With 32 depositor nations among its members, the Manila-based Asian Development Bank, in the 18 months of its lifetime, has sought to prove its own stability in an area of economic turmoil. Its funds — partly kept on demand in 44 world banks-— earned interest of $4.5 million in 1967 while a multitude of possible investments were being cautiously evaluated. "We are new boys in this business," says Bank President Takeshi Watanabe, 62, of Japan, "and we must be sure of what we are doing."
Thai Fish. If all goes well, the bank by 1971 will have a capitalization of $1 billion to be lent for struggling projects throughout Asia. The largest contributors, Japan and the U.S., will by then have invested $200 million each.
In addition to the U.S., twelve other nonregional members have pledged a total of $155 million—ranging from $34 million from West Germany to $2,000,000 from Italy. The 19 regional countries in the bank will also invest a total of $615 million, giving them 60% of ADB's shares outstanding.
Testifying to its conservative stance, new-boy ADD so far has made only one loan: $5,000,000 to Thailand for a fish-refrigeration plant. But several other firm loan applications are in the works. Ceylon will shortly sign for a loan to improve tea production, Taiwan wants $5,000,000 for a fishing fleet, and Indonesia would like $150 million to increase food production. Malaysia has applied to ADB for a loan to build oil-palm mills, and two weeks ago the bank signed a technical-assistance agreement with the Philippines under which ADB will send five experts to see what can be done about the Philippine rice crop. Only 21% of the land, according to an ADB study, is now irrigable in wet seasons and a mere 9% in dry.
To Feed Itself. Partly responsible for ADB's go-slow approach to loans is the task of getting to know its far-flung customers—and vice versa. To accomplish this, the bank offers technical assistance where necessary, as well as surveys of its findings, including a recent study of food problems facing Indonesia and South Korea. Watanabe's pragmatic belief, which is reflected in such projects as the Thai loan and the Filipino study, is that "the region's first concern is feeding itself."
Perhaps the biggest stumbling block for ADB is its 61% interest rate, which reflects the world's tight-money markets. For struggling member-customers like Nepal, the rate could prove prohibitive. To offset this and make money more attainable, the bank is creating a special loan fund that promises to benefit both donor and recipient. The borrower would get his money at reasonable terms in exchange for agreeing to buy from donor countries the supplies for the projects involved. Canada, Denmark and Japan have promised contributions to the special fund, but its success may well depend on U.S. participation. So far, a budget-minded U.S. Congress has balked at the Administration's pledge of $200 million.