Partnership BriefCofinancing with the People’s Republic of China

3 Defining the Partnership

6 Highlights

Box and Tables 5 Capacity Building in the Greater Mekong and Central Asia

8 Direct Value-Added Cofinancing

10 Trust Fund Commitments

Contents

©2012 Asian Development Bank

All rights reserved. Published 2012. Printed in the Philippines.

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Note:

In this publication, “$” refers to US dollars.

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3

n a unique cofinancing relationship, the People’s Republic of China (PRC) and

the Asian Development Bank (ADB) have been working together to support regional cooperation and poverty reduction for ADB developing member countries in Asia and the Pacific. Through the establishment in 2005 of the PRC’s Poverty Reduction and Regional Cooperation Fund (PRC Fund)—the first and only trust fund financed by contributions from an ADB developing member country—projects totaling almost $20 million were approved during 2005–2011, to support capacity- building and knowledge-sharing activities. Priority support was given to countries in the Greater Mekong Subregion (GMS) and the Central Asia Regional Economic

Defining the PartnershipCooperation (CAREC). The PRC has since replenished the fund, with another $20 million in 2012.1 When established, the PRC Fund was the only ADB-managed trust fund supporting regional cooperation and integration, one of five core operational areas prioritized in Strategy 2020, ADB’s long-term strategic framework. The fund’s objectives include to accelerate poverty reduction and economic and social development in the region with tangible results.

1The GMS countries include Cambodia, the People’s Republic of China (Yunnan Province and Guangxi Zhuang Autonomous Region), the Lao People’s Democratic Republic, Myanmar, Thailand, and Viet Nam. The CAREC countries include Afghanistan, Azerbaijan, the People’s Republic of China (Xinjiang Uygur Autonomous Region and Inner Mongolia Autonomous Region), Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan.

The PRC Fund finances activities that promote regional cooperation and integration through capacity-building and knowledge-sharing programs; contribute to poverty reduction through cross-border harmonization and regional public goods provision; and contribute to South–South knowledge sharing through knowledge dissemination and network building among ADB’s developing member countries. In 2009, the PRC, represented by the Export–Import Bank of [the People’s Republic of] China, signed a framework cofinancing agreement with ADB to deepen the institutional partnership based on a programmatic approach. Under the agreement, the bank earmarked an amount equivalent to $1.5 billion over 3 years for cofinancing ADB projects.

The PRC replenished the PRC Fund with $20 million in 2012“

“

I

4 Partnership Brief

PRC Fund Institutional Structure■ Executing agency: Ministry

of Finance of the People’s Republic of China

■ Implementing agency: Asian Development Bank

■ Management responsibility in ADB: Office of Regional Economic Integration

■ Communication on financial aspects and reporting: Office of Cofinancing Operations

Regional Cooperation and Integration As of April 2012, the PRC Fund had approved funding applications amounting to $18.84 million for 47 ADB projects. Of these, 22 have been completed and 25 are ongoing. Most projects (39) support capacity building and institutional strengthening, one of four priority areas in which the PRC Fund is active. Among the most successful activities funded by the PRC Fund were projects supporting the Phnom Penh Plan for Development Management in the GMS and several projects providing capacity building in CAREC. These projects trained civil servants associated with the GMS and CAREC programs to better manage regional cooperation and included learning and skills development, research, networking, the establishment of research institutes, and fellowship grants for short-term training courses for public policy management in top international institutions (see box, page 5).

Among its many achievements, the PRC Fund contributed to the development of GMS partner institutions, as well as the activities of the CAREC Institute and the establishment of the Asia-Pacific Institute for Water Security. Support to other focus areas of the PRC Fund included research and analytical work (16 projects); dissemination, networking, and cross-learning (14 projects); and piloting of innovative approaches (6 projects). Public sector management received the biggest share of funding (40%), followed by industry and trade (22%), agriculture and natural resources (18%), multisector (13%), finance (4%), and energy (3%). The most significant share of the fund’s financial support was directed to projects in the GMS (43%) and CAREC (24%). Several PRC Fund projects also helped reduce poverty more directly. These projects worked to harmonize regulations for investment and trade and to boost cross-border employment

