is conducted by the units
responsible for designing and implementing country
strategies, programs, projects, or technical assistance
activities. It comprises several instruments, including
project/program performance reports, midterm review
reports, technical assistance or project/program
completion reports, and country portfolio reviews. All
projects are self-evaluated by the relevant units in a
project completion report. ADB’s project completion
reports are publicly disclosed on ADB’s Internet site. Client
governments are also required to prepare their own
project completion reports.
Independent evaluation is a foundation block of
organizational learning: it is essential to transfer increased
amounts of relevant and high-quality knowledge from
experience into the hands of policy makers, designers,
and implementers. ADB’s Operations Evaluation
Department (OED) conducts systematic and impartial
assessment of policies, strategies, country programs, and
projects, including their design, implementation, results,
and associated business processes to determine their
relevance, effectiveness, efficiency, and sustainability
following prescribed methods and guidelines,.[9] It also
validates self-evaluations. By this process of evaluation,
ADB demonstrates three elements of good governance: (i)
accountability, by assessing the effectiveness of ADB's
operations; (ii) transparency, by independently reviewing
operations and publicly reporting findings and
recommendations; and (iii) improved performance, by
helping ADB and its clients learn from past experience to
enhance ongoing and future operations.
Operations evaluation has changed from the beginnings of
evaluation in ADB in 1978. Initially, the focus was on
assessing after completion the extent to which projects
had achieved their expected economic and social benefits.
Operations evaluation now shapes decision making
throughout the project cycle and in ADB as a whole. Since
the establishment of its independence in 2004, OED
reports directly to ADB’s Board of Directors through the
Board's Development Effectiveness Committee.
Behavioral autonomy, avoidance of conflicts of interest,
insulation from external influence, and organizational
independence have made evaluation a dedicated tool—
governed by the principles of usefulness, credibility,
transparency, and independence—for greater
accountability and making development assistance work
better. Independent Evaluation at the Asian Development
Bank presents a perspective of evaluation in ADB from the
beginnings and looks to a future in which knowledge
management plays an increasingly important role.[10]
In recent years, there has been a major shift in the nature
of OED’s work program from a dominance of evaluations
of individual projects to one focusing on broader and more
strategic studies. To select priority topics for evaluation
studies, OED seeks input from the Development
Effectiveness Committee, ADB Management, and the
heads of ADB departments and offices. The current
thrusts are to: (i) improve the quality of evaluations by
using more robust methodologies; (iii) give priority to
country/sector assistance program evaluations; (iv)
increase the number of joint evaluations; (v) validate self-
evaluations to shorten the learning cycle; (vi) conduct
more rigorous impact evaluations; (vii) develop evaluation
capacity, both in ADB and in DMCs; (viii) promote portfolio
performance; (ix) evaluate business processes; and (x)
disseminate findings and recommendations and ensure
their use. OED's work program has also been
reinterpreted to emphasize organizational learning in a
more clearly defined results architecture and results
framework. It entails (i) conducting and disseminating
strategic evaluations (in consultation with stakeholders),
[11]
 (ii) harmonizing performance indicators and evaluation
methodologies,[12] and (iii) developing capacity in
evaluation and evaluative thinking.[13] All evaluation studies
are publicly disclosed on OED's website (some
evaluations of private sector operations are redacted to
protect commercially confidential information).[14] OED's
evaluation resources are displayed by resource type,
topic, region and country, and date.[15] Learnings are also
gathered in an onlineEvaluation Information
System offering a database of lessons, recommendations,
and ADB Management responses to these.[16] Details of
ongoing evaluations and updates on their progress are
made public too.[17]
Beginning 2006, acting within the knowledge management
framework of ADB, OED has applied knowledge
management to lesson learning, using knowledge
performance metrics.[18] Learning Lessons in ADB sets the
strategic framework for knowledge management in
operations evaluation.[19] Improvements have been made
that hold promise not only in OED but, more importantly,
vis-à-vis its interfaces with other departments and offices
in ADB, developing member countries, and the
international evaluation community. In the medium term,
OED will continue to improve the organizational culture,
management system, business processes, information
technology solutions, community of practice, and external
relations and networking for lesson learning. Among the
new knowledge products and services
developed, Learning Curves are handy, two-paged quick
references designed to feed findings and
recommendations from evaluation to a broader range of
clients[20] Evaluation News report on events in monitoring
and evaluation.[21] Evaluation Presentations offer short
photographic or Powerpoint displays on evaluation topics.
[22]
 Auditing the Lessons Architecture highlights the
contribution that knowledge audits can make to
organizational learning and organizational health.[23]
Of the 1,106 ADB-funded projects evaluated and rated so
far (as of December 2007), 65% were assessed as being
successful, 27% partly successful and 8% as
unsuccessful.

