Haruhiko Kuroda, president of the Asian Development BankBrett Beadle
Haruhiko Kuroda, president of the Asian Development Bank and a former vice-minister of finance for international affairs in Japan, oversees billions of dollars in lending and aid to Asia each year. Here, he discusses five key issues for Asian economies and their governments.
The ADB approved $16.1-billion (U.S.) in financing in 2009 as well as $3.2-billion in co-financing. How do you decide where to deploy capital?
Over the past couple of decades, the emphasis has changed dramatically. Ten or 15 years ago, the largest borrowers were Indonesia and the Philippines. Now the largest borrowers are India, Pakistan and China. We very much focus on small and medium-sized economies, poor economies and in particular, post-conflict countries. In countries such as Afghanistan, Pakistan, Sri Lanka, Nepal, Cambodia and Vietnam, the ADB is by far the biggest donor.
The ADB has always been very strong in infrastructure support, but nowadays we focus much more on green energy, including solar power, wind power and energy-efficient projects in many countries.
Will some developing Asian countries be able to skip the construction of traditional power infrastructure and go directly to green-technology projects?
I think so. China is now very strong in wind-power generation, for instance ... [and]India may lead solar-power projects because it's located in the so-called Sun Belt. ... Of course, there are a lot of constraints. Most of the green-power technology, for instance, is held by companies in developed countries. Another constraint is financing. At this stage, many renewable energies are more costly than traditional ones. ... An appropriate policy framework is also needed to further develop green energy in developing countries.
What about fossil-fuel subsidies in India and elsewhere in Asia?
Many developing countries still have subsidies on things like gasoline and petroleum consumption. That does not make sense. We are constantly encouraging countries to eliminate or reduce subsidies for consumption and switch to renewable green energy. This is key in the next two decades. ... The Indonesian government [reduced fuel subsidies]to a substantial extent. It reduced subsidies on gasoline and kerosene while providing cash subsidies to the poor who would have been most affected. ... This made sense in three ways: It reduced the fiscal deficit, encouraged the economy to become more energy efficient, and ensured the poor didn't suffer.
China is leading the world in some green technologies, but it is also, by some estimates, the largest energy consumer. Is China doing enough on this front?
China has already become the largest greenhouse gas emitter in the world, overtaking the U.S. The Chinese population is 1.3 billion, maybe three or four times bigger than the U.S. But China's GDP is far smaller than the U.S. ... which shows how energy inefficient the Chinese economy is. China is making improvements ... but these are still in the early stage of development. There is a long way to go for the Chinese economy.
Much of the ADB's focus has been on Pakistan and the devastating floods. What role has the bank played?
The focus is still on relief, but the ADB and the World Bank are jointly engaged in assessing damages and will soon start reconstruction. ... The floods affected 50 per cent of Pakistan and 20 million people; reconstruction will take at least three years. ... The ADB initially provided a $3-million grant for relief and has set aside $2-billion to reconstruct roads, bridges,electricity and irrigation systems, as well as schools, hospitals and clinics. ... I hope that with abundant human resources, the Pakistan economy can take off and grow as fast as the Indian economy has.
This interview has been edited and condensed.