opportunities. They also supported agriculture and trade sectors, where many poor households are engaged, and provided the poor with skills for better managing outbreaks of communicable diseases. For example, the project Transboundary Animal Disease Control for Poverty Reduction in the GMS, completed in 2011, addressed regional public health concerns related to animal diseases. It identified targeted disease control approaches and improved the diagnostic capacities of national and regional laboratories. This improved the flow of information on diseases among GMS countries. The project also applied disease control programs to improve the incomes of poor livestock holders along the Mekong River. The PRC Fund also supports private sector participation in the implementation of the CAREC trade facilitation component. The CAREC Federation of Carrier and Forwarder Associations, the only private-sector-led sub-

Defining the Partnership 5

regional cooperation mechanism, provides the essential link between CAREC public and private sector programs.

Generating CofinancingImportantly, the PRC Fund has also helped catalyze additional support for regional cooperation and integration from multilateral development partners, such as the International Fund for Agricultural Development, the International Institute for Trade and Development, and the Food and Agriculture Organization, and from bilateral development partners including Australia, Finland, France, Japan, the Republic of Korea, New Zealand, Sweden, and the United Kingdom. Altogether, the PRC Fund has helped mobilize more than $45 million in additional financing for 27 of the 47 projects it supports, including counterpart funding from governments. ■

Capacity Building in the Greater Mekong and Central Asia

A mong the most successful programs of the PRC’s Poverty Reduction and Regional Cooperation Fund (PRC Fund) is a series of projects under the Phnom Penh Plan for Development

Management, which focused on improving the capacity for public policy management among senior and mid-career civil servants in the Greater Mekong Subregion (GMS). The fund provided a total of $1.5 million to the Phnom Penh Plan, which conducted 90 learning programs benefiting over 1,770 civil servants from the six GMS countries. About 11% of these programs were supported by the PRC Fund. A fellowship program under the plan allowed 31 mid-career and 13 senior GMS civil servants to participate in executive and leadership programs in top international business schools and institutions. In addition, GMS Development Dialogues were conducted on energy security, climate change, food security, labor migration, economic corridors, and on complementarities between the GMS and the Association of Southeast Asian Nations. The plan also established the Leaders Networking for Knowledge (LINK) program to Phnom Penh Plan alumni to allow them to share knowledge and to network. PRC Fund support has so far organized 10 LINK events.

Central Asia In three regional technical assistance grants, the PRC Fund supported a series of programs involving training and knowledge sharing to increase capacity among officials associated with the Central Asia Regional Economic Cooperation (CAREC) program for work in regional cooperation. The first of these—Capacity Building for Regional Cooperation in Central Asia from February 2006 to July 2007—conducted seminars and training workshops to expand awareness of regional cooperation and encourage discussion of the various approaches for deepening cooperation. It also conducted a study tour to expose CAREC civil servants to experiences in the more advanced GMS cooperation program. Over the course of the project, 323 people received training. During 2007–2008, 491 participants took part in the project, Capacity Development for Regional Cooperation in CAREC Participating Countries (Phase I), which provided training and a better understanding of the role and potential of regional cooperation. The project helped civil servants examine opportunities and challenges in implementing regional programs and initiatives and completed eight studies to support more effective regional cooperation in Central Asia. The CAREC Institute project of January 2009 to March 2012, meanwhile, has supported the development and delivery of training and research aligned with the work of the CAREC program. The PRC Fund supported the Leadership Development Initiative, which improved the analytical tools and skills of public officials. It also financed the launch of the CAREC Institute Research Program. The project conducted sector training, knowledge-sharing activities, and workshops through March 2012. As of January 2011, 1,026 participants had received training. ■

Pakistan

Uzbekistan

Afghanistan

Azerbaijan Kyrgyz Republic

Tajikistan

6 Highlights

Cumulative Direct Value-Added Cofinancing (as of 30 Apr 2012)

Direct Value-Added Cofinancing Investment projects■ No grants■ No loansTechnical assistance: $18.88 million for 48 projects (including one project not funded by the PRC Fund).

