1

NEWS FROM adbbrm@adb.orgBangladeshA Quarterly Newsletter of the Bangladesh Resident Missionof the Asian Development Bank September 2008

NEWS FROM www.adb.org/brm adbbrm@adb.org

ADB Helps Bangladesh Copewith Rising Food Prices

A DB is helping Bangladesh with$170 million in loan and $600,000in technical assistance grant tocope with rising food prices.

The fund was disbursed in early Augustafter approval by ADB’s Board of Directorson 22 July. The assistance is part of theGovernment’s $1.29 billion food securitypackage, supported by ADB and otherinternational agencies.

The assistance helps the Governmentensure access to food supply for thosehardest hit by recent natural disasters inBangladesh and the rapid increase in foodprices. Bangladesh is the first developingmember country to receive ADB supportafter the announcement made by ADBPresident Haruhiko Kuroda during theinstitution’s 41st Annual Meeting in May.ADB will provide up to $500 millionimmediate budgetary support to the

hardest hit countries in Asia and thePacific, and an increase in lending foragriculture and rural development to morethan $2 billion in 2009.

Bangladesh, a net importer of foodgrains, was severely affected by twofloods and a devastating cyclone in 2007,causing a rice production shortfall of 1.2million tons and adversely affecting thefood security of an estimated 25 millionpeople. Rapidly increasing food pricesfurther worsened the situation, seriouslyaffecting the poor and vulnerable andfixed income earners, who allocate about70% of their total spending on food. InBangladesh, food inflation now stands at12%. Out of the country’s total population,40% are now living below the povertyline. The country’s per capita grossdomestic product currently stands at$554.

DOWN TO EARTH Adviser for Agriculture Dr C. S. Karim visits a rice field in Dinajpur during theinauguration of rice harvesting by Chief Adviser Fakhruddin Ahmed on 24 May

Paul J. Heytensjoined ADB’sBangladesh Resi-dent Mission(BRM) as its newCountry Directoron 31 August.Prior to joining

BRM, Mr. Heytens was ADB’s CountryDirector for Nepal.

Mr. Heytens worked for ADB’s EastDepartment (1990-1993) as ProjectEconomist, Agriculture; Principal ProjectEconomist, South Asia Department (2003-2004); and Principal Agricultural Econo-mist, South Asia Department (2005-2007). He also worked as Economist, AsiaPacific Department, International Mon-etary Fund, IMF (1993-1998); IMF Resi-dent Representative in Beijing, China(1998-2001) and in Indonesia (2001-2003);and Deputy Division Chief, African Depart-ment, IMF (2004-2005).

A US national, Mr. Paul Heytens holdsa Ph. D. in Development Economics fromthe Stanford University, USA.

New CountryDirector

In this Issue ADB Assists Education Sector

Development 2 Recovering from Floods and Cyclone

Damages 3 Tree Plantation Made Social Move-

ment 4 Integrated Water Resources Manage-

ment 5 Improving Regional Transport 6 Tackling Climate Change Impacts 7 Providing Basic Social Protection Not

a Question of Wealth 8 Higher Farm Productivity is Key to

Food Security: ADB Report 9 ADB’s Outlook for Asia: Slowdown in

Growth, Sharp Rise in Inflation 10 ADB Supports Bangladesh to Improve

Agriculture and Food Security 11

2

ADB Assists Bangladesh in Education Sector Development

ADB is assisting Bangladesh inimproving its educational qualityand system efficiency. Over thepast decades, ADB has been

helping Bangladesh develop theeducation sector through project–specificactivities in primary, secondary, non-formal, and distance education, as well asskills training. So far, Bangladesh hasreceived $914.5 million in loans and grantsfor the education sector.

ADB has helped the Government inimproving access to education bybuilding and improving primary andsecondary schools and providing freetextbooks to primary students, free schoolsupplies especially to students of poorand disadvantaged areas, and stipends tosecondary school girls. ADB has alsoassisted in laying the foundation forteacher education in secondary schoolthrough several projects, includingestablishing Teacher Training Collegesand Higher Secondary Teacher TrainingInstitutes.

Over the years, the focus of ADB’ssupport has shifted toward sector policydevelopment and reforms, and systemicimprovement to support the Government’sbroader education reform agenda. WithADB’s assistance, the Government hasintroduced a number of reforms in thesecondary education subsector, such asdecentralized management system,examination reforms, school-basedassessment system, and schoolperformance based management system,which has already started showingpositive outcome, reflected in theimproving trend in the results of SSCexamination over the last few years.

A unique contribution of ADB to theeducation sector of Bangladesh is theestablishment of the Bangladesh OpenUniversity (BOU) in 1992. Through BOU’sdistance education, people in ruralareas—particularly women and adults whomust work to support their families whilepursuing education—greatly benefited inacquiring further education.

In the non-formal education subsector,with ADB’s support, the Governmentestablished a Directorate of Non-formalEducation, now reconstituted as Bureau ofNon-formal Education, which deliversliteracy programs to adult illiterates, mostof whom are women.

In primary education, currently ADBis the lead agency for the $1.8 billionSecond Primary Education DevelopmentProgram (PEDP-II) cofinanced by 10 otherdevelopment partners for inclusive andquality primary education throughimproved policies, institutional andorganizational strengthening, and capacitybuilding. The 6-year program has alreadymade good progress.

The ongoing Secondary EducationSector Development Program (SESDP)approved in 2006 is supporting policyreforms aimed at strengthening themanagement and governance of the sector,the curricula, national examinations, andteacher education. The SESDP will assistthe Government in modernizing themadrasah (Islamic religious school)education curriculum so that graduateshave better employable skills. To improvethe marketable skills of school leavers, ADBis also supporting improvement of the

technical and vocational training systemto better respond to market needs,including the requirements of the informalsector.

