Takehiko NakaoPresident

Asian Development Bank

22nd ASEAN+3 Finance Ministers’ and Central Bank Governors’ Meeting

2 May 2019 | Nadi, Fiji

Reinvigorating Growth in ASEAN+3

ASEAN+3 economies slowed in step with global and PRC growth deceleration

2

7.5

5.0 5.0 5.4 4.9 5.0 4.6 5.2 4.7 4.6 4.4

0

2

4

6

8

10

12

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019f 2020f

ASEAN+3 G3 PRC

GDP Growth (%)

G3 = Japan, euro area, and the United States; f = forecast; PRC = People’s Republic of China.Source: ADB. Asian Development Outlook database; and IMF, World Economic Outlook Database April 2019.

3

Up/Downside risks to the outlook

Better-than-expected domestic consumption and investment can still boost growth in some ASEAN+3

economies. But downside risks remain significant

♦ Continuing US-PRC trade tensions

♦ Potential financial volatility due to excessive leverage

♦ Evolving political situations

♦ A sharper-than-expected slowdown in Europe on the

heels of a disorderly Brexit

♦ Uncertainties in advanced economies’ monetary

policies

Long-term structural challenges facing ASEAN+3

4

♦ Unfavorable trade environment

♦ Infrastructure gaps

♦ Population aging in some economies

♦ Possible effects of technology on jobs

♦ Climate change impacts

♦ Remaining poverty and widening

inequality

Drivers for growth

5

♦ Prudent macroeconomic policies and structural reforms

♦ Strong consumption from a growing middle class

♦ Increasing women’s participation in economic activities

♦ Greater use and application of digital technology

♦ More indigenous “product and process” innovation

♦ Increasing demand for business process outsourcing

♦ Expansion of tourism, attracting people from within and outside the region

♦ Growing intraregional FDI to deepen supply chains

Regional integration supporting trade, investment, and tourism

6Source: ADB, Asian Economic Integration Report database.

ASEAN+3 Intraregional Shares (% of total)

Trade FDI Tourism

47% 51% 73%(2016)

45% 48% 75%

2001

2017

Asia: largest and fastest growing e-commerce market by region

E-commerce by Region (% of GDP)Global E-commerce (% of GDP)

7

Notes: Business-to-Consumer (B2C) e-commerce covers any contract for the sale of goods and/or services, fully or partially concluded by a technique for distance communication. Values refer to the total of goods and services sold through B2C transactions as a percentage of GDP. Source: Ecommerce Foundation (2016).

1.3

1.6

2.0

2.4

3.1

2011

2012

2013

2014

2015

0.6

0.6

2.3

2.8

3.6

0.7

0.8

2.6

3.1

4.5

Middle East andNorth Africa

Latin America

Europe

North America

Asia and thePacific

2015

2014

Important reforms to reap the potential from digital economy

8

♦ Access to ICT: Enhance affordability of and access to ICT

♦ Payment options: Broaden the e-payment availability and options

♦ Infrastructure: Improve logistics and delivery infrastructure

♦ Taxation: Develop digital tax policies and options; strengthen international cooperation for better taxation

♦ Regulation:o Protect consumers against cyber-crimes and fraudo Prevent illegal activities (e.g., money laundering)o Enhance cyber security to prevent cyber attackso Protect personal data and privacy

9

Leverage tourism to boost economy and jobsTourism Receipts (% of GDP)

Source: ADB calculations using data from World Bank, World Development Indicators

(accessed April 2019).

