Asian Development Bank

Asian Development Bank March 2018 President Takehiko Nakao

Azerbaijan ADB Regional Members(48 economies) Uzbekistan Kazakhstan Georgia Armenia Turkmenistan Afghanistan Pakistan Bangladesh Maldives Kyrgyz Republic Sri Lanka Tajikistan Nepal Mongolia People s Republic of China Bhutan Non-Regional Members(19 countries) Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Ireland, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States Indonesia Korea Timor-Leste Australia Japan Lao PDR Hong Kong, China India Myanmar Taipei,China Thailand Marshall Islands Viet Nam Philippines Cambodia Micronesia Kiribati Brunei Palau Nauru Malaysia Tuvalu Papua New Guinea Solomon Islands Samoa Singapore 2 Vanuatu New Zealand = Advanced economies and graduated developing members Cook Islands Fiji Tonga 2

3 Country Data (2016) Population (million) GDP ($ billion) Per capita GDP ($) People s Rep. of China 1,382.7 11,232 8,123 India 1,299.8 2,264 1,742 Indonesia 258.7 932 3,604 Pakistan 193.6 279 1,441 Bangladesh 161.5 228 1,414 Philippines 104.2 305 2,927 Viet Nam 92.7 201 2,172 Thailand 69.0 407 5,902 Myanmar 52.3 64 1,232 Republic of Korea 51.2 1,411 27,535 (reference: advanced economies) Japan 127.0 4,937 38,883 United States 323.3 18,624 57,608 Germany 82.5 3,479 42,177 France 64.6 2,466 38,178 United Kingdom 65.6 2,629 40,050 Source: World Economic Outlook October 2017 database.

4 Growth Rate (%) 2016 2017 (forecast) 2018 (forecast) Developing Asia 5.8 6.0 5.8 (excluding NIES) 6.3 6.5 6.3 People s Rep. of China 6.7 6.8 6.4 India 7.1 6.7 7.3 Indonesia 5.0 5.1 5.3 Pakistan 4.7 5.3 5.5 Bangladesh 7.1 7.3 6.9 Philippines 6.9 6.7 6.8 Viet Nam 6.2 6.7 6.7 Thailand 3.2 3.8 3.8 Myanmar 5.9 7.7 8.0 Republic of Korea 2.8 3.1 3.0 NIEs = newly industrialized economies of Hong Kong, China; Rep. of Korea; Singapore; and Taipei,China. Source: Asian Development Outlook December 2017 Supplement.

Developing Asia growth moderated, but remains healthy Real GDP Growth (y-o-y, %) 12 10 8 9.6 Developing Asia 8.1 Developing Asia excluding NIEs 6 7.1 7.0 6.8 6.6 6.3 6.5 6.3 4 2 9.4 7.4 6.4 6.4 6.4 6.0 5.8 6.0 5.8 0 2010 2011 2012 2013 2014 2015 2016 2017 Forecast 2018 Forecast NIEs = newly industrialized economies of Hong Kong, China; Rep. of Korea; Singapore; and Taipei,China. Source: Asian Development Outlook December 2017 Supplement. 5

Factors behind the PRC s growth slowdown % 16 12 8 4 0 GDP 7.9 7.8 7.3 6.9 6.7 6.7 6.8 6.9 6.9 6.8 2012 2013 2014 2015 2016 Economic growth Retail sales Industrial value-added Q3 Q4 Q1 Q2 Q3 2016 Sources: Asian Development Outlook December 2017 Supplement database; CEIC Data Company. 2017 Cyclical factors Excess capacity in some sectors Prioritizing financial sector stability Structural factors Rebalancing from investment- to consumption-driven growth Declining working-age population Convergence to developed economies 6

PRC shifts toward services- and consumption-driven economy % 100 Demand-side Shares in GDP % 100 Supply-side Shares in GDP 9.5 8.6 80 60 48.4 51.1 Consumption Investment 80 60 46.4 39.8 Agriculture Industry 40 20 47.9 47.2 Net exports 40 20 44.1 51.6 Services 0 3.7 1.7 2010 2016 0 2010 2016 Sources: Asian Development Outlook 2017, ADB; national source. 7