The Teaching Quality ImprovementProject approved in 2004 aims to improveteaching quality through organizationaldevelopment and capacity building, teachertraining facilities, strengthening in-serviceand pre-service teacher training, increasingequitable access, and improvingcommunity involvement.

Over the medium term, ADB supportwill continue to focus on improving thequality and relevance of primary andsecondary education, and institutionalcapacity building. Building on theachievements of PEDP-II, assistance inprimary education will extend support tothe Government’s new program of earlychildhood education to adequately prepareyoung children for primary schooleducation.

Education

EDUCATION FOR ALL Senior government officials and heads of missions and representativesfrom the agencies and organizations supporting the PEDP-II visited a school in Manikganj aspart of the program’s mid-term review in 2007.

To know more about LTSF review,go to http://www.adb.org/ltsf/default.asp For evaluation resources, visit http:/

/www.adb.org/Evaluation/ For information on anticorruption

issues, go to http://www.adb.org/Integ-rity/

3

ADB is helping Bangladesh with a$120 million loan to recover fromthe destruction wrought by thefloods and cyclone that

devastated the country in 2007. A $200,000technical assistance grant will also supportthe initiative entitled Emergency DisasterDamage Rehabilitation Project (EDDRP).

The assistance from ADB’sconcessional Asian Development Fund willcontribute to sustainable economic growthby minimizing the devastating impact of thesevere floods and cyclone that hit thecountry last year, and reduce future riskfrom similar catastrophes. Together withADB, the Japan Bank for InternationalCooperation is cofinancing with a $60million loan, and the Canadian InternationalDevelopment Agency with a grant of $10million for the project. The cofinancedfunds are being administered by ADB.

The EDDRP will also assist in capacitybuilding and training to strengthen theGovernment’s disaster preparedness byadopting cost-effective and disaster-resistant infrastructure design standards

through increased subregionalcooperation. The project builds on theexperiences of the ADB-financedEmergency Flood Damage RehabilitationProject, initiated soon after the devastatingfloods in 2004, which was successfullycompleted ahead of schedule in mid-2007,within its 2-year implementation period.

The floods and cyclone last yearaffected 25 million people in 51 districts,with $3 billion in losses. The disastersseverely damaged livelihoods,infrastructure, and caused losses to crops,livestock, property, and housing, as wellas reduced income opportunities.

Earlier, ADB assisted Bangladesh inconstructing over 650 cyclone-resistantprimary and secondary schools acrossBangladesh’s disadvantaged coastal belt,which is extremely prone to naturaldisasters. People immensely benefited fromthe school-cum-disaster shelter centers byusing the schools as shelters duringfloods, tidal surge and cyclones, and asrelief centers after the disaster.

Recovering from Floods andCyclone DamagesADB is assisting Bangladesh with

$50 million in loans to help im-prove the country’s technical

skills training system to create betterwage and employment prospects.

The assistance from ADB’sconcessional Asian Development Fundwill help the Ministry of Education tomake its technical and vocational edu-cation and training (TVET) programsmarket-oriented, short-term, and rel-evant, especially for the thousands ofunemployed and underemployed adultpoor who were not able to finish theeighth grade.

The project aims to support theGovernment’s plan to reduce povertyand promote economic growth by pro-viding market-relevant skills training tomore Bangladeshis, including the poorand the disadvantaged. The projectplans to train about 70,000 people over5 years.

ImprovingVocationalEducation System

MULTIPURPOSE FACILITY A school-cum-disaster shelter center in Bagerhat built with ADBassistance

Disaster Management

ADB Secures $11.3Billion to HelpAsia’s Poorest

ADB has secured $11.3 billion forthe next 4-year phase of itsconcessional development fund

to fight poverty in the Asia and Pacificregion—a significant jump of more than60% from the previous period.

The fund will help developing Asia-Pacific countries meet Millennium De-velopment Goal targets, and bring bet-ter opportunities and brighter future topeople living in the region’s poorest na-tions. The Asian Development Fund(ADF) provides grants and low-interest loans to the Asia and Pacific’spoorest countries, which are home tosome 400 million people living on lessthan $2 a day. The new ADF will coverthe period 2009-2012.

4

Tree Plantation Made SocialMovement in BangladeshB angladesh has made tree

plantation a social movementwith assistance from ADB andother stakeholders by

introducing participatory social forestryapproach. Pioneered by Bangladesh, theparticipatory social forestry model yieldedrobust socioeconomic benefits, and itsexperiences are now being adopted bymany countries, including Cambodia, India,and Viet Nam. ADB has assisted Bangladeshwith more than $135 million in loans andtechnical assistance for a number ofprojects, including the Community ForestryDevelopment Project (1982–1988), UpazilaAfforestation and Nursery DevelopmentProject (1989–1996), Coastal GreenbeltProject (1995–2002), and the Forestry SectorProject (1998–2006).

The ADB-assisted projects introducedand promoted sustainable participatorysocial forestry activities through activecommunity participation and enhancingforest resource generation andconservation in protected and publiclyowned and managed lands. The projectsemphasized efficient forest resourcesgeneration and management involvingcommunity participation, increasedcountrywide tree coverage, povertyreduction and livelihood improvement of

rural poor beneficiaries focusing on womenand women-headed families, and reducingpublic forest land encroachment. Theprojects gave special attention to womenempowerment socially and economically byinvolving them actively in the projectactivities.

