Council on Foreign Relations
JERRY SEIB: My name is Jerry Seib. I'm the bureau chief here in Washington for the Wall Street Journal, and I'm happy and proud to be your moderator today. I would like to start by thanking the Council on Foreign Relations for giving me an opportunity to think and talk about something other than hunting etiquette in Texas -- (laughter) -- for at least an hour. I think that's an advance.
As any of you who are veterans of these affairs know, my first job is to do housekeeping on behalf of the council. That means to remind you all that this meeting is on the record, and the second is to remind all of you, including myself, to turn off your cell phones. And I will actually do it now.
It's my pleasure to introduce our guest today, who is Haruhiko Kuroda, the president of the Asian Development Bank and chairperson of the bank's Board of Directors. He's held this job we were just discussing as bank president for almost exactly one year now, having assumed the post on February 1st of 2005. So Happy Anniversary, for starters.
Mr. Kuroda is highly qualified for the position he now occupies, because for almost four decades, he's been deeply involved in questions of finance and international finance in Asia. As an academic in Tokyo, he's been a student of the region's financial affairs. As director general of the International Bureau and vice minister of finance in the Ministry of Finance in Japan, he helped design the Miyazawa initiative that helped pull the Asian region out of its 1997 and 1998 financial crisis. And then as special adviser to the Japanese prime minister, he helped guide Japanese government policy on international monetary issues.
In his current position, Mr. Kuroda has been speaking out on the need and the opportunities to use economic development in Asia to address poverty in the region, which is wider and more pervasive than commonly realized. And that, in fact, is the subject he's going to discuss with us today. So I will ask Mr. Kuroda to speak, and then we'll have a chance for questions afterward.
HARUHIKO KURODA: Thank you very much indeed for your kind words of introduction. And it is, of course, a great honor to participate in this forum, which is well known for its thoughtful analysis and contributions to global affairs, so that I very much want to thank the council for arranging this opportunity and all of you for joining us today.
I think the ties between the United States and Asia run deep, and maintaining those ties is very important. Besides a strong economic relationship, Asia and the United States are partners in many areas, including those efforts related to global security, anti-terrorism, environment, and so on and so forth. The U.S. has thriving Asian communities in many of its major cities, and Asia remains a prime destination for Americans to visit as well as to work.
These relationships have helped many Asian countries to connect to new opportunities and have contributed to the ongoing process of globalization. So with this in mind, I am pleased to offer a few observations on Asia and the global economy.
Clearly, Asia's growth over the past half-century has been dramatic. Japan leaped past the post first, soon to be followed by the newly industrialized economies of Hong Kong, Korea, Singapore and Taiwan. Taiwan -- (inaudible) -- is called Taipei, China. Then came the rapid development of countries now joined together in the Association of South East Asian Nations, or ASEAN.
Particularly impressive these days is the economic rise of the People's Republic of China and India. Over the past 10 years, China grew at an average annual rate of 9.1 percent and India at the rate of 6.3 percent, and most forecasters see continued rapid growth in these two countries in the years ahead; likely 8 to 9 percent in China and 7 to 8 percent in India. But more importantly, growth is widely shared among developing countries in Asia. Our latest forecasts show an estimated average GDP growth of 6.6 percent across the developing economies of Asia and the Pacific last year, and we expect to see continued growth in the coming years.
So these decades of rapid growth have transformed Asia from an economic hinterland to a new frontier of global development and progress, bringing a better standard of living to hundreds of millions of Asian people. But ultimately, Asia's economic and social success will depend on making growth more inclusive, more (pro-poor ?) and more sustainable.
