Browse content similar to Rajat Nag - Managing Director General, Asian Development Bank. Check below for episodes and series from the same categories and more!
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That's it from me but now it is We are used to the idea that we're | :00:13. | :00:18. | |
living in ASIO's century, that China and India are leading an | :00:18. | :00:24. | |
irreversible shift of power from west to east. -- Asia's. Maybe now | :00:24. | :00:31. | |
it is time to challenge that new orthodoxy. Asian Nations are facing | :00:31. | :00:41. | |
:00:41. | :00:46. | ||
huge challenges, poor governance and environmental degradation. My | :00:46. | :00:56. | |
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guest is Rajat Nag, from the Asian Development Bank. Are reports of | :00:57. | :01:07. | |
:01:07. | :01:07. | ||
Asia's economic advance somewhat premature? Rajat Nag, welcome to | :01:07. | :01:16. | |
HARDtalk. Thank you. Thank you very much. It strikes me that in recent | :01:16. | :01:22. | |
years, Asia has hardly been short of investment. What exactly is the | :01:22. | :01:30. | |
point of the Asian Development Bank. The way you introduce did it is | :01:30. | :01:35. | |
spot-on. There is a certain euphoria about Asia and the reality | :01:35. | :01:40. | |
is they receive huge unfinished agenda. We have done very well. We | :01:40. | :01:45. | |
have done well on poverty, in comes have increased. Asians are | :01:45. | :01:50. | |
healthier and more educated. But there are still 600 million people | :01:50. | :01:56. | |
without access to clean water. Two- thirds of the world's poor live in | :01:57. | :02:06. | |
:02:07. | :02:07. | ||
Asia. $1.25 a day. That is a huge unfinished agenda. We have a lot of | :02:07. | :02:13. | |
work to do. And I come back to my point, which was based on some raw | :02:13. | :02:20. | |
facts. Last year you disbursed up to $20 billion worth of investment. | :02:20. | :02:30. | |
:02:30. | :02:30. | ||
We approved more and disburse to west. China, $50 billion overseas | :02:30. | :02:37. | |
in 2009 and it says by 2013, that figure will be of $100 billion. | :02:37. | :02:43. | |
important thing is not the amount of money that has been provided. | :02:43. | :02:48. | |
You should look at what is being invested in China. China can invest | :02:48. | :02:55. | |
around Asia so what seems to me China represents a force, a wall of | :02:55. | :03:00. | |
money, investment money, that you cannot defeat -- compete with. | :03:00. | :03:05. | |
we are providing China is not money. They do not need it. It needs | :03:05. | :03:09. | |
access to knowledge and best practices. We invested an | :03:10. | :03:15. | |
environmental project. Carbon capture, energy efficiency. That | :03:15. | :03:19. | |
will reduce China's carbon footprint, which will be useful for | :03:19. | :03:22. | |
China and the rest of the world said there is an important synergy | :03:22. | :03:28. | |
here. That is a proposition I would like to test. Before we get there, | :03:28. | :03:34. | |
people watching this will be looking at the world economy and | :03:34. | :03:38. | |
looking at the sense of doom we see in the rich industrialised West and | :03:38. | :03:41. | |
wondering whether you, as the leading figure in Asian economic | :03:41. | :03:46. | |
analysis, believe it is bound to have an impact on the Asian economy. | :03:46. | :03:54. | |
Will it? Certainly. We will be affected by what happens in the | :03:54. | :03:59. | |
West but because our macro-economic fundamentals are strong in Asia, | :03:59. | :04:04. | |
debt is lower, we have strong domestic demand, we will be able to | :04:04. | :04:07. | |
weather the economic crisis much better and we are forecasting | :04:07. | :04:15. | |
growth in Asia this year of about 7.5%. Edit down. A bit down since | :04:15. | :04:21. | |
April. But the West is not doing as well. I wonder if that is wildly | :04:21. | :04:25. | |
optimistic and based on the fact that Asia recovered so quickly and | :04:25. | :04:29. | |
impressively from the financial crisis of 2008 but this time around, | :04:29. | :04:34. | |
it could be difference and worse. One of the leading American | :04:34. | :04:38. | |
economic analysts told us last week but in his opinion, we are looking | :04:38. | :04:44. | |
at the phrase "the great contraption", to be compared to the | :04:44. | :04:50. | |