Headquarters Manila, Philippines Founded in 1966 67 Members Asian Development Bank (ADB) Authorized Capital $ 151.5 billion (Dec 2017) Major shareholders (capital share %): Japan (15.6%), United States (15.6%), PRC(6.4%), India(6.3%) * Paid-in capital: $7.6 billion (including $0.6 billion committed but not paid yet) Callable capital: $143.9 billion Annual Loan/Investment Approval $19.1 billion (2017) * Including loans, ADF grants, guarantees, and equity investments, but excluding technical assistance and cofinancing Top recipients: PRC, India, Pakistan, Bangladesh, Indonesia Loan Outstanding $101.0 billion (Dec 2017) Staff 3,128 (including international staff 1,136) (Dec 2017) 8

9 Contribution by Members Ordinary Capital Resources (Capital Share/ Voting Power Share) Japan (15.6%/ 12.8%), United States (15.6%/ 12.8%), PRC (6.4%/ 5.5%), India (6.3%/ 5.4%), Australia (5.8%/ 4.9%), Indonesia (5.4%/ 4.7%), Canada (5.2%/ 4.5%), Korea (5.0%/ 4.3%), Germany (4.3%/ 3.8%), others (30.4%/ 41.3%) Asian Development Fund (Cumulative Contribution) Japan (38.3%), United States (13.4%), Australia (7.9%), Canada (6.0%), Germany (5.7%), United Kingdom (5.0%), France (4.2%), others (19.5%) International Staff (1,136) (Dec 2017) Japan (143), United States (139), India (80), Australia (69), PRC (63), Korea (63), United Kingdom (56), Canada (51), Philippines (45), Germany (42), France (37), Pakistan (31), Indonesia (30), others (287)

ADB Operations ADB provides loans, grants and technical assistance to developing member countries in Asia and the Pacific. Loans are financed from ordinary capital resources. Regular OCR loans are provided to middle-income countries (per capita income $7,025) at quasi market rate. Concessional OCR loans are provided to low income countries (per capita income $1,185) at concessional terms (long maturities, low interest rate including grants) ADF grants are offered to countries with limited debt repayment capacity e.g. Afghanistan, Lao PDR Technical assistance includes capacity building, project preparation, and research for developing members. 2017 Commitments * Outstanding Equity ** OCR (Loan) 19.50 100.9 50.3 Regular OCR 17.23 71.5 Concessional OCR 2.27 29.4 ADF (Grant) 0.6-0.7 Technical Assistance 0.2 * Excluding co-financing. ** Including paid-in capital ($7.0 billion) and ordinally reserves ($ 43.2 billion: accumulated retained earnings (12.5 billion) plus a one-time income of $30.7billion at the beginning of 2017 due to the merger of ADF loan assets with OCR)) 10 (Billion USD)

Annual Approvals of Loans and Grants 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Ordinary Capital Resources (OCR) and Asian Development Fund Operations (ADF) ($ billion) 6.3 8.1 11.1 11.3 15.8 13.7 13.9 13.1 14.2 13.5 16.3 17.5 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 19.1 Note: Figures reported in gross approval basis include loans, grants, equity investments, and guarantees. 11

ADB Operations Ordinary Capital Resources (OCR) and Asian Development Fund Operations (ADF) Approvals ($19.1 billion in 2017 from $17.5 billion in 2016) By Country By Sector PRC 14% (12%) Finance 14% (12%) Water 9% (9%) Others 21% (29%) Public Sector Management 6% (11%) Viet Nam 3% (4%) Sri Lanka 5% (4%) Uzbekistan 6% (3%) Philippines 6% (5%) Indonesia 10% (10%) Bangladesh 10% (6%) India 14% (18%) Pakistan 11% (9%) Transport 27% (23%) Energy 29% (26%) Agriculture 10% (7%) Education 4% (4%) Health 1% (2%) ICT 0.1% (1%) Bracketed numbers are from 2016. Industry and Trade 0.3% (5%) 12