The task of ending poverty in Asia, the region's most persistent and pervasive problem, is far from complete. Despite progress, the scale of deprivation in Asia is daunting. As of 2003, some 620 million people in the region still were living on less than $1.00 a day. Actually this 620 million people -- poor people in Asia, the number is almost equal to the total people living in sub-Saharan Africa or total number of people living in Latin America. So still Asia is poor, and two-thirds of the world's most desperately poor live in Asia. There are more people in Asia with inadequate nutrition, more living in slums, and more without access to safer water and sanitation than in any other part of the world. Many countries in Asia, including China and India, are likely to fall short of achieving the Millennium Development Goals for non-income poverty.
It is unacceptable that even the brightly shining cities of emerging Asia are dotted with shanty slums, and the wide income disparities among countries in the region are cause for concern. Sustained economic growth is, of course, essential, but growth must also be made more inclusive so that all citizens have the opportunity to build assets, gain fair and productive employment, and contribute to the ongoing development of economies and societies.
I think one way to make growth more inclusive is through regional cooperation and economic integration. Regional cooperation and integration can accelerate growth in poorer, slower-growing economies and extend it into the poor segments of each country, thereby reducing income disparities both within and among countries. It is also an important step towards full integration with the global economy and a vital avenue for financial, economic, and political stability.
In recent years, Asian nations have built considerable momentum in this approach, approach to economic cooperation and integration. For instance, the ASEAN Plus 3 countries -- ASEAN plus China, Japan, and Korea -- now consistently engage in economic policy dialogue of unprecedented scope and depth. Finance ministers in other subregions are starting to interact more regularly. Subregions such as Central Asian nations and the six countries that share the Mekong River are developing and implementing coordinated transport and energy infrastructure plans.
It is very interesting to note that not long ago, the Mekong was a center of conflict in which many Americans were intimately involved. Since 1992, Cambodia, China, Laos, Myanmar, Thailand, and Vietnam have been working together to change the region's economic and social landscape. In so doing, they have become more open to each other and to the world. As a result, the combined exports of the subregion have been growing by an average of 16 percent a year. And between 2000 -- between 1992 and 2003, the number of people earning less than $1.00 a day fell by a dramatic 56 percent.
ADB supports and promotes regional cooperation both as a means to sustain growth and as a means to address problems that cannot be contained without -- within borders. For instance, the frequency of catastrophic events such as earthquakes, floods and epidemics in Asia is rising. The region is dense in population, and any natural disaster or infectious disease tends to take a large toll on life, property, and the regional economy. The Indian Ocean tsunami, the earthquake in South Asia, SARS and now avian flu starkly illustrate how vulnerable Asia is to such catastrophes. Responses to these calamities can only be managed effectively if they are managed cooperatively within the region and in partnership with the international community.
As the region continues to grow and to integrate, it also faces other new challenges. One of them is its large and growing demand for energy. Adequate energy supplies are crucial to Asia's future, but we cannot ignore the potential environmental consequences of steadily increasing consumption of energy from traditional sources. Sustained global warming will affect everyone, but it is the poor who will suffer most, bearing the brunt of increased flooding, lower food production, disease, and other ill effects, with limited resources and means to adapt.
Fortunately, countries in the region recognize this and are now paying greater attention to energy efficiency, renewable energy and low carbon technologies. Several countries, including China and India, have recently announced targets for energy efficiency and renewable energy. ADB is actively involved in helping its member countries in their efforts. For example, we are one of the few international institutions that provide underlying finance for projects that can produce tradable emission reduction credits, carbon trades. And we recently proposed the Carbon Market Initiative to bring projects to fruition and help meet the world's long-term demand for carbon credits.
I have also constituted a task force in ADB to explore how we could increase our program on clean energy to $1 billion a year by 2008. Our plan is to identify and address the barriers to clean energy investments and then develop a portfolio of tools and investment mechanisms to meet the specific needs of each distinct market, targeting both public and private sector investments. Efforts such as these are essential to move Asia to a more sustainable growth path.
Of course, Asia's emergence as a crucial player in the global economy also presents challenges that can only be addressed by global effort. Since time is short, I will mention just three.