Great Depression. It is hard to see how Asia will continue to grow. | :04:50. | :04:55. | |
Does that mean there will be orderly resolution of the US-owned | :04:55. | :04:59. | |
crisis? That is a heck of an assumption. One has to make certain | :04:59. | :05:03. | |
assumptions based on what we see happening and if that does not | :05:03. | :05:09. | |
happen, we have to look at all the numbers again. We feel that 7.5% in | :05:09. | :05:15. | |
that neighbourhood it is not. has what one of China's best known | :05:15. | :05:20. | |
economic analysts, now the Chief of the Beijing International Finance | :05:20. | :05:25. | |
Forum, said. He said China is entering a tough period indeed. | :05:25. | :05:29. | |
Inflation and growth rates are conflicting with each other and it | :05:29. | :05:35. | |
is troubling. It is troubling. Not only in China but in India. | :05:35. | :05:40. | |
Inflation rip pressures. It prevents -- presents several | :05:40. | :05:44. | |
challengers. Given the fundamentals as we see it, but potential for | :05:44. | :05:51. | |
economic growth is strong. What it will come down to from 7.5, we | :05:51. | :05:58. | |
cannot say but there will be a need on a greater balance in. Asia will | :05:58. | :06:04. | |
have to become consumer a share, not just factory Asia. I have been | :06:04. | :06:11. | |
hearing that for a long time. China takes that seriously and eases its | :06:11. | :06:14. | |
monetary and fiscal policy and encourages domestic consumption. | :06:14. | :06:18. | |
The inflation rate could go a whole lot higher and it could be looking | :06:18. | :06:22. | |
at a bubble, particularly in terms of property which could be damaging | :06:22. | :06:27. | |
to China and the rest of the world. That is why we have said inflation | :06:27. | :06:34. | |
is a concern. Asia's macro-economic management has been pretty sound | :06:34. | :06:39. | |
and these factors are balanced but what we are see in his -- saying is | :06:39. | :06:44. | |
Asia has to consume more. Not irresponsibly, like Europe or | :06:44. | :06:53. | |
America, but much more. Asia consumes 10% of the electricity. | :06:53. | :06:56. | |
We're not saying in we go up to American levels but certainly, | :06:56. | :07:01. | |
consumption levels in Asia can increase. Consumption we might come | :07:01. | :07:05. | |
back to as a philosophy to drive growth but before we get there, let | :07:05. | :07:11. | |
us think a little deeper about your bank, the Asian Development Bang. | :07:12. | :07:17. | |
It seems anachronistic back the bank, its two most intellectual | :07:17. | :07:22. | |
partners, are the United States and Japan. It is a throwback to the | :07:22. | :07:29. | |
1960s. That is the shareholder in now. We had a capital increase last | :07:29. | :07:38. | |
year. Shareholder has tripled our capital. -- shareholders. When | :07:38. | :07:43. | |
you're taking big investment decisions and you say it is very | :07:43. | :07:47. | |
important in the terms of how you want to affect Asian growth, the | :07:47. | :07:53. | |
biggest and most influential voices are coming from America and Japan? | :07:53. | :08:02. | |
China and Coria are important shareholders. -- Korea. Path is | :08:02. | :08:06. | |
America and Japan. That is changing. It should be changing now. | :08:06. | :08:11. | |
The important thing is how we increase our operations, how we | :08:11. | :08:16. | |
leverage our resources to fight poverty because poverty is a huge | :08:16. | :08:18. | |
challenge, and unfinished agenda in Asia. | :08:18. | :08:23. | |
How does it work, this idea that to fight poverty best by sticking to | :08:23. | :08:28. | |
aid decades old notion that a development is all about building | :08:28. | :08:38. | |
:08:38. | :08:39. | ||
big project. -- to a decades-old. Building dams and highways. How | :08:39. | :08:45. | |
does that alleviate poverty? For it does significantly. We supported a | :08:45. | :08:48. | |
huge bridge in Bangladesh which made a big difference to poverty | :08:48. | :08:53. | |
levels in Bangladesh because it connected the poorest part of | :08:53. | :08:57. | |
Bangladesh with the south-western part. Infrastructure by it self is | :08:57. | :09:01. | |
not enough but it is a very necessary condition for growth. | :09:01. | :09:05. | |
Growth is necessary to reduce poverty. One of the signature | :09:05. | :09:09. | |