With support from ADB projects andtechnical assistance grants, a 20-yearForestry Master Plan was prepared, and theNational Forestry Policy 1994 wasdeveloped. The Forest Act (Amendment)

CARING FOR THE GREEN A woman takes care of trees planted on a road in Mymensingh, underparticipatory benefit sharing agreement

2002 was put in place allowing people’sparticipation in the generation andmanagement of forest resources throughsocial forestry. Under the Act, socialforestry rules have been developed toregulate participatory benefit sharingagreements, which allow rural resource-poor and women-headed householdsreceive a 45% share of the proceeds fromthe sale of timber planted and cared for bythe beneficiaries over a 10-year period.

ADB Assists Private Sector Development

T hrough its Private SectorOperations Department, ADBprovides direct assistance toprivate sector projects with clear

development impact. The private sectoroperations are focused primarily oninfrastructure, capital markets, and financialsector.

In Bangladesh, ADB is assisting theGovernment in creating a level playing fieldconducive to private sector developmentby helping establish a well-functioningfinancial and capital market. ADB alsofosters public-private partnerships that willlower the risks and costs associated with

large infrastructure projects. ADB’s publicand private sector operations work inharmony to improve the enablingenvironment to make Bangladesh moreattractive to foreign direct investment, andto widen opportunities for public-privatepartnerships. Private sector developmentis supported by easing key infrastructurebottlenecks to growth; building basiceducation, skills, and health foundation fora more productive labor force; fosteringpublic-private partnerships to provideessential infrastructure and services;nurturing a vibrant small and mediumenterprise sector; improving private

financial governance; facilitating therestructuring and privatization of selectedstate-owned enterprises; and assisting theGovernment in improving the policy andregulatory environment for private sectordevelopment.

In Bangladesh, ADB has financed eightprivate sector projects in power, mobiletelephone, textile, cement, capital market,and leasing sectors worth $242.18 million.This also includes the Meghnaghat PowerProject—the first build-own-operate powerproject in the country—and GrameenPhone,which substantially expanded rural accessto mobile phone services.

5

Integrated Water Resources Management to BoostAgriculture and Rural Livelihoods

A DB is supporting Bangladeshin developing efficient andsustainable flood managementand irrigation systems to boost

agricultural productivity and encouragelivelihood diversification. The assistanceis being provided in line with Bangladesh’sNational Water Policy and National WaterManagement Plan of 2004, which adoptedthe basic principles of integrated waterresource management, sustainable servicedelivery, and user participation in watermanagement.

ADB has been a major developmentpartner of Bangladesh in the water sector,providing 19 loans worth almost $700 millionsince 1973. ADB’s water sector assistancehas helped establish the policy andinstitutional framework for decentralizedand participatory water management,including sustainable operations andmanagement by water managementassociations. The interventions have alsocontributed to agricultural and rural growth,market orientation, and increased farmers’access to irrigation water. ADB-assistedprojects have substantially improved floodplain management, increased agriculturalproduction, and generated employment forthe farmers and the landless.

The ADB-assisted Small-Scale WaterResources Development Sector Project(SSWRDSP) is supporting theGovernment’s poverty reduction efforts byincreasing sustainable agricultural andfisheries production, applying principles ofcommunity-driven development, andpromoting effective participation of womenin decision making and sustainableenvironmental management. The projecthas helped improve rural economy andreduce poverty through increasedagricultural and fisheries production,resulting in increased farm and off-farmemployment. Building on SSWRDSPlessons, the Southwest Area IntegratedWater Resources Planning andManagement Project is now applying thebottom-up participatory approach withinmedium and large schemes.

The Jamuna-Meghna River ErosionMitigation Project has established a cost-effective, innovative, and sustainableriverbank protection by pilot testing low-cost technologies, using sand-filled geo-textile bags. It has also establishedmanagement systems to provide protectionin an adaptive manner to the natural riverprocesses with stringent quality control ofunderwater construction works.

The Secondary Towns IntegratedFlood Protection Project II is promotingeconomic growth and reducing poverty innine selected towns by providing a flood-free and secure living environment withinthe framework of integrated floodprotection.

Drawing on the good lessons of thefirst two phases, ADB is now formulatingthe countrywide third phase of Small ScaleWater Resources Project (a technical assis-tance from Japan’s grant to be implementedduring 2009-2016), in which the Netherlandsand the IFAD have shown interest to be thecofinanciers. ADB is also formulating thesecond phase of the Command Area Devel-opment Project to boost the agricultural pro-duction of the country along with theNetherlands again as a prospectivecofinancier.

RICE FIELD IN DINAJPUR ADB assistance in flood control, drainage, and irrigation facilitiescontributed to increased productivity in Bangladesh

ADB to HelpBoost RegionalFinancial Stability

ADB will establish an “Asian Finan-cial Stability Dialogue” to help co-ordinate regulatory development

and monitor potential vulnerabilities in theregion’s markets and financial systems.ADB President Haruhiko Kuroda made theannouncement at a conference entitled“Restructuring Beyond the Subprime” heldin Manila during 18-19 September 2008. The most recent bout of global finan-cial market turmoil prompted the urgentneed for building a cogent and pro-activeplan to better preserve regional financialstability. The initiative will help the regionto move forward on its path toward greaterfinancial integration and to develop thefoundations for regional financial stability. To develop deeper and more innova-tive financial markets, Asia needs to pro-mote consistent standards, harmonize pru-dential indicators, and establish standardsfor governance and transparency to facili-tate domestic and international investment. Financial system development, re-gional financial integration, and construct-ing the groundwork for regional financialstability are critical for a sound financialmarket.