First, the environmental problems plaguing Asia do not affect not only Asia, but the entire planet. Climate change and environmental degradation must be halted and reversed for the sake of future generations. This is a priority for ADB and increasingly so for member developing countries. And of course, assistance from the international community is essential.
Second, global imbalances are widening, and the cooperation of all players is needed to correct them. The U.S., for example, needs to encourage household savings and reduce its fiscal deficit. Europe and Japan need to make further structural reforms. Oil producers should spend more for domestic investment and consumption. And, of course, emerging Asian economies need to make their currencies more flexible. China and Malaysia took a tentative step in this direction last July when they revised their exchange rate regimes, but bolder coordination steps would further increase the flexibility of regional currencies relative to the dollar and the euro while maintaining intra-regional exchange rate stability. This stability is, I think, vital given the region's rising economic interdependence.
Finally, in a global era, all regions must work together to address the most pressing global issues. Asia is making an enormous contribution to global growth and financial stability and must be given adequate voice in order to fulfill its role in global affairs. For instance, I believe that the IMF quota share for Asia should better reflect this reality, and the Basel Committee on Banking Supervision should also recognize it by including more Asian countries as members of the committee.
Let me close by saying that while Asia's emergence presents challenge for -- challenges for all, it also presents an opportunity -- a huge opportunity for the global community. The region's dynamic growth is good for Asia and also good for the world. With more than half of the world's population, victory over poverty in Asia will be a victory for all. By staying involved and engaged with developing Asia, by helping it meet its challenges and by solving global challenges together, all countries and, I think, all people stand to benefit immensely from a more stable, more open and more prosperous world.
Thank you. (Applause.)
SEIB: Thank you very much. Obviously, as you indicate, the stakes are huge and the issues are fascinating and difficult.
Let me start by asking you to go into one subject you didn't touch on much, which is you mentioned the astonishing growth rates in India and China, which we all tend to fixate on here as well; but I think everybody also realizes that real economic growth in Asia and real development that would allow an uplifting of everyone in the region depends a lot on the economy in your home country of Japan. People here have been waiting for a decade for the real economic recovery in Japan, and some people think they now see it. Is it happening? Is it for real? And how will we know for sure?
KURODA: I agree. I agree. Still Japan is by far the largest economy in Asia, nearly three times bigger than the Chinese economy, so Asian economic growth can be accelerated once the Japanese economy recovers in a sustainable way. And I think the Japanese economy has recovered or has been recovering. A few things can be pointed out.
First, the corporate sector in Japan has been now very much strengthened. Bad-debt problem has been almost completely overcome, and many Japanese companies have regained or even strengthed international competitiveness. If you look at statistics, then you can find that now the Japanese corporate sector is making profits much bigger than the profits they recorded during the so-called bubble period. So the corporate sector is now very much recovered and strengthened.
Second, the financial sector is also very much strengthened. As I mentioned before, the bad-debt issue is now almost overcome and the Japanese financial institutions have become quite profitable. For instance, I understand that one of the big three banks in Japan is likely to record a profit of more than 1 trillion yen this year. So the financial sector has overcome the problem and recovered strongly; although I must say that still the Japanese financial institutions have a lot of things to learn to strengthen, but certainly have recovered.
Deflation, unfortunately, is not yet completely eradicated. The CPI, Consumer Price Index, shows small positive signs, but it may include some element of high oil prices; so in reality, price deflation is still there. Bank of Japan has been doing quite a lot to eradicate deflation, so I think in coming months deflation would also be overcome. So, yes, Japanese economy is recovered, and now many Japanese companies are interested in further investing in Asia, including China and India, but also in some other countries like Vietnam, Pakistan, Bangladesh, Indonesia.
MR. SIEB: And let me secondly ask you to, if you might, expand slightly on something you did mention in your remarks. You mentioned avian flu. I'm curious, in your view and the view of the ADB, is this a minor concern, a major concern, as something that can in the short term seriously interfere with development?