ADB Operational Activities - Approvals ($ million) - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Loans and Grants* Sovereign 9,421 14,024 11,809 11,752 11,300 12,611 11,610 13,655 14,950 15,937 Nonsovereign 1,913 1,735 1,846 2,106 1,841 1,602 1,919 2,626 2,502 3,150 Subtotal 11,335 15,758 13,655 13,858 13,141 14,213 13,529 16,280 17,452 19,087 Technical Assistance 190 203 175 148 151 156 159 141 169 206 Cofinancing 1,678 4,978 5,462 7,695 8,272 6,648 9,222 10,735 14,061 9,585 Total Operations 13,203 20,939 19,293 21,700 21,564 21,017 22,909 27,157 31,682 28,878 Figures reported in gross approval basis include loans, grants, equity investments, and guarantees. Cofinancing amount includes TA cofinancing. Numbers may not sum precisely due to rounding 13

ADB Operational Activities - OCR and ADF Disbursements ($ million) - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Loans and Grants* Sovereign 8,098 9,997 7,201 7,516 8,080 7,779 8,962 10,773 10,746 10,069 Nonsovereign 725 507 865 792 615 924 1,229 1,567 1,743 1,372 Total 8,823 10,503 8,066 8,309 8,695 8,703 10,191 12,340 12,489 11,441 *Figures include loans, ADF grants, guarantees, and equity investments, but do not include technical assistance, other special funds and cofinancing. Numbers may not sum precisely due to rounding. Source: Controller s Department, ADB.. 14

Organization Chart of ADB (as of Jan 2018) ADB Institute Independent Evaluation Department Office of the Compliance Review Panel Board of Governors Board of Directors(1) President Office of the Public-Private Partnership Office of the Ombudsperson Office of the Auditor General Office of Anticorruption & Integrity Strategy, Policy and Review Department -European Representative Ofc. -Japanese Representative Ofc. -North American Representative Ofc. Office of the Special Project Facilitator Vice President (Operations 1) Vice President (Operations 2) Vice President (Knowledge Mgmt. & Sustainable Dev t) Vice President (Finance & Risk Management) Vice President (Administration & Corporate Mgmt.) Vice President (Private Sector & Cofinancing Ops.) South Asia Department (2) Central & West Asia Department (2) East Asia Department (2) Pacific Department (2) Southeast Asia Department (2) Sustainable Dev t. & Climate Change Dept. Economics Research & Regional Cooperation Dept. Department of Communications Controller s Department Treasury Department Office of Risk Management Procurement, Portfolio & Financial Mgmt. Dept. Budget, Personnel & Mgmt. Systems Dept. Office of Administrative Services Office of the Secretary Private Sector Operations Department Office of Cofinancing Operations (1) Board of Directors currently consists of 12 Directors from Australia, Canada, China, France, Germany, India, Indonesia, Japan, Korea, Malaysia, Pakistan and the US, (2) Under regional departments, 29 local offices are located in 28 countries (Pacific Liaison Office located in Sydney is in charge of Pacific countries). 15 Office of the General Counsel Office of the Information & Systems Technology

Sector and Thematic Groups Sector Groups Education Energy Finance Sector Development Health Transport Urban Water Thematic Groups Climate Change and Disaster Risk Management Environment Gender Equity Governance Public-Private Partnership Regional Cooperation and Integration Rural Development and Food Security (Agriculture) Social Development 16

Remaining and New Challenges in Asia and the Pacific Still around 330 million people live in absolute poverty on less than $1.90 a day Large infrastructure gaps Implementing the Sustainable Development Goals adopted at the United Nations Implementing the climate change actions agreed at COP21 Promoting private sector Enhancing gender equality Urbanization Aging Widening inequalities 17