6

Improving Logistics in Dhaka-ChittagongCorridor Can Raise GDP by 1%

Improving Regional Transport Systemfor Collective Growth

ADB and Japan are helping preparean investment project that willease the flow of goods, services,and people across Bangladesh,

Bhutan, India, and Nepal to promoteeconomic cooperation and integrationamong the four member countries of theSouth Asia Subregional EconomicCooperation (SASEC). The Japan SpecialFund is extending a $1 million grant to drawup the design for the SASEC TransportLogistics and Trade Facilitation Project.ADB will manage the grant.

The project will work towardimproving cross-border transportinfrastructure and introducing moderncross-border management to facilitate trade

and movement of people across SASECcountries. The technical assistance consistsof three components: a road corridor thatpasses from Kakarvitta in Nepal, throughPanitanki-Fulbari in India to Banglabandhain Bangladesh; a rail link from Akhaura inBangladesh to Agartala in India; and amodernized cross-border regime at keycross-border points.

The SASEC initiative was launched in2001 with ADB assistance to support andfacilitate regional cooperation initiatives insix priority sectors: energy and power;environment; information andcommunication technology; tourism, trade,and investment; private sector cooperation;and transport. It provides a venue for policy

dialogue, information sharing, andconfidence building among participatingcountries to enable better economiccooperation.

Asia Must Pursue DeeperRegionalism: ADB Study

A sian nations must boosteconomic ties through closerconsultation and policycoordination, and improve

financial market surveillance to fosterfinancial stability and economic prosperity,says “Emerging Asian Regionalism – APartnership for Shared Prosperity”, a newbook released by ADB.

The dynamic and outward-lookingstyle of Asian regionalism will have asignificant impact in the globalizedeconomy in Asia. Asian regionalism can bea stabilizing factor when shocks arise,whether they come from within the regionor outside, the book says.

The region is being interconnectedthrough trade, finance, and macroeconomiclinks. While continued growth will reinforcethe region’s market-led integration, officialcooperation will need to intensify based onsound economic principles. The financialcrisis of 1997/98 underscored Asia’sinterdependence and shared interests, and

gave a strong impetus to emerging Asianregionalism.

The new book based on an ADBstudy urges policymakers to strengthensupervision, surveillance, and dialogueon financial markets through creation ofa new, high-level Asian financial stabilitydialogue. It says Asia will benefit fromstrengthening its mechanisms formonitoring and potentially coordinatingexchange rate and macroeconomicpolicies. It suggested setting up an Asiansecretariat for economic cooperation. Theregion also needs to cooperate to makedevelopment sustainable by protectingregional health and environment.

With the growth of trade and financialties, Asia’s macroeconomicinterdependence has also increased. Theregion faces a challenging period aheadas global payment imbalances appearunsustainable as the credit turmoilunfolds and global economic slowdowndeepens, the book says.

ADB to UpdateSafeguard Policy

ADB has taken additional steps inthe update of its environmentaland social safeguard policies af-

ter having concluded 14 consultationworkshops across the Asia and Pacificregion, North America, and Europe. Asecond round of consultations will beconducted and a second draft of thesafeguard policy statement (SPS), basedon the feedback and advice receivedthrough extensive consultations, will beprepared.

The consultations aim to increaseADB’s understanding of stakeholders’perspectives; establish a shared under-standing of key safeguard objectives,principles, and requirements; and guidethe formulation of the safeguard policystatement.

The policy update is expected tomake the safeguards more effective—widening scope of environment assess-ment and introducing new requirementsfor grievance redress mechanisms,stronger public consultation and com-munity engagement, and greater atten-tion to project implementation.

Representatives from government,civil society, private sector, academicinstitutions, and international develop-ment agencies provided feedback on thefirst consultation draft for the proposedsafeguard policy update, which is in-tended to enhance the relevance of ADBsafeguards and strengthen theireffectiveness.

7

Climate Change

Tackling Climate Change Impacts

ADB is promoting clean energyinitiatives to minimize adverseimpacts of climate change.Supports are provided by filling

gaps in financing, building capacity andknowledge, helping create enabling policyand regulatory environments, andpromoting collective action.

In Bangladesh, ADB is helping mitigatethe risks and rehabilitate the damagescaused by disasters resulting from climatechange. Following the floods and thecyclone SIDR in 2007, ADB approved $240million Emergency Disaster DamageRehabilitation Project to rehabilitate andrestore the damaged infrastructures. Theassistance is enabling people resume theirnormal lives by restoring access tolivelihoods and basic infrastructure. Theassistance is also helping in capacitybuilding and training to strengthenBangladesh’s disaster preparedness byadopting cost-effective and disaster-resistant infrastructure design standardsand improved early warning systemsthrough increased subregional cooperation.The new project will build on theexperiences of the ADB-financedEmergency Flood Damage RehabilitationProject, initiated soon after the devastatingfloods in 2004, which was successfully

completed ahead of schedule in mid-2007,within its 2-year implementation period.

Though Bangladesh has the leastcontribution to the build up of greenhousegases, it bears the serious consequencesof climate change. An estimate says that,with half a meter sea level rise resulting fromclimate change, about 20% of Bangladeshin the coastal area will go under water.According to the United Nations (UN)Human Development Report 2007/2008,Bangladesh is among the possible countriesto be mostly affected by climate change,which may cause a large-scale reversal inhuman development, with more than 70million people being affected.