KURODA: I must say that we have a major concern, but of course we have to differentiate the current situation from a possible pandemic situation. The avian flu has spread all over the world, creating huge problems for the poultry industry, and killing 80 or more people. But at this stage, there has been no case reported that the avian flu has been transmitted within human and -- you know, human-to-human, so at this stage, only bird-to-bird and bird-to-human. No case of human to human transmission is reported.
So at this stage, yes, problem is big and must be contained, and ABD is prepared to provide additional technical and financial assistance to member countries. We already mentioned, announced that on top of already-provided assistance, we can provide another 300 billion -- $300 million assistance to deal with the avian flu. So this is the current situation, and the current situation became more serious, but I don't think at this stage the avian flu is making the Asian economy or the global economy decelerate significantly or anything like that.
But on the other hand, as you know, many experts are warning us that at some stage, because of genetic mutation, human-to-human transmissible avian flu might emerge. Then it could become a big pandemic. And unlike SARS, since this is a kind of influenza, it would spread quite quickly, within a few weeks, not only all over Asia, but also all over the world. Our economy has made some tentative sort of preparations. If avian flu becomes a pandemic transmissible betweem human beings, then the impact could be quite damaging. For instance, Asian economies might experience almost zero growth in one year. Tourism and trade would be seriously damaged. And so, like '97-'98 financial crisis, Asia may face a real recession if a pandemic emerged. But that is not the case at this -- at this stage, bird flu is bird-to-bird and bird-to-human transmission, so I think it's best to contain at this stage rather than waiting till pandemic emerges.
MR. SIEB: Thank you.
I would like to open the discussion up to you. Two requests. Raise your hand and I'll recognize you, but wait for a microphone. There's one on each side. And secondly, if you could stand and state your name and your affiliation before the question.
QUESTIONER: Maheh Kotecha – Structured Credit International. Kuroda-san, you mentioned many things about the Asian situation which are very positive -- the growth rates and so forth. And in the environment that you are in, many countries are now able to access markets directly, attract foreign investment directly through the private sector, raising questions not only about ADB, but also about other multilateral banks as to their role today when capital flows from the private markets are so big and so available, even for countries like Philippines and Indonesia. So what do you see in your role now, as one year into the bank, that the bank can do and other multilaterals can do to become and stay more relevant? Because there is a real chance that they will become irrelevant.
KURODA: Yes, not only ADB, but also all MDBs are facing a similar problem. However, let me point out a few things.
One, there are still many poor or poorest developing countries which have not much access to the markets, even in Asia. We have Afghanistan, Nepal, Sri Lanka, Cambodia, Papua New Guinea, so many poor countries. Some of them are post-conflict countries. And they continue to face difficulties in raising enough capital for their development investment. And also I understand in sub-Saharan African region there are so many countries which need direct help from MDBs like African Development Bank or the World Bank. So, one, we still have a sizable number of developing countries which need direct financial support from ADB.
Second is that, yes, now Asia is full of money. Asian countries have plenty of money. India, China, even some ASEAN countries have hundreds of billions of dollars that their foreign exchange results, and they can, of course, many of them, can raise money from the capital markets. But still they need support, help from MDBs, even India and China, because the financial assistance from MDBs, like ADB, include not only money, capital, but also various know-how, technologies, even very -- safeguards regarding people's -- (inaudible word) -- environment, minority people and so on and so forth. And actually, MDB support is a kind of package of this important value-added combined with financial support.
So I think many Asian countries, including China and India, still need a kind of support from MDBs. And actually, India and China are two major borrowers of ADB, and I think they would continue to borrow from ADB in foreseeable future. But I agree at the same time we have to improve our sort of financial product or our financial assistance. Otherwise, increasingly many developing countries in Asia would have larger and larger market access. And if our financial support does not include good value added, we would be marginalized and our assistance would become less relevant, although there are still huge needs for support from -- (off mike).
