What ADB has done and hasn’t done for Philippines

By Satur C. Ocampo
At Ground Level | The Philippine Star

As the 45th Asian Development Bank governors’ annual meeting closes today at the PICC, it’s apt to look back and see how the regional bank, established in 1966 with permanent headquarters in the Philippines, has fulfilled — or failed to fulfill — its primary objective.

Specifically, how has the ADB influenced Philippine economic development, or its failure to develop as expected?
“The primary objective of the (ADB) is to help accelerate the economic development of the developing countries in Asia. To accomplish this, the Bank must not only know the hardships, problems and dreams of these countries, but must also look at these hardships, problems and dreams through the eyes of these countries. The Bank must therefore be located in a developing country.”

That statement came from Cornelio Balmaceda, commerce and industry secretary in the Diosdado Macapagal administration. He was acknowledged by his peers as the main proponent of the ADB. He chaired both the First Ministerial Conference on Asian Cooperation in 1963 that conceptualized the bank and the 9-nation Consultative Committee formed in 1965 that supervised its formation.

Balmaceda campaigned relentlessly to get the ADB headquarters set up in the Philippines — a developing country, versus Japan, a developed nation. He succeeded with the support of China, Vietnam, Iran, Pakistan, Afghanistan, Ceylon (now Sri Lanka), Malaysia, and Thailand.
When the ADB was established, among the Asian nations that joined, the Philippines ranked second to Japan in economic development. One-fourth of the Filipinos then were deemed poor.

Ironically, after 46 years, the Philippines lags behind most of the Asian nations in development. With a much larger population beyond 90 million, still 1/4 or much bigger portion of the population is deemed poor.

For sure, all is not rosy for the rest of Asia and the Pacific. In its 2011 annual report, the ADB acknowledges:

“Poverty reduction remains the greatest challenge for developing countries of Asia and the Pacific. Although significant progress has been made in reducing income poverty, large pockets of deprivation remain and disparities both within and across countries continue to grow… Nearly half of Asian citizens — about 1.8 billion people — still live on less than $2 a day.”

This is hardly surprising. The same situation of increasing poverty and acutely widening income inequality is a worldwide phenomenon. This speaks loudly of the failures to fulfill the objective of reducing poverty by the post-World War II tandem financial institutions — the World Bank and the IMF. Both are dominated and controlled by the rich US and European states. Much documentation exists on the failed policy-and-program recommendations to member-nations of the two institutions.

Again, it’s hardly surprising that the ADB has trod the same road to failure as the WB-IMF tandem. The ADB is dominated and controlled by Japan, the US, European and other developed states.

The ADB backstops IMF-WB policies and programs, drawn up and implemented from the viewpoint and interests of the rich nations. Thus, it has failed to follow the guidepost that Balmaceda prescribed: to look at the hardships, problems and dreams of the Asian developing nations “through their eyes.”

What of the ADB programs in the Philippines?

A study by the Bagong Alyansang Makabayan, based largely on Ibon Foundation research, cites the following policy recommendations and programs, among others devised and funded by the ADB, that have had negative impacts on the lives of Filipinos:

1. The power-industry privatization and the enactment and implementation of the Electric Power Industry Reform Act of 2001 or EPIRA. During the 10 years under this law, power rates have been doubled (Meralco by 112%, Napocor by 95%). Manila and Cebu now have the highest and third-highest power rates in Asia.

The privatization program hasn’t solved the power-supply shortage, as direly experienced by the people of Mindanao. Yet P-Noy told the Mindanaoans to expect higher power rates.

Moreover, despite the sale of Napocor assets to the private sector, the state firm remains indebted at $15.8B, mainly to the ADB and WB. The current debt level is almost the same as the $16.4-B debt in 2001 — after Napocor has shelled out $18B to repay such debt. Whoa!

2. The enactment and implementation of the Mining Act of 1995, based on ADB’s study-cum- recommendations in 1993-94.

The mining act implementation has resulted in wide-scale environmental degradation and other problems that have spurred nationwide protests, mostly met with brutal reprisals using police and military forces. The situation has impelled the P-Noy government to promise, after a “mining summit,” to draw up new mining rules and regulations. Up to now these haven’t been issued.

3. The controversial conditional cash transfer or CCT program, which has been heavily criticized as an interim dole-out unlikely to reduce poverty. It is funded by loans from ADB ($400M) and WB ($470M).
Ibon Foundation urges ADB to make a thorough assessment on the impacts of both the EPIRA and the CCT programs. It further suggests a review mechanism that will allow independent parties to determine and recommend whether current ADB programs shall be suspended and new ones be disapproved because of their negative impacts on the people.

A sound advice this is.

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E-mail: satur.ocampo@gmail.com
May 5, 2012

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