ADB has taken several initiatives todevelop capacity for implementing theKyoto Protocol and the Clean DevelopmentMechanism in 15 developing membercountries. Under the Asia Least-costGreenhouse Gas (GHG) Abatement Strategyprogram, ADB took the lead in developingthe first set of national level GHGinventories and in identifying mitigationprojects for 11 countries. Under the EnergyEfficiency Initiative launched in 2005, ADBintends to expand investments in energyefficiency projects to $1 billion a year byworking closely with its developing membercountries to identify high priority

intervention areas that have replicationand scale-up potential.

ADB’s Carbon Market Initiative (CMI)was established to support sustainabledevelopment goals of developing membercountries, address global climate changeconcerns, and assist developed countriesto meet their emissions reductioncommitments. The Clean DevelopmentMechanism (CDM) Facility at ADB wasestablished in 2003 to provide technicalsupport to developing member countriesin accessing additional financial resourcesfor CDM-eligible projects. The AsiaPacific Carbon Fund is a trust fundestablished and managed by ADB onbehalf of fund participants. In 2006, ADBjoined the Methane to Markets (M2M)Partnership promoted by the UnitedStates Environmental Protection Agencyto capture methane and utilize it for energypurposes.

Specifically for Bangladesh, ADB isnow formulating a cluster technicalassistance to support the Climate ChangeImplementation Plan to cover both theadaptation and the mitigation aspects. Asa part of this, ADB will participate in ahigh-level conference in London to be heldin September 2008 and will subsequentlyextend a technical assistance to theDepartment of Environment. ADB will workclosely with other development partnersto promote energy efficiency and cleandevelopment mechanisms. ADB’sBangladesh Resident Mission and SouthAsia Department are maintaining closeliaison and contact with DFID, UNDP, andJBIC resident missions in Bangladesh fordeveloping programs and initiatives tohelp Bangladesh tackle climate changeimpacts.

VICTIMS OF CLIMATE CHANGE The poor suffer the most because of floods and other disastersinduced by the climate change impacts

For news and information aboutADB operations in Bangladesh, visitwww.adb.org/brm

To receive general ADB updates, goto http://mms.adb.org/e-notification/register.asp

8

Grant to HelpImprove WaterManagement

With a $600,000 grant from theJapan Special Fund,Bangladesh is designing theParticipatory Small-Scale

Water Resources Project, which ADB maysupport. The grant project will help improvesmall-scale water resources management forfurther boosting agriculture and fish pro-duction. This will also strengthen the Lo-cal Government Engineering Department’s(LGED) integrated water resources manage-ment unit’s ability to plan, design, andevaluate the use of small-scale water re-sources, and provide support for the op-eration and maintenance of the resources.The proposed project will encourage localparticipation and enhance the capacity ofcommunity-based water management orga-nizations. The assistance is the third in aseries of small-scale water resource devel-opment projects supported by ADB inBangladesh. The first two phases includedimplementation of water management inter-ventions, and organizational reform and ca-pacity building for the LGED. ADB hasbeen a major development partner ofBangladesh in the water sector, providing19 loans worth almost $700 million since1973.

ADB Launches NewDevelopment Magazine

ADB has launched a new magazine,Development Asia, to help raiseawareness and understanding ofdevelopment issues and

challenges concerning the Asia and Pacificregion. It will feature topical issues,commentaries from leading figures in Asia,and innovative research and projects.

As a knowledge institution, ADB iscommitted to increasing awareness ofAsia’s development challenges andencouraging innovative solutions fromaround the world. Development Asia is partof this effort.

Development Asia aims to bringknowledge products to a broader audience,encourage more discussion of theirfindings and implications, and provide aplatform for discussion and debate onimportant development issues affecting theAsia and Pacific region. The first issuetackles topics such as climate change,biofuels, genetically modified food, and

Fighting Graftand Corruption

ADB’s anti-graft division barred 61companies and 48 individuals frominvolvement in its projects last year,

according to an internal report. Firmswere found guilty of a range of fraudulentactivities from exaggerating their annualincome to collusion in bidding for contracts.

The Integrity Division said it hadreceived 211 complaints last year, a 23%increase from 2006 and a tenfold leap sincethe ADB’s anticorruption drive whichstarted in 1998.

Providing Basic SocialProtection Not a Question ofWealth, Report Says

Even poor countries can afford basicsocial protection like financinghealth care, cash transfers to thepoor and elderly, and child

protection, according to the newlydeveloped Social Protection Index (SPI)created by ADB and its partners.

The index shows that the ability toprovide appropriate social protection to anation’s citizens is not only a question ofthe country’s wealth. The SPI will givegovernments and international agencies anew tool to assess and compare the socialprotection efforts of countries throughoutAsia and the Pacific region. While socialprotection is growing in importance in the

fight against poverty and in meeting theMillennium Development Goals, there havebeen very few attempts to systematicallyquantify the overall impact of socialprotection activities in terms of expenditure,beneficiaries, or the impact of the programs.The SPI was created to fill this void.

Even though Japan and South Koreatop the list, countries considered relativelywealthy didn’t always score higher thanpoorer neighbors. While India and Pakistanhave similar levels of per capita grossdomestic product, they score verydifferently on the SPI. India rates at 0.46while Pakistan is at 0.07. The SPI is measuredbetween zero and 1.0.

food security. For more information, visitwww.developmentasia.org.

9

Higher FarmProductivity is Keyto Food Security:ADB Report

In the long run, the notion of food secu-rity should move beyond a relativelystatic focus on food availability to higher

productivity. Developing Asia needs tostrike a balance between providing im-mediate relief to shield the poor and vul-nerable against rising food prices, says ADBreport on Food Prices and Inflation in De-veloping Asia: Is Poverty Reduction Comingto an End?