Criticism
Since the ADB's early days, critics have charged that the
two major donors, Japan and the United States, have had
extensive influence over lending, policy and staffing
decisions.[24]
Oxfam Australia has criticized the Asian Development
Bank of insensitivity to local communities. "Operating at a
global and international level, these banks can undermine
people's human rights through projects that have
detrimental outcomes for poor and marginalized
communities."[25] The bank also received criticism from
the United Nations Environmental Program, stating in a
report that "much of the growth has bypassed more than
70 percent of its rural population, many of whom are
directly dependent on natural resources for livelihoods and
incomes."[26]
There had been criticism that ADB's large scale projects
cause social and environmental damage due to lack of
oversight. One of the most controversial ADB-related
projects is Thailand's Mae Moh coal-fired power station.
Environmental and human rights activists say ADB's
environmental safeguards policy as well as policies
for indigenous peoples and involuntary resettlement, while
usually up to international standards on paper, are often
ignored in practice, are too vague or weak to be affective,
or are simply not enforced by bank officials.[27][28]
The bank has been criticized over its role and relevance in
the food [Link] ADB has been accused by civil society
of ignoring warnings leading up the crisis and also
contributing to it by pushing loan conditions that many say
unfairly pressure governments
to deregulate and privatize agriculture—leading to
problems such as the rice supply shortage in Southeast
Asia.[29]
The bank has also been criticized by Vietnam
War veterans for funding projects in Laos, because of
the United States' 15% stake in the bank, underwritten by
taxes.[30] Laos became a communist country after the U.S.
withdrew from Vietnam and the Laotian Civil War was won
by the Pathet Lao, which is widely understood to have
been supported by the North Vietnamese Army.
In 2009, the bank endorsed a 2.9-billion-dollar funding
strategy for proposed projects in India. The projects in this
strategy were only indicative and still needed to be further
approved by the bank's Board of Directors; however, PRC
Foreign Ministry spokesman Qin Gang claimed, "The
Asian Development Bank, regardless of the major
concerns of China, approved the India Country
Partnership strategy which involves the territorial dispute
between China and India. China expresses its strong
dissatisfaction over this... The bank's move not only
seriously tarnishes its own name, but also undermines the
interests of its members."[31]

Members

Asian Development Bank - Developing Member

Countries(DMC) graduation stagesOutside regions Asia-
Pacific region developed membersDMC graduated from
assistance, Group-D Ordinary Capital Resources (OCR)
financing, Group-C OCR and ADF blended financing,
Group-B Asian Development Fund (ADF) financing,
Group-A
ADB has 67 members (as of 2 February 2007).[33] Names
are as recognized by ADB.
The year after a member's name indicates the year of
membership. The largest share holders of the ADB are
Japan and USA, each holding 15.57% of the shares.[34] At
the time a country ceases to be a member, the Bank shall
arrange for the repurchase of such country's shares by the
Bank as a part of the settlement of accounts with such
country in accordance with the provisions of paragraphs 3
and 4 of this Article.[35]
Republic of China (Taiwan) initially joined as "China" as a
founding member representing the whole of China.
However, its share of Bank capital was based on the size
of Taiwan's capital, unlike the World Bank and IMF where
the government in Taiwan had had a share representing
the whole of China prior to the People's Republic of China
joining and taking the Republic of China's seat. In 1986, a
compromise was effected when the People's Republic of
China joined the institution. The ROC was allowed to
retain its membership, but under the name of Taipei,
China — a name it protests. Uniquely, this allows both
sides of the Taiwan Straits to be represented at the
institution.
INDIA AND ADB
ADB Membership
Joined: 1966
Shareholding and Voting Power
India is the third largest shareholder among
regional members and the fourth largest overall.
Figures are as of 31 December 2008, before the
fifth general capital increase process began. The
process is ongoing, and the final figures are
expected to be available by 31 December 2010.
Current subscription levels are available from the
Office of the Secretary.
Shares held: 224,010 (6.32%)
Votes: 237,242 (5.35%)
Ashok K. Lahiri is the Executive Director and Md.
Aminul Islam Bhuiyan is the Alternate Executive
Director representing India on the ADB Board of
Directors.
Hun Kim is the ADB Country Director for India.
The India Resident Mission (INRM) was opened in
1992 and provides the primary operational link
between ADB and the government, private-sector,
and civil-society stakeholders in its activities. INRM
engages in policy dialogue and acts as a
knowledge base on development issues in India.
The India government agency handling ADB affairs
is the Ministry of Finance.