SEIB: Let me move to the aisle here and then over here next. Sorry, I'm making life difficult for the microphone operator. Right there, in the yellow down there.
QUESTIONER: Thank you. My name is – Sonia Schott -- Radio Valera, Venezuela. I would like to know what is your impression on the increasing presence of China in Latin America. Does it represent any threat, or how it is considered for the rest of the countries on the region? Thank you.
KURODA: My answer is quite simple. China or India or Latin American countries, I think they are not a threat to anyone. They provide huge opportunities for many countries' companies in the developed world, because unlike some security issues, economic issues are not so-called zero-sum game. Many economic issues are kind of a win-win game. And for instance, if China continues to grow quite rapidly, that would provide huge markets for many companies which export goods and services to China and also provide good opportunities to invest in China. So China, India or Latin American countries do not pose any threat. I think that they provide huge opportunities to grow for the entire economy, entire global economy.
QUESTIONER: Joe Grimes, ARD. Economic growth and poverty reduction can be mutually supportive, but they can also be in conflict. Economic growth basically means making the pie bigger. Poverty reduction means dividing it up. An earlier question mentioned how much private money is flowing around now, and -- (inaudible) -- national development banks are really relevant. You're now talking about focusing more on poverty development. In the past, clearly it was more on economic growth. How is this new policy affecting the kinds of projects you're planing to fund in the future?
KURODA: ADB a few years ago adopted so-called poverty reduction strategies. And according to that strategy, we need at least three things to reduce poverty. One is inclusive growth, pro-growth. Second is more social investment. And third is called improved governance. These three are necessary to promote poverty reduction in developing countries. And I think in the past 10-years or 15 years, many Asian countries really achieved poverty reduction through inclusive growth and through more investment, both investment in the social sector and through improved governance. But I do agree that developing countries in Asia need further efforts, particularly in the social investment and governance areas.
Private investment is -- not only domestic investment, but also foreign direct investment -- they are increasing quite rapidly, and I think this trend will be sustained in many countries, including China and India. But certainly, some room for public investment will remain because particularly in the infrastructure sector you need some core investments made by the public sector, although increasingly public-private partnership has become important in many developing countries.
SEIB: I think I have a gentleman there on the end. A question? And I'll try to -- (inaudible).
QUESTIONER: My name is -- (name inaudible) -- freelance journalist. Dr. Kuroda, in his recent State of the Union address, U.S. President Bush made a specific reference to the U.S. economy as facing stiff and rising competition from China and India, and you emphasized that yourself in your presentation. Now, how heavy or strong do you think this U.S. factor is in the global competition between India and China as -- themselves, given their individual sustainable growth?
KURODA: I think the Chinese economy and the India economy will be able to grow quite rapidly in the next 10-15 years. And that means that, of course, increased competition will come from China and India. Of course, always companies are subject to competition from within their country or even from outside of their country. And since the Chinese economy and the Indian economy would grow with rapidly increasing labor productivity, increased competition will come.
But again, in the long run as there are -- as from a (macroeconomic ?) point of view apart from individual corporate point of view, the economic issues -- economic issues, including competition -- increased competition, are not really zero-sum game, and the increased competition certainly some companies may fail. Some companies may have to retire from the market. But some others would become stronger and in some sectors comparative advantage may indicate that that particular sector could become bigger and stronger than otherwise because of the competition coming from China and India.
So from individual company point of view, it's not always -- (laughs) -- happy. But from macroeconomic point of view and from longer time prospect is, I think, increased competition; increased, accelerated, sustained growth in China and India would be beneficial to everyone.
SEIB: Yeah, right here.
QUESTIONER: Hi, my name is Ting Wang from -- Cleary Gottlieb Steen & Hamilton LLP. You mentioned in your presentation the vast numbers of people in Asia living in abject poverty.