See tables, pages 8–10, for projects.

Kazakhstan

Turkmenistan

Central Asia Regional Economic Cooperation countries

Greater Mekong Subregion countries

Distribution of PRC Fund Projects by Priority Activity

(number of projects, as of 30 Apr 2012)

Note: Based on project numbers. Some projects are counted more than once as they cut across several priority activities.

Capacity building and institutional strengthening

39

Research and analytical

work16

Piloting of innovative

approaches

6

Dissemination, networking, and cross-learning

14

Viet Nam

Mongolia

Cambodia

Lao People’s

Democratic Republic

People’s Republic of China

7Projects Funded by the PRC Fund

by Sector(%, as of 30 Apr 2012)

Public Sector Management

40.00

Agriculture and Natural Resources

18.00

Industry and Trade

22.00

Multisector13.00

Energy3.00

Finance4.00

Thailand

ASEAN = Association of Southeast Asian Nations; ASEAN+3 = ASEAN plus the People’s Republic of China, Japan, and the Republic of Korea; CAREC = Central Asia Regional Economic Cooperation; DMC = developing member country.

ASEAN/ASEAN+3

11.00

Asia and the Pacific/

Selected DMCs

16.00

Central Asia/CAREC

24.00

Greater Mekong

Subregion43.00

Northeast Asia6.00

Distribution of PRC Fund Projects by Subregion

(%, as of 30 Apr 2012)

Year Project Amount

Cambodia

2009 Capacity Development for National Economic Policy Analysis and Development Management, Phase III

500.00

Regional

2011 Regional Program for Research and Capacity Development on Water Security 500.00

2010 Supporting the Boao Forum for Asia and the Asian Exim Banks Forum in Dialogues on Regional Economic Integration and Partnership

500.00

2010 Strengthening the Coordination of the GMS Program 500.00

2010 Strengthening Carbon Financing for Regional Grassland Management in Northeast Asiac

300.00

2010 Strengthening Carbon Financing for Regional Grassland Management in Northeast Asiac, d

100.00

2010 Strengthening CAREC, 2007–2009 (Supplementary)d 500.00

2010 GMS Phnom Penh Plan for Development Management IV 500.00

2009 Asia Pacific Procurement Partnership Initiative 500.00

2009 CAREC: Working with the Private Sector in Trade Facilitation 500.00

2009 Capacity Development in Results-Based Monitoring and Evaluation for Countries under ADB’s CAREC Program

500.00

2009 Deposit Insurance Establishment 500.00

2009 Implementing the GMS Human Resource Development Strategic Framework and Action Plan

500.00

2009 Transboundary Animal Disease Control for Poverty Reduction in the GMS (Supplementary)d

200.00

2008 Accelerating the Implementation of the Core Agriculture Support Program 500.00

2008 Regional Knowledge and Partnership Networks for Poverty Reduction and Inclusive Growth

500.00

2008 Small-Scale Technical Assistance for Developing a Computable General Equilibrium Modeling Framework for Analyzing the Impacts of Power Trading between Mongolia and the People’s Republic of China

150.00

2008 CAREC Institute, 2009–2012 500.00

2008 Development Study of the GMS Corridor (Supplementary)d 400.00

2008 Enhancing Transport and Trade Facilitation in the GMS 500.00

2008 Capacity Building and Institutional Strengthening of the Free Trade Agreement Units in Selected ASEAN Member Countries

500.00

Direct Value-Added Cofinancinga ($ ’000, Mar 2005–Apr 2012)b Technical Assistance Projects

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a Cofinancing with contractual or collaborative arrangements between a financing partner and ADB. In addition, the People’s Republic of China and ADB have common projects that are considered under “other cofinancing.” Other cofinancing is cofinancing in which a financing partner and ADB cofinance a project independently with no contractual or collaborative arrangements between them.

b All figures are given in US dollar equivalents unless otherwise indicated.c Funding was approved under separate applications.d The cumulative number of projects excludes supplementary technical assistance grants.