Poverty in ADB Developing Member Countries* 1990 1999 2005 2011 2013 Population (million) 2,759 (52%)*** 3,172 (53%)*** 3,417 (52%)*** 3,644 (52%)*** 3,718 (52%)*** No. of Poor (million) $1.9/day (2011 PPP) Poverty Rate (%) Share of Developing World Poor (%) No. of Poor (million) $3.2/day (2011 PPP) Poverty Rate (%) Share of Developing World Poor (%) 1,469 53.2 78.7 2,246 81.4 77.2 1,230 38.8 71.2 2,240 70.6 73.3 875 25.6 64.9 1,939 56.7 84.7 500 13.7 52.5 1,499 41.1 65.4 326 8.8 42.8 1,241 33.4 61.4 Notes: *Refers to 34 developing member countries: Armenia, Azerbaijan, Bangladesh, Bhutan, People s Republic of China, Fiji, Georgia, India, Indonesia, Kazakhstan, Kiribati, Kyrgyz Republic, Lao People's Democratic Republic, Malaysia, Maldives, Federated States of Micronesia, Mongolia, Myanmar, Nepal, Pakistan, Papua New Guinea, Philippines, Samoa, Solomon Islands, Sri Lanka, Tajikistan, Thailand, Timor-Leste, Tonga, Turkmenistan, Tuvalu, Uzbekistan, Vanuatu, and Viet Nam. **Ratio to the world population (5,285 million in 1990; 6,038 million in 1999; 6,517 million in 2005; 7,012 million in 2011; 7,182 in 2013). Source: ADB estimates based on World Bank s PovcalNet data (downloaded October 11, 2017). 18

Key messages: Attracting PPPs and strengthening capital markets Strengthen regulatory and institutional framework to generate a pipeline of bankable projects for PPP Enact PPP laws, streamline procurement and bidding processes, and establish independent PPP units to attract private sector financing Deepen capital markets to attract long-term institutional investors Improve government coordination and transparency, and enhance capacity for project planning, design, and implementation 19

ADB TO DOUBLE ANNUAL CLIMATE FINANCING TO $6 BILLION FOR ASIA-PACIFIC BY 2020 (announced on 25 September 2015) Doubling ADB s annual climate financing to $6 billion by 2020, from the current $3 billion. $4 billion for mitigation through scaling up support for renewable energy, energy efficiency, sustainable transport, and building smart cities. $2 billion for adaptation through more resilient infrastructure, climatesmart agriculture, and better preparation for climate-related disasters. Continuing to explore cofinancing with Green Climate Fund and other partners. Mobilizing greater private resources. Issuing more green bonds. Adjust its procurement systems in order to facilitate the integration of cleaner and more advanced technology into its projects Strengthen partnerships with centers of excellence to provide cutting-edge knowledge and expertise 20

Reforming ADB Enhancing lending capacity by combining Asian Development Fund (ADF) s equity and lending operations to the Ordinary Capital Resources (OCR) balance sheet. Streamlining procurement procedures. More authorities delegated to Resident Missions. The office of Public-Private Partnership established. 7 Sector Groups (Transport, Energy, Health, Education etc.) and 8 Thematic Groups (Gender, Governance, Environment etc.) reconstituted with full time secretariats. Talent management initiative to enhance staff performance and workforce planning to allocate staff resources more efficiently. Strengthening private sector operations 21

Asian Century Scenario (global GDP composition) <Source: Asia 2050, which is a study in 2011 commissioned by ADB> Present(2016) Asian Century Scenario(2050) Middle East & Sub-Saharan North Africa Africa 4% 2% Latin America & Caribbean 7% Rest of World 2% Asia 32% Sub-Saharan Middle East & Africa North Africa 2% 3% Latin America & Caribbean 10% Rest of World 2% North America 27% North America 13% Asia 52% Europe 26% Europe 18% Asia s GDP: $24 trillion (market FX rate) Asia s per capita GDP: $12,000 (PPP) Asia s GDP: $174 trillion (market FX rate) Asia s per capita GDP: $40,800 (PPP) Population (billion) and Share (%) 2016 Asia 4.12 (55%) World 7.44 (100%) 22 2050 4.76 (52%) 9.15 (100%)

23 Asian Share of World GDP 70% 60% 50% 40% 30% 20% 10% 0% 1700 1820 1870 1913 1950 1970 1980 1995 2010 2020 2030 2040 2050 Source: Asia 2050: Realizing the Asian Century

Eight Conditions for Economic Development - Op-ed by President Nakao, Nikkei Asian Review (Feb 5, 2015) - 1. Infrastructure investment 2. Investment in health and education 3. Macroeconomic stability 4. Open trade and investment regimes: including streamlining regulatory framework and reforming sate-owned enterprises 5. Public governance: anti-corruption, efficiency of delivering services and quality of regulations 6. Inclusiveness and sustainability: sharing development fruits, gender equality, environment, and climate change 7. Vision for the future 8. Political stability, security, and good relations with neighboring countries 24