As yields of food crops in most Asianeconomies remain low, compared withother major producing nations, technol-ogy improvement has become increasinglyimportant along with efficient use of wa-ter, power, and other key inputs.

The report, prepared by ADB’s Eco-nomics and Research Department, em-phasizes that farmers will need to makethe right choices and be provided accessto new seeds, modern technology, andcredit, and infrastructural facilities. Thereport says structural factors like the de-cline in global stocks of rice and other ce-reals, rising oil prices, and the resultantrise in prices of fertilizers and transporta-tion costs for farm products are key fac-tors behind high and rising food prices.

ADB Loans Increase to Record $10.1 Billion in 2007

I n response to demands fordevelopment assistance, ADBapproved $10.1 billion in loans in2007, a 37% increase over the

previous year.Pakistan was the largest borrower with

around $2.0 billion, followed by Viet Nam,India, the People’s Republic of China,Indonesia, and Bangladesh. The operationalsector with the biggest share of loans wastransport and communications with $3.9billion, or 39% of the total loans, more thandouble the amount in 2006.

ADB approved a further $672.7 millionof assistance in grants in 2007, up 25% from

the previous year. A total of 242 technicalassistance projects were approved worth$243.4 million, all of which were alsoprovided as grants. ADB also showed animprovement in disbursement to $6.8 billionin 2007 from $5.7 billion in 2006.

Recognizing the important role of theprivate sector in generating jobs andeconomic growth, ADB approved $760.3million for 19 nonsovereign loans to theprivate sector and $105.0 million for threenonsovereign loans to the public sector.

In 2007, Bangladesh also received thehighest ever ADB assistance with over$965.70 million. As of 31 December 2007,

cumulative public sector lending toBangladesh amounted to about $9.13billion for 180 loans, with $178.8 millionfor technical assistance grants for 333projects. Currently, Bangladesh has alarge portfolio of 49 loans with a net loanamount of $3.21 billion. In the 2008–2010assistance pipelines, ADB’s public sectorlending program comprises 20 firmprojects totaling about $2.5 billion. Thetechnical assistance program for 2008–2010 consists of 24 projects with anannual allocation of about $5 million ingrant funding.

ADB Supports Key Gover-ADB Supports Key Gover-ADB Supports Key Gover-ADB Supports Key Gover-ADB Supports Key Gover-nance Reforms in Bangladeshnance Reforms in Bangladeshnance Reforms in Bangladeshnance Reforms in Bangladeshnance Reforms in Bangladesh

T he Caretaker Government hasinitiated criticalgovernance reforms to curbcorruption, enhance

accountability, and improve transparencyin the entire public sector. ADB approvedBangladesh Good Governance Program(GGP) in November 2007 to support theGovernment to implement these keygovernance reforms with a focus oncombating corruption, ensuring separationand independence of the judiciary, andimproving efficiency and neutrality of thecivil service.

The important governance reforms thathave already been implemented by theCaretaker Government include: (i)reconstitution and operationalization of theAnti-Corruption Commission (ACC), (ii)ratification of the United NationsConvention Against Corruption (UNCAC)and revision of ACC act in line withUNCAC, (iii) annual declaration of assetsby the public servants and the lower courtjudges, (iv) establishment of a grievancehandling mechanism in the line ministriesand agencies, (v) separation of the Judiciaryfrom the Executive, (vi) establishment of theSupreme Judicial Commission to ensuretransparency and merit in the appointmentof Supreme Court Judges, (vii) creation ofan independent attorney service to ensure

neutrality in the public prosecution (viii)reorganization of Public ServiceCommission and revision of civil servicerecruitment rules to ensure merit andtransparency in the public service selectionprocess, and (ix) promulgation of the Rightto Information Act .

ADB is supporting the Governmentwith $150 million under the GGP forimplementing a set of policy, legal, andinstitutional reforms in the key governanceareas such as the Anti-CorruptionCommission and the Judiciary, and in otherkey sectoral institutions and agencies. TheGovernment agreed with ADB to implementa total of 47 policy and institutionalgovernance reforms under the GGP. Out ofthese, 31 governance reforms were fullyimplemented by the Government untilOctober 2008.

The remaining major governancereforms that the Government is expected tofully implement in the next 2 years include(i) preparation and implementation of acomprehensive National Integrity Strategy,(ii) establishment of the National Office ofthe Ombudsman, (iii) introducing anti-corruption training modules in publictraining institutes, (iv) instituting the CitizenReport Cards by public utilities and at localgovernment levels, and (v) legislation of aWhistleblower Protection Act.

10

Developing Asian economies willrevert to a more moderategrowth outlook of 7.5% this

year and 7.2% next year after postingits fastest growth of 9% in nearly twodecades in 2007, ADB says in a newmajor report.

According to the Asian Develop-ment Outlook 2008 Update (ADO Up-date) released by ADB in September,inflationary pressures in the region aremounting and could boil over if left un-addressed.

The report projects an inflation rateof 7.8% in 2008 in Asia and the Pacific,up from an earlier estimate of 5.1%. In2009, inflation could reach 6.0%.

Clouding the outlook for the region,the report notes, are the continued el-evated level of international oil and foodprices, the persistence of high inflation,and a prolonged slowdown in industrialcountries. The report highlights that asupply shortage will remain a dominantissue in global commodity markets.

The ADO Update urges developingAsian economies to address rising infla-tion even at the expense of slowergrowth, adding that the region mustlearn to adjust to high commodityprices. The report also recognizes thatthe regional outlook remains tied to thefortunes of industrialized countries.