QUESTIONER: I was wondering from the ADB standpoint and alleviating poverty, how you would prioritize meeting the needs of the various segments of the poor? For example, what do you do, you find most pressing in helping those living on a dollar a day to move up to $5.00 a day, or helping those who are already at $5.00 a day move to $5.00 an hour? How do you balance those priorities? Or are the strategies of -- for helping one and the same?
KURODA: Strategy -- ADB's strategy is to assist those member countries to reduce poverty. It would depend on two things. One is the needs of a particular country. For instance, take India. India has been growing quite fast, but in India does need two things. One is more an improved infrastructure. If transport, power transmission network, energy sector -- all infrastructure in India is really strained and is not very good, is not good enough for sustaining high growth or even accelerating growth. So a lot of infrastructure investment would be needed in India, the World Bank or ADB could provide a lot of assistance.
On the other hand, some other countries like China, China may -- needs more investment in the social sector rather than the economic infrastructure sector because economic infrastructure has improved greatly in the last 10 to 15 years. And also, the government itself can now manage infrastructure investment quite well, particularly in the coastal -- (inaudible) -- area. So needs are changing in China and some other countries also, so our assistance to developing member countries for the -- (inaudible) -- must be adjusted to the needs of a particular country.
SEIB: But just to clarify -
SEIB: You're saying in -
SEIB: -- and just to clarify your question, those strategies help the person making $1.00 a day -
KURODA: Oh, yeah.
SEIB: -- or $1.00 an hour or $5.00 a day equal -
KURODA: I think the $1.00 or less a day is a global sort of (measuring load ?) of extreme poverty, but certainly $1.00 per day is not very much. And now many experts are arguing that at least $2.00 per day would be the better sort of criteria for poverty. And if you raise it to $1.00 per day to $2.00 per day then the number of poor people in Asia would become quite huge -- more than 1 billion. And if you raise the threshold to $5.00 per day -- (the bulk of ?) -- Asian people are still poor. So at this stage the international community made $1.00 per day as a general sort of criteria for extreme poverty, and the U.N. summit decided that this -- the number of extreme poor had been gone $1.00 or less than $1.00 per day, the number must be halved by 2015. I think that target would be met in Asia.
Too, I would like to point out another issue -- another factor which would decide our strategy in developing countries; that is what is our core competence -- that is, what is our core business, so to speak? And also, I mean, ADB is -- it's a small institution and the financial and human resources are limited, so we have to focus. We have to prioritize our support. And for instance, to China, ADB has never provided concessional resources to China. China joined ADB 20 years ago. In the last 20 years, ADB provided only so-called ordinary capital resources; that is to say, borrowing money in the market and lending money to China with administrative costs added.
So our concessional resources, what we call Asian Development Fund -- ADF -- to be infringed by donors every four years, but ADF resources have never been provided to China, and also never provided to India. That means that, unlike World Bank Group -- World Bank Group still provides concession resources called IDA resources to India; although stopped providing IDA resources to China recently. That means that our support in India tends to be focused on infrastructure and particularly -- (inaudible) -- infrastructure support. Why the World Bank could provide $1 billion concessional resources to India so that they tend to support social investment and social sector, so there's some sort of division of labor among the -- (inaudible).
SEIB: Right here.
QUESTIONER: Thanks. Aimee Christensen with CG Strategies. First, I wanted to thank you and recognize your leadership, really moving the ADB to play an important role in clean energy and moving to address global warming. I think it's a critical role for the ADB to play and like -- and to help drive private investment. On a related question, there's been some discussion here, a little bit on the U.S./China relationship and potential for conflict in one area, obviously, and that is the common demand for oil.
QUESTIONER: Senator Lieberman was here two months ago, I believe it was, proposing a substantive bilateral engagement between the U.S. and China to share strategies, to reduce our common dependence on oil. And certainly China's been taking leadership there on fuel economy standards and some other things. I was wondering if you thought that was something that could be valuable to complement your efforts in this area.