Tourist Arrivals (2017, million)

14.86.4

4.9

7.0

4.7

4.0

0.6

2.8

1.8

1.6

0.9

0.3

1.3

18.0

13.6

5.9

5.7

4.5

4.0

3.4

2.6

1.5

1.4

1.1

0.8

0.3

0.0 5.0 10.0 15.0 20.0

CAMTHASIN

MALLAOVIE

MYAPHI

BRUINOKORJPNPRC

2005 2017

0.4

6.9

53.4

16.0

104.9

95.5

51.5

5.6

264.0

31.6

126.8

69.0

1,386.4

0.3

3.3

3.4

5.6

6.6

12.9

13.3

13.9

14.0

25.9

28.7

35.6

60.7

0 20 40 60 80 100 120 140 160 180 200

BRULAO

MYACAM

PHIVIE

KORSININO

MALJPNTHAPRC

Tourist Population

300 700 1,400

10

Promote sustainable tourism to support inclusive growth

♦ Ensure guidelines and regulations to protect environment and local communities, and preserve cultural heritage

♦ Invest in infrastructure for tourism such as airports, railways, ferries, roads, and Wi-Fi networks

♦ Build knowledge and skills of tourism professionals

♦ Improve travel facilitation such as visa free entry for tourists

♦ Adopt and implement the regional tourism guidelines and standards

ADB promotes regional tourism cooperation

11

improved access and environmental conditions in

secondary tourism destinations

$300 M*Cumulative ADB

assistance for ASEAN tourism

▪ Roads

▪ Airports

▪ Ferry terminals

▪ Waste

management systems

▪ Skills training

▪ Women’s entrepreneurship and

innovative tourism technology

startups

▪ Regional tourism planning,

standards and marketing

▪ Regional knowledge dissemination

ADB’s regional tourism knowledge support and advisory services are recognized as global best practice by United Nations World Tourism Organization (2018)

INFRASTRUCTURE CAPACITY BUILDING

* There is no tourism-related project in PRC.

Annual ADB Commitments of Loans and Grants to ASEAN plus PRC

12

Ordinary Capital Resources (OCR) and Asian Development

Fund Operations (ADF)($ billion)

Commitment is the financing approved by ADB’s Board of Directors or Management and legal agreement has been signed by the borrower, recipient, or the investee company and ADB. It is the amount indicated in the investment agreement that may or may not be equal to the approved amount, depending on the exchange rate at the time of signing.

5.04.3 4.2

7.1

3.9

6.15.4

6.4

8.9

2010 2011 2012 2013 2014 2015 2016 2017 2018

PRC 12.2%(11.9%)

Indonesia 9.7%(10.3%)

Philippines 7.0%(3.6%)

Viet Nam 4.0%(4.4%)

Myanmar 2.9%(1.6%)

Thailand 2.4%(0.3%)

Other ASEAN3.7%

(0.3%)

Other Asia 58.1%(67.5%)

ADB Operations in 2018

13

Ordinary Capital Resources (OCR) and Asian Development Fund Operations (ADF)

(commitments in 2018 increased to $21.6 billion from $19.7 billion in 2017)

Other ASEAN= Cambodia and Lao PDR.PRC = People's Republic of China. Bracketed numbers are from 2017.

Energy24% (32%)

Transport23% (25%)

Agriculture11% (8%)

Public Sector Management

10% (6%)

Water10% (8%)

Finance9% (14%)

Education8% (4%)

Industry and Trade3% (2%)

Health2% (1%)

ICT0.3% (0.4%)

By SectorBy Country

Strategy 2030: Seven Operational Priorities

14

Promoting rural development and

food security

Strengthening governance and

institutional capacity

Fostering regional cooperation and

integration

Addressing remaining poverty and reducing

inequalities

Making cities more livable

Key ApproachesStrengthening knowledge services

Catalyzing and mobilizing financial resources for development

$1 in private sector operations financing matched by $2.50 of cofinancing

Accelerating progress in gender equality

At least 75% of number of ADB committed operations by 2030

Tackling climate change, building climate

and disaster resilience, and enhancing

environmental sustainability

At least 75% of number of ADB committed operations by 2030, total of $80 billion from ADB’s own resources

from 2019 to 2030

Expanding private sector operations

1/3 of number of ADB committed operations by 2024