ADB Calls for Environment-ADB Calls for Environment-ADB Calls for Environment-ADB Calls for Environment-ADB Calls for Environment-FFFFFriendly and Inclusiveriendly and Inclusiveriendly and Inclusiveriendly and Inclusiveriendly and InclusiveTTTTTransport Pransport Pransport Pransport Pransport Projectsrojectsrojectsrojectsrojects

ADB urges its development partnersto ensure that the environment isprotected in transport andinfrastructure projects. The call

came from the ADB Transport Forum heldin Manila during 9-12 September.

The transport sector is the largest byoil use, and by far the fastest growingemitter of greenhouse gases in the Asiaand Pacific region. The region has thehighest growth rate in terms of motorvehicles—increasing over 10% everyyear. At present, transport sector loans

comprise more than 30% of ADB’s totallending. Transport projects have directand indirect consequences on climatechange, rising fuel prices, and disparitiesin economic development. ADB willsupport the developing membercountries to effectively adapt to theeffects of climate change—throughclimate proofing—in transport and otherinfrastructure projects. ADB will alsoalign its transport sector work to one thatpromotes inclusive growth and regionalcooperation.

For business opportunities withADB, go to www.adb.org/business/opportunities For media inquiries and the

latest news, go to www.adb.org/media For publications, go to

www.adb.org/publications orfax +632 636 2648

ADB Supports CloserADB Supports CloserADB Supports CloserADB Supports CloserADB Supports CloserCooperation in South AsiaCooperation in South AsiaCooperation in South AsiaCooperation in South AsiaCooperation in South Asia

ADB is supporting closer regionalcooperation and integration (RCI)in South Asia through a grantdesigned to help strengthen and

expand policy reforms in two key nations,India and Pakistan.

ADB will provide technical assistanceof $750,000 for the South Asian RegionalCooperation in 2030 Project. The grant willidentify constraints and promote policyreforms and other strategies needed toovercome the barriers to cooperation andintegration in South Asia.

The grant is focused on India andPakistan because they are the region’s twolargest economies and both have beentaking steps to promote stronger RCI.

“India and Pakistan could potentiallyplay a pivotal role in advancing wider Asianintegration, as well as catalyzing SouthAsian regional cooperation,” said JayantMenon, Principal Economist, ADB Officeof Regional Economic Integration.

In the past, progress on cooperationhas been slow and South Asia remains theleast integrated region in the world withintra-regional trade, for example, accountingfor just 2% of gross domestic product,compared to 20% in East Asia.

Challenges to closer ties includepersistent poverty, rising inequality, civilconflict and at times, tense politicalrelations. High levels of trade protectionismalso persist despite the establishment ofthe South Asian Free Trade Area.

However, there has been progress inrecent years with a pickup in the level andpace of domestic policy reforms acrossSouth Asia; improved relations andincreased levels of trade between India andPakistan; and a greater opening up of SouthAsian economies to other regions and theworld.

The grant will seek to support andaccelerate domestic policy reforms thathave begun in India and Pakistan, and toidentify long-term strategies for closerregional cooperation that could maximizegains from the policy changes.

Two country studies will be carried outand an international conference is plannedfor October 2009 where the findings will bediscussed and disseminated. Anotherphase may be carried out examining similarissues in other South Asian countries,starting with Bangladesh, then Sri Lankaand Maldives, followed by Nepal, andBhutan.

ADB’s Outlookfor Asia:Slowdown inGrowth, SharpRise in Inflation

11

ADB Supports Bangladesh to ImproveADB Supports Bangladesh to ImproveADB Supports Bangladesh to ImproveADB Supports Bangladesh to ImproveADB Supports Bangladesh to ImproveAgriculture and Food SecurityAgriculture and Food SecurityAgriculture and Food SecurityAgriculture and Food SecurityAgriculture and Food Security

A DB has been supportingBangladesh in policy reforms andinnovative interventions forincreasing food grain

production; diversifying crops; anddeveloping the livestock, forestry, andfisheries sectors. ADB has also assisted inconserving the environment, creatingirrigation systems, fostering small-scalewater resource, building flood protection,and ensuring village people’s greateraccess to markets.

ADB has so far supported Bangladeshwith 51 concessional loan projects/programs amounting to $1.825 billion forthe agriculture and natural resources sector.Currently, seven projects amounting to $375million are being implemented. The FoodCrops Development Program (1990)contributed to reducing rural poverty. TheParticipatory Livestock DevelopmentProject (1997) enabled more than 500,000people—mostly women—to put more foodon the table, educate their children, and evensave enough to lease or buy agriculturalland. The Northwest Crop DiversificationProject (2000) is helping raise farm outputsand incomes, accelerating povertyreduction, and stimulating the economy ofBangladesh’s northwest region by tappingthe enormous potential of high-value crop

production, value addition, andagribusiness. The AgribusinessDevelopment Project approved in 2005promotes agribusiness activities togenerate employment and help alleviatepoverty. ADB’s forestry sectorinterventions assisted Bangladesh innatural resources management, improvingthe environment, and generatingemployment.

The Emergency Assistance for FoodSecurity Project approved in July 2008contributes to sustainability of economicgrowth by minimizing the devastatingimpact of severe floods and cyclone, andbudgetary support for commercial foodimport. The Second Participatory LivestockDevelopment Project (2004) is helping toincrease income of small farmers fromlivestock-related enterprises with specialfocus on women’s socioeconomicempowerment and capacity building of theDepartment of Livestock.