KURODA: Yes, I think that is quite useful and complement our effort and the international community's effort because -- I mean, if China or India or Asian economies are not growing so fast, their demand for energy may not grow so fast. But since they are growing so fast and their high growth is likely to be sustained in the next 10-15 years, unless their energy efficiency is greatly improved, they would demand huge amount of energy which would have two implications. One is higher and higher energy prices, including oil prices. And the second implication is bigger and bigger negative impact on the environment.
So I think the international community has a sort of common or shared interest to improve energy efficiency in those fast-growing economies in the world, and particularly fast-growing, emerging, or developing economies, and notably China and India. And I think it's a very good idea for any countries, including the U.S., to provide technical assistance or some close advice, even financial assistance to improve their energy efficiency and develop clean energy. And ADB are trying to intensify our efforts, but certainly bilateral donors could help very much to help them.
SEIB: Right here on the aisle.
QUESTIONER: I'm Woody Erberwitz (ph) from -- (affiliation inaudible). We've heard a lot from the pretty macro level, but let me try to bring it down a little bit. In your experience in the one year you've been there, what actually works? What have been the most successful development programs, and how replicable are they without continued outgoing assistance from your bank?
KURODA: This is very -- the core -- (laughter) -- of development assistance. And from just one year experience, I found -- I mean, it's not a very unique kind of observation. I mean, when a project or program is formed and implemented, (very/really ?) crucial is the implementation agency; that is to say, the government in developing countries. And many projects -- according to independent assessments, many projects in China have been successful. The success ratio has been much higher in China than in other developing countries. That means that the government capacity -- capability of implementing projects and programs are high, and that is really crucial.
Of course, assistance from MDBs like ADB or assistance by bilateral donors, NGOs, those are also important -- crucial. And how they provide assistance is also crucial. But at the end of the day, the most crucial factor is the government -- (inaudible) -- agency which implements projects or programs; unless they are competent, unless they are capable, unless they are prepared to make -- (inaudible) -- success is difficult. I mean, as you can imagine, in any project, small or large, always some unexpected thing happens. (Laughter.)
So you have to -- I mean, you cannot get money with some guidelines from MDBs and just implement as -- (inaudible). It's impossible. All things happen. You have to adapt yourself to the changing environment -- changing factors. And really MDBs or bilateral donors cannot do everything. They can provide assistance, but it is the government who implements projects and programs whether it's successful or not.
SEIB: We're near the end of our time; once we -- one last question? I think right there.
QUESTIONER: Sam Black from the law firm of Squire, Sanders & Dempsey. I wonder if you could please comment on micro-lending activity in Asia, either at the bank or in the nonprofit and for-profit sector.
KURODA: Last year, when the government of the Philippines hosted a big conference related to micro-finance, I was invited, and also I gave my speech at the conference. There are so many experts of micro-finance -- (inaudible). And one of them is of course the famous originator of the -- (inaudible) -- Bank in -- (inaudible). He was very interesting, and he told us that his bank got started and became so big with a few million clients, you know, without any support from the government or any support from the international community, and yet it was so successful. But of course, if the government or the international community can provide some assistance to enhance micro-finance, micro-credit which would be able to directly reduce poverty and improve the living standard of poor people, that would be better.
So ADB has been providing some assistance in a micro-finance institutions in Bangladesh -- I'm sorry, in Pakistan, India and some other countries. However, I must say that certainly micro-credit or micro-finance institutions can be developed by external assistance or by government assistance, but if those micro-finance institutions are to really be sustained and contributing to poverty reduction, I think external or government assistance should be limited in time and scope because these are basically private financial institutions and they should be viable. They should be self-sustained. Too much assistance -- prolonged assistance could undermine the long-term viability of micro-finance institutions.
SEIB: Obviously, we could go on, as you could tell, but we've reached the end of our time, so I first of all want to thank you. And the interest in what you're doing is obviously large and maybe on the second anniversary we can do it again. (Laughter.)
Thank you very much. (Applause.)
KURODA: Thank you very much.
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