2008 GMS Phnom Penh Plan for Development Management III 500.00

2008 Supporting the Boao Forum for Asia 500.00

2008 Core Environment Program and Biodiversity Conservation Corridors Initiative in the GMS

500.00

2007 Strengthening Human Resource Development Cooperation in the GMS 22.00

2007 Enhancing the Development Effectiveness of the GMS Economic Cooperation Program

500.00

2007 Capacity Development for Monitoring and Evaluation 500.00

2007 Strengthening CAREC, 2007–2009 500.00

2007 Transboundary Animal Disease Control for Poverty Reduction in the GMS 300.00

2007 CAREC Members Electricity Regulators Forum 500.00

2006 ASEAN+3 Regional Guarantee Mechanism (Project-specific)e 35.00

2006 ASEAN+3 Regional Guarantee and Investment Mechanism Phase 2 300.00

2006 Capacity Development for Regional Cooperation in CAREC Participating Countries Phase I

500.00

2006 Enhancement of Subregional Cooperation in BIMP-EAGA and IMT-GT 250.00

2006 Capacity Building for Designing, Negotiating, and Implementing Free Trade Agreements in Selected ADB DMCs

500.00

2006 Second ASEAN+3 Seminar on Poverty Reduction 70.00

2006 Technical Training and Capacity Building for Selected ASEAN+3 Countries on Regional Economic and Financial Monitoring

500.00

2006 Partnership on Persistent Organic Pollutants Pesticides Management for Agricultural Production in Central Asian Countries

400.00

2006 Support Preparations for CAREC Business Development Forum 200.00

2006 Support to Trade Facilitation and Capacity Building in the GMS 400.00

2006 Human Resources Development for Trade in the GMSd, f 250.00

2006 Expansion of Subregional Cooperation in Agriculture in the GMSg 250.00

2006 Expansion of Subregional Cooperation in Agriculture in the GMSd, g 350.00

2006 Development Study GMS Corridor 400.00

2006 Implementation of the GMS Cross-Border Transport Agreement 400.00

2005 Capacity Building for Regional Cooperation under the CAREC Program 400.00

2005 Enhancing the Business Environment in the GMS 200.00

2005 GMS Phnom Penh Plan for Development Management III 500.00

Year Project Amount

9

e Not financed by the People’s Republic of China Poverty Reduction and Regional Cooperation Fund.f This application was for the project Support to Trade Facilitation and Capacity Building in the Greater Mekong Subregion.g Funding was approved under separate applications.ASEAN = Association of Southeast Asian Nations; ASEAN+3 = ASEAN plus the People’s Republic of China, Japan, and the Republic of Korea; BIMP-EAGA = Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area; CAREC = Central Asia Regional Economic Cooperation; DMC = developing member country; GMS = Greater Mekong Subregion; IMT-GT = Indonesia-Malaysia-Thailand Growth Triangle.

10

Trust Fund Commitments ($ million, as of 30 Apr 2012)a

Year Fund Amount Status2012 Poverty Reduction and Regional

Cooperation Fund 20.00 Available for commitment:

$20.38 millionb

2005 Poverty Reduction and Regional Cooperation Fund

20.00

a Commitments in US dollars are as of the time of commitment. For commitments made in currencies other than US dollars, the amounts are converted to US dollars using the exchange rates at the time of commitment.b Out of the total commitment of $40 million.

Partnership Brief Cofinancing with the People’s Republic of China

The Partnership Brief series, compiled by the Office of Cofinancing Operations of the Asian Development Bank (ADB), presents key details of cofinancing with ADB’s main development partners.

About the Asian Development Bank

ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to two-thirds of the world’s poor: 1.8 billion people who live on less than $2 a day, with 903 million struggling on less than $1.25 a day. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

For further information, please contact:

Asian Development Bank—Office of Cofinancing OperationsCécile L.H.F. Gregory–HeadRiccardo Loi–DirectorKaren Decker–Principal Financing Partnerships Specialist

Asian Development Bank 6 ADB Avenue, Mandaluyong City1550 Metro Manila, Philippineswww.adb.org Publication Stock No. ARM124765

May 2012

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