The Small-Scale Water ResourcesDevelopment Sector Project (2001) issupporting the Government’s povertyreduction efforts by increasing agriculturaland fisheries production, applyingprinciples of community-drivendevelopment, and promoting effectiveparticipation of women in decision making

and sustainable environmentalmanagement. The Jamuna–Meghna RiverErosion Mitigation Project (2002)established cost-effective, innovative, andsustainable riverbank protection by pilot-testing low-cost technologies (sand-filledgeo-textile bags) and establishing themanagement systems to provide protectionin an adaptive manner to the natural riverprocesses. The Secondary TownsIntegrated Flood Protection Project II (2005)is promoting economic growth andreducing poverty in nine selectedpourashavas by providing a flood-free andsecure living environment. ADB’s SecondSmall Scale Water Resources DevelopmentSector Project is helping to increaseagricultural production through sustainablestakeholder-driven, small scale waterresource management systems. TheSouthwest Area Integrated WaterResources Planning and ManagementProject is helping to enhance sustainabilityof existing flood control, drainage, andirrigation systems in the selectedsubregions of the southwest, with a totalcoverage of about 100,000 hectares. TheEmergency Disaster Damage Rehabilitation(Sector) Project is contributing tosustainability of economic growth byminimizing the devastating impact of severefloods and cyclone, and reducing future riskfrom similar disasters. Technical assistanceprojects, such as Strengthening theGovernment’s Capacity for Improving FoodSecurity and Strengthening ProjectManagement on AgribusinessDevelopment, are also helping theGovernment to improve its planning andimplementation capacity.

ADB is now providing Bangladeshwith technical assistance support forpreparing the proposed Food CropProduction and Value Addition SupportProject, Sustainable Participatory LivestockDevelopment Project, Second CommandArea Development Project, Chittagong HillTracts Rural Development Project – II,Participatory Small Scale Water ResourcesProject, and National Disaster RiskManagement Project.

HARVESTING CROPS A farmer family in Northern district of Natore harvests long beanscultivated with support from ADB’s North-West Crop Diversification Project

12

ADB Launches New Long-Term Strategy

ADB has launched Strategy 2020, anew long-term strategy for itsvision of an Asia and Pacificregion free of poverty.

To fight poverty in a region of morethan 600 million poor people surviving on$1 a day, Strategy 2020 will refocus ADBoperations on three development agenda—inclusive economic growth,environmentally sustainable growth, andregional integration.

Strategy 2020 sets ADB’s new strategiccourse, emphasizing that poverty reductioncan only be sustained if more people areeconomically productive, economic growthtakes place in a well-managed naturalenvironment, and neighboring economies

work within larger and freer markets toachieve shared interests throughcooperation.

By 2012, 80% of ADB’s lending will bein five core operational areas identified as

ADB’s comparative strengths—infrastructure, environment, regionalcooperation and integration, finance sectordevelopment, and education. By 2020,about 50% of operations will be in privatesector development and private sectoroperations, and 30% in regionalcooperation and integration. ADB willcontinue to operate on a more selectivebasis in health, agriculture, and disasterand emergency assistance.

ADB’s stakeholders provided extensiveinput into Strategy 2020, which will serveas ADB’s main strategic document from2008 to 2020, replacing the long-termstrategic framework for 2001-2015 releasedin 2000.

Despite the damages caused byfloods and cyclone in 2007, theBangladesh economyrebounded during the second

half of FY2008 pushing the annual grossdomestic product (GDP) growth rate up to6.2%. The GDP growth was bolstered bystrong private consumption, surge inremittance inflows, and recovery of exportgrowth during the second half of the year.

According to the BangladeshQuarterly Economic Update (QEU) June2008, released by ADB Bangladesh ResidentMission on 18 September, GDP growth inFY2009 is projected at 6.5%, thoughcontaining the high inflationary expectationremains a major challenge. The evolving gasshortage may become a bigger impedimentto economic activities, requiring immediatemeasures to step up exploration along with

particularly higher global oil and commodityprices could stress the balance of paymentsand fiscal positions. Political uncertaintyand natural disasters could also constraineconomic growth. The QEU is available ath t t p : / / w w w. a d b . o rg / D o c u m e n t s /Economic_Updates/BAN/default.asp.

steps to develop the country’s high qualitycoal resources. Several downside risks,

The quarterly newsletter of the AsianDevelopment Bank (ADB) Bangladesh ResidentMission (BRM) aims to enhance communica-tions between ADB and its client groups. Newsfrom Bangladesh disseminates information onADB activities and provides a forum ondevelopment issues in Bangladesh. Articles inthe newsletter, however, do not necessarilyreflect the official ADB view. We welcomereaders’ comments and suggestions.

Bangladesh Resident MissionPlot E-31, Sher-e-BanglanagarDhaka–1207, Bangladesh.Tel: +880 2 815 6000 to 6016Fax: +880 2 815 6018 to 6019adbbrm@adb.orgwww.adb.org/brm

In this issue, $ refers to US dollar.

BangladeshNEWS FROM

ADB to Launch NewClimate Change Fund

ADB is establishing a new fundto slow the onset of climatechange and help the Asia and

Pacific region adapt to the probabledevastating impact of global warming.ADB will provide an initial $40 millionto the Climate Change Fund, which willbe open for further contributions fromcountries, development organizations,foundations, the private sector, andother sources.

The purpose of the fund is tofacilitate greater investments in devel-oping countries in Asia and the Pacificto address the causes and conse-quences of global warming. The fundwill be used to provide grant financingfor technical assistance, investmentprojects, research, and otheractivities.

High Inflation, Poor Infrastructure Major Challenge: QEU