pieces of infrastructure you have invested in this in the greater | :09:09. | :09:19. | |
:09:19. | :09:21. | ||
Mekong River sub region, a huge hydro power project, in Laos. Local | :09:21. | :09:27. | |
people report it has drastically reduced fish stocks and a damaged | :09:27. | :09:30. | |
agricultural production, affecting the lives of tens of thousands. How | :09:30. | :09:36. | |
was that part of poverty alleviation? That project was one | :09:36. | :09:39. | |
of the first projects, done in the 1990s. They are still feeling the | :09:39. | :09:43. | |
effects today. As soon as we learnt about it, we were there and many of | :09:43. | :09:47. | |
these issues have been addressed. You should look at other projects | :09:47. | :09:54. | |
we have supported. Another one you referred to in a previous programme. | :09:54. | :10:00. | |
That project has now got the best practices on resettlement, on | :10:00. | :10:03. | |
safeguards so we learnt from mistakes but those projects are | :10:03. | :10:12. | |
making a difference to the people. Action Aid. They have looked at | :10:12. | :10:18. | |
some of your biggest infrastructure projects and say you have | :10:18. | :10:21. | |
exaggerated the poverty problem and created new environmental to a | :10:21. | :10:28. | |
branch. -- damage. They say you have not served to deliver the poor | :10:28. | :10:34. | |
a decent life. We have heard this and we are in dialogue with them | :10:34. | :10:39. | |
and others. It is not quite right. We have to look at the figures. | :10:39. | :10:48. | |
Asia has reduced poverty. 50% were poor in 1970. That is down to 20%. | :10:48. | :10:55. | |
With respect, this is a question of making sense of the micro and the | :10:55. | :11:01. | |
macro. They are saying some of your biggest signature schemes are | :11:01. | :11:07. | |
counter-productive. That is where I disagree. They are not. I do agree | :11:07. | :11:11. | |
that all these large infrastructure projects have some affects and | :11:11. | :11:15. | |
sometimes negative. We are conscious of that. We have | :11:15. | :11:18. | |
safeguard policies which try to avoid that him back but when we | :11:18. | :11:28. | |
cannot, we minimise it. -- impact. Income generation. Exactly the | :11:28. | :11:34. | |
point you made. Those safeguards are not working. A watchdog group | :11:34. | :11:37. | |
accused you of consistently sideline in civil society | :11:37. | :11:40. | |
organisations who want to complain about adverse affects of your | :11:40. | :11:45. | |
policies. With all due respect, and we talk to them frequently, we have | :11:45. | :11:49. | |
an accountability mechanism. It is a question of whether you were | :11:49. | :11:53. | |
listening or just talking at them. We listened but we have | :11:53. | :11:57. | |
stakeholders who include the civil society, who include the | :11:57. | :12:00. | |
government's, the other shareholders, the affected people | :12:00. | :12:05. | |
and we have to build a consensus. - - governmentgovernmentmes, civil | :12:05. | :12:10. | |
society might feel we have not listened to them a but we listened | :12:10. | :12:14. | |
to others as well. Here is perhaps the biggest point of all. You have | :12:14. | :12:18. | |
said sustainability is important and he expressed concern about | :12:18. | :12:23. | |
environmental degradation. -- you. Is it not the case that so much of | :12:23. | :12:28. | |
what you are funding, the economic growth you're sitting in Asia, is | :12:28. | :12:36. | |
having an extraordinarily come to - - counter-productive affect? | :12:36. | :12:41. | |
have to keep it in perspective. 800 million people in Asia are up | :12:41. | :12:44. | |
without access to electricity. That is the population of North America | :12:44. | :12:49. | |
and Europe combined. Providing them wi wi we have to have | :12:49. | :12:56. | |
options. Renewables will be the best. Nuclear? Maybe. Wind and | :12:56. | :13:04. | |
solar, we support and strongly. They can provide and the 10% of the | :13:04. | :13:10. | |
requirement and wind dies down, the sun gets covered over. They are not | :13:10. | :13:16. | |
reliable. Is this a way of you financing coal-fired power | :13:16. | :13:24. | |
stations? No. How many are your financing? We are financing one. | :13:24. | :13:30. | |
Fewer and fewer. Let mwer. Let mHow do you provi you provicity? | :13:30. | :13:36. | |
Renewables on not enough. Nuclear as an option but it has issues. | :13:36. | :13:44. | |
