Statement by the Governor for the Republic of China at the 39th Annual Meeting of the Asian Development Bank
39th Annual Meeting of the Asian Development Bank
Fai-nan Perng, Governor, The Central Bank of China
Hyderabad, India, May 6, 2006
Mr. Chairman, President Kuroda, Fellow Governors, Ladies and Gentlemen:
On behalf of the delegation of the Republic of China, I would like to thank the government and people of India for their generous hospitality, and the staff of the Asian Development Bank for their thoughtful arrangements. Hyderabad offers a fascinating blend of the old and the new. The 400-year-old city mixes rich cultural traditions with cutting edge technology. It is a choice venue for the annual get-together of the ADB family. I join my fellow governors in welcoming Armenia and Brunei Darussalam to the Bank.
Since its founding 40 years ago, the Bank has contributed greatly to the development of the Asia-Pacific region. During President Kuroda's over one year in office, the Bank has crossed many important milestones. It sent relief to tsunami-affected countries, helped rebuild quake-hit Pakistan, and set up a $300 million Earthquake Emergency Assistance Fund. The Bank formed regional partnership with the WHO, the Food and Agricultural Organization of the UN, and the ASEAN to launch a $38 million project to combat the bird flu threat. It also actively assisted developing member countries in reducing poverty as part of its efforts to fulfill the Millennium Development Goal by 2015. Through the Internal Reform Agenda, the Bank is becoming more relevant, responsive and results-focused in all its operations. The Office of Economic Integration commenced operation to promote regional cooperation. I believe that under President Kuroda's leadership, the Bank will continue to steer a course for sustainable growth and prosperity for Asia.
From the works of disaster prevention, preparedness and rehabilitation, the Bank gained a valuable experience in coordination with other international organizations and established a well-functioning model for the future. While paying compliments to the Bank, I would, however, like to suggest how it could do much better. During the decade to 2003, half of the Bank's income was from loan business and half of it from liquidity investment. Loan business accounted for 42 percent of the income in 2004 and 31 percent in 2005. A liquidity investment to income ratio as high as 70 percent would imply a diversion from the Bank's role as a development bank. I propose that the Bank gear up the allocation of its resources towards the development needs of the region.
A series of efforts undertaken by Asian countries after the 1997 financial crisis have contributed significantly to regional financial stability. These include the Chiang Mai Initiative, the Asian Bond Fund and the Asian Bellagio Group. The Bank is taking an important step further by planning to introduce the Asian Currency Unit (ACU). A weighted index of a basket of Asian currencies, the ACU will serve as a benchmark to monitor movements in the values of currencies in the region. I give my full support to the idea of launching the ACU. However, its currency composition is highly important for the ACU to represent the true economic configuration and financial structure of Asia. It seems to me that the currently proposed ACU has left out some major currencies such as the NT dollar.
As economic integration accelerated in recent years, Asian countries have become closely linked with each other. Yet, more can be done. For example, the Chiang Mai Initiative can be expanded into a multilateral swap mechanism across Asia with the Bank as the intermediary. This will pave the way for the Asian Monetary Fund. In addition, Asian countries may jointly establish a formal regional exchange-rate coordination mechanism. Such an arrangement will enhance stability of Asian currencies, decrease transaction costs, and reduce uncertainties incurred by exchange rate volatility, thus furthering regional economic and trade development.
Most importantly, regional cooperation should be inclusive. All economies with adequate strength and financial resources should be allowed to participate. What's more, regional integration is multilateral in nature. The Bank possesses 40-year experiences, quality manpower, technology and other resources. I heartily recommend that it actively establish itself as the platform for regional economic integration. This will save the costs of establishing a new transnational institution, and member countries will be able to engage in more extensive cooperative relationships through this platform.
I will briefly update you on the Taiwan economy. GDP went up by 4.1 in 2005 and is projected to grow further by 4.5 percent in 2006. Prices are stable. CPI was 2.3 percent in 2005 and will likely fall below 2 percent this year. The government's fiscal reforms in recent years have achieved positive results. Balance of payments has been in good shape. The current account and overall balance remain in sustained surplus. Foreign exchange reserves have been building up. The private sector maintains a net external claims position.
I would like to reiterate that the Republic of China is a founding member of the Bank and has fully carried out her membership responsibilities. My delegation continues to protest against the unilateral alteration of our membership designation. I would also like to call on member countries to respect each other concerning the equal opportunities of hosting meetings and workshops of the Bank. Lastly, I wish the meeting every success. Thank you.