Japanese Crown Prince Naruhito has called on Asian governments and other concerned stakeholders to combine wisdom and work to overcome various challenges on the way of making the continent prosperous.

The crown prince made the statement during the inaugural session of the 50th annual meeting of the Asian Development Bank’s Board of Governors on Saturday. 

“The countries in Asia have made significant progress in economic development and poverty reduction since the establishment of the Asian Development Bank (ADB) half a century ago,” said the crown prince, who had previously attended ADB’s annual meetings in Fukuota 20 years ago and in Kyoto 10 years ago. “However, 300 million people still live in poverty in this region, and poverty reduction through sustainable and inclusive growth remains an important agenda to us.”

Asia, which was referred to as the home of the poor 50 years ago, today accounts for a third of global gross domestic product and contributes to more than half of the world’s economic growth. In other words, Asia is now the driver for the global economic growth. But as the continent is growing, it has also started witnessing problems of income inequality, aging, climate change and volatility in international capital flows.

“To confront these challenges, we should follow two guiding principles of achieving inclusive and sustainable economic growth and strengthening the resilience against various crises,” said Japanese Deputy Prime Minister, Finance Minister and Chairperson of the Board of Governors of the ADB, Taro Aso, adding, “We should also focus on areas such as infrastructure development, strengthening of the health system, disaster risk management and regional financial cooperation.”

The ADB is currently framing a long term strategy called Strategy 2030 to address all these issues. The strategy will focus on infrastructure development, strengthening of the health and education sectors, gender equality and mobilisation of private resources for development. “Supporting infrastructure will remain our priority,” said ADB President Takehiko Nakao. His comment comes at a time when a recent ADB report has identified the need for $1.7 trillion per year for investment in power, transport, telecommunications, and water supply through 2030. “This is double our previous estimate, reflecting additional investments needed to support continued growth and address climate change,” Nakao said.

Asia very well knows governments cannot come up with all the funds required to bridge the infrastructure and sustain economic growth. So, the private sector and capital markets need to be tapped.

But a latest Moody’s report says only around $220 billion is being raised through the capital market per year for infrastructure development in Asia, reflecting a big funding gap. Yet the good news is that project financed debt has a very high recovery rate of around 80 percent in Asia. And two-thirds of the bad project financed debt has been recovered over years.

Asia can cash in on this track record if multilateral development banks, like the ADB, could help enhance credit worthiness of various borrowers using different instruments, says the Moody’s report. Also, documents should be standardised and project pipeline tracker should be established to boost investor confidence in the infrastructure sector, adds the report.

Asia was desperately short of capital at the time of ADB’s establishment. But by adhering to strong banking principles and establishing a strong credit profile, the ADB, in 1969, successfully issued its first bond in Deutschmark in Germany, according to Nakao. The ADB later went on to become the first international entity to issue yen-denominated bonds in Japan in 1970, heralding the launch of the “samurai” bond market. Today, the ADB has provided around $270 billion in loans and grants to various countries.

“Building on our achievements of the past 50 years, the ADB will continue to work together with our partners to build a more vibrant, inclusive and sustainable Asia and the Pacific,” Nakao said.