Hydropower has downstream effects. Cole is another one. -- coal. It is | :13:44. | :13:54. | |
:13:54. | :14:00. | ||
the cheapest in Asia, renewables on the balance. When we Finance call, | :14:00. | :14:06. | |
-- coal, we look at all other options. We want to look at the one | :14:06. | :14:10. | |
with the lowest carbon footprint. This is a difficult one for you. | :14:10. | :14:15. | |
The smile of pleasure on your face, you refer to meet the degree at | :14:15. | :14:19. | |
which India and China are going to see car owners rise. He replied | :14:19. | :14:24. | |
that as a positive. The construction of 30,000 kilometres | :14:24. | :14:28. | |
of new roads have been financed. That should be applauded but he was | :14:28. | :14:32. | |
simply inviting more and more Asians who do not a dry individual | :14:32. | :14:37. | |
cars to acquire and use their own cars and if that continues, that | :14:37. | :14:47. | |
:14:47. | :14:48. | ||
That is the point - not that we would have the consumption levels | :14:48. | :14:53. | |
of a miracle or Europe but that people with a bicycle could be | :14:53. | :15:01. | |
justified to have a motorcycle or scooter. We are very involved in | :15:01. | :15:06. | |
ent. It is not just a question of | :15:06. | :15:13. | |
providing the roads. It must be sustainable. Asia is down there in | :15:13. | :15:17. | |
terms of car ownership and consumption. It is conceivable that | :15:17. | :15:24. | |
it will increase but it must be sustainable. The question is how | :15:24. | :15:34. | |
:15:34. | :15:35. | ||
much you ape Western models of consumption driven quarry if. -- | :15:35. | :15:40. | |
growth. "someone who thinks a lot about this and he said: Too many | :15:40. | :15:44. | |
Asians go to US business schools and take on an ideology dearer. | :15:44. | :15:51. | |
They are smart but they are intellectually neutered. People | :15:52. | :15:55. | |
like that just to buy into western growth models. A think we should | :15:55. | :16:00. | |
take the best from everywhere. Western universities, if they give | :16:00. | :16:06. | |
the best education, I will go there. But we should not have a Western | :16:06. | :16:13. | |
presumption -- consumption model. We will have an Asian model. You | :16:13. | :16:19. | |
cannot say, it is good for you to have no electricity. But you do not | :16:19. | :16:26. | |
need three cars in the garage. It is not a bin a Western model - it | :16:26. | :16:32. | |
is a question of coming up with our own model. So it is A delicate | :16:32. | :16:35. | |
Balance. Do you think you got it wrong when you decided to fund | :16:35. | :16:40. | |
private water companies? They are improving water supply in Asia but | :16:40. | :16:48. | |
at a price that some people in Asia are finding unacceptably high. | :16:48. | :16:53. | |
should give an example of manilla, where I live. It is a water | :16:53. | :17:03. | |
:17:03. | :17:05. | ||
supplies are owned by a private company. -- Manila. But had to | :17:05. | :17:11. | |
decide what is acceptable? We keep talking about water supply. The | :17:11. | :17:21. | |
:17:21. | :17:22. | ||
poor pay the highest price. They need to either buy bottled water or | :17:22. | :17:28. | |
they drink polluted water. We need people to pay zero. I think society | :17:28. | :17:37. | |
and the poor are better off than being told, there is no water | :17:37. | :17:41. | |
supply. You say you want an Asian style of economic development that | :17:41. | :17:45. | |
strikes a balance. How do you square that with the fact that some | :17:45. | :17:50. | |
of the most vulnerable communities in the world when it comes to the | :17:50. | :18:00. | |
:18:00. | :18:02. | ||
effects of climate change, how do you squeeze your belief in quoth | :18:02. | :18:05. | |
with the fact that in Bangladesh or the Philippines there are people | :18:05. | :18:10. | |
who right now are facing potentially disastrous | :18:10. | :18:20. | |
consequences? Absolutely. Asia is very concerned. Nine out of ten | :18:20. | :18:25. | |
cities in Asia will be submerged if sea levels rise. Two-thirds of | :18:25. | :18:29. | |
people in Asia depend on agriculture so they are affected by | :18:29. | :18:35. | |
climate change. It is one thing you tell me you are concerned but could | :18:35. | :18:45. | |
it affect the investment decisions that you make? It is not a question | :18:45. | :18:54. | |
of getting over coal. We want to invest in Hydra. Ever a time you | :18:54. | :18:57. | |
making investment decision on coal- fired power one could say that you | :18:57. | :19:04. | |
are at inviting suicide For your own region. No. It is a question of | :19:04. | :19:11. | |
has sensibly do it. You do not just turn off the light. -- how you | :19:11. | :19:19. | |
sensibly do it. I suggest we look at the options available. Asia is | :19:19. | :19:26. | |
unilaterally taking steps on reducing greenhouse gas emissions. | :19:26. | :19:31. | |
We are looking at how we can produce and consume much less. But | :19:31. | :19:40. | |
China end India and Japan and Korea have done is investigate these | :19:40. | :19:45. | |
alternatives. We are investigating many of these projects. Asia could | :19:45. | :19:52. | |
say, let the west take care of it, but I do not think the answer is | :19:52. | :19:56. | |
not to consume. You have talked to other Asian governments about where | :19:56. | :20:02. | |
you can best put your money to work. At what point do you think | :20:02. | :20:05. | |
yourselves at the bank, we should not necessarily give them money at | :20:05. | :20:09. | |
all because there are such serious Governance transparency and | :20:09. | :20:12. | |
accountability issues that we can never trust them to disperse the | :20:12. | :20:21. | |
funds properly. That is a valid point. He does not stop you | :20:21. | :20:27. | |
dispersing the money! We put everything through a simple filter. | :20:27. | :20:37. | |
When our actions make a difference, we believe that being there and | :20:37. | :20:47. | |
:20:47. | :20:51. | ||
Steyne engaged and raising issues... Give me one recent case. They are | :20:51. | :20:55. | |
fantastically serious governance issues. Give me one time when you | :20:55. | :20:59. | |
still up to officials and demanded they change their practices or | :20:59. | :21:06. | |
demanded the removal of individuals. In eight of the countries I | :21:06. | :21:16. | |
:21:16. | :21:17. | ||
mentioned. We have procurement systems that are robust. We have | :21:17. | :21:22. | |
sanctioned individuals and companies in the last seven years. | :21:22. | :21:26. | |
Who have you ever close down a project because of corruption? Yes. | :21:26. | :21:32. | |
With several governments. A give me one government. A day is not fair | :21:32. | :21:39. | |
to give you one country. You are talking about transparency! | :21:39. | :21:49. | |
:21:49. | :21:54. | ||
billion worth of investments, we have. We have cancelled loans for | :21:54. | :22:04. | |
:22:04. | :22:07. | ||
issues including Governance, so we did take actions. It is very | :22:07. | :22:11. | |
important that we talk about the specifics with the Government's | :22:11. | :22:15. | |
Private lives. A not with people like me so their populations back | :22:15. | :22:20. | |
in Asia know what is drawing on. The important thing is: What effect | :22:20. | :22:27. | |
does it hurt? You issued a report and posed the question: Is Asia are | :22:27. | :22:32. | |
going to be economically Supreme by 2050 or will it fall into the | :22:32. | :22:38. | |
middle income trap and never fully advance took nation status? It is | :22:38. | :22:47. | |
probable but not pre-ordained. If Asia does not mend its Governance... | :22:47. | :22:54. | |
There are two things not happening well: Fear is rising inequality and | :22:54. | :23:00. | |
rising governance issues. Things are getting worse. In some | :23:00. | :23:06. | |
countries. We are very concerned about Governance. If Asia does not | :23:06. | :23:13. | |
handled this issue,... The two giants of Asia, China and India, | :23:13. | :23:16. | |
would you say they are getting worse when it comes to Governance | :23:16. | :23:22. | |
and inequality? In a quality is getting worse in both countries, | :23:22. | :23:28. | |
years. Governance is not just corruption - there is a rule of law, | :23:28. | :23:32. | |
accountability, effectiveness. Both of them are just about at the same | :23:33. | :23:40. | |
level, which is not good enough. You started by saying there is a | :23:40. | :23:44. | |
danger of too much euphoria. You have poured a bucket of cold water | :23:44. | :23:51. | |
on it. I have not. I have been realistic. I have said it is too | :23:51. | :23:58. | |
early to pop the champagne cork because when you visit Asia it is | :23:58. | :24:05. |