ASIAN DEVELOPMENT BANK:

Set up:

The Asian Development Bank (ADB) envisions a prosperous, inclusive, resilient, and sustainable Asia and
the Pacific, while sustaining its efforts to eradicate extreme poverty in the region. Despite the region's
many successes, it remains home to a large share of the world's poor: 263 million living on less than
$1.90 a day and 1.1 billion on less than $3.20 a day.

ADB assists its members, and partners, by providing loans, technical assistance, grants, and equity
investments to promote social and economic development.

ADB maximizes the development impact of its assistance by facilitating policy dialogues, providing
advisory services, and mobilizing financial resources through financing operations that tap official,
commercial, and export credit sources.

Origin:

ADB was conceived in the early 1960s as a financial institution that would be Asian in character and
foster economic growth and cooperation in one of the poorest regions in the world.

A resolution passed at the first Ministerial Conference on Asian Economic Cooperation held by the
United Nations Economic Commission for Asia and the Far East in 1963 set that vision on the way to
becoming reality.

The Philippines capital of Manila was chosen to host the new institution, which opened on 19 December
1966, with 31 members that came together to serve a predominantly agricultural region. Takeshi
Watanabe was ADB's first President. During the 1960s, ADB focused much of its assistance on food
production and rural development.

When the world suffered its first oil price shock, ADB increased its support for energy projects,
especially those promoting the development of domestic energy sources in member countries.

Co-financing operations, in which ADB manages the funds of other organizations, began to provide
additional resources for ADB projects and programs. ADB’s first bond issue in Asia—worth $16.7 million
and issued in Japan—took place in 1970.

A major landmark was the establishment in 1974 of the Asian Development Fund to provide low-interest
loans to ADB's poorest members.

During its formative years, ADB dealt with administrative, organizational, and funding issues to establish
itself as a sound and credible institution. ADB’s first President, Takeshi Watanabe, envisioned ADB’s role
as Asia’s “family doctor.” The Bank conducted several studies to have a fuller understanding of the
region before lending on energy, transport, agriculture, and finance gained momentum during the latter
half of the first decade.
OBJECTIVES:

1-Reducing Poverty:

Firstly, its objective is to help the member countries in countering poverty. Hence, it helps them in
poverty reduction and country development.

2-Promoting Economic Growth:

If both the social as well as the economic aspects of a country is rising, then it leads to economic growth.
One of the objectives is to help the countries to go towards economic growth.

3-Developing Human Resource:

Thirdly, their objective is to support human development.

4-Protecting the Environment:

Moreover, they believe in preserving and protecting the environment.

5-Improving the Status of Women:

Lastly, they work and wish to continue working towards empowering women and improving their status
in society.

Functions:

1. Economic and Social Advancement

This bank has a membership program under which there are various benefits available for the members’
countries.

These benefits include providing loan and investment at a concessional rate. One of the functions of the
ADB is to provide loans and equity investments for the economic and social upgrade of developing
member countries.

2. Technical Assistance:

Most of the countries require a lot of services like advisory services. Moreover, they while operating at
the international level; most of the countries require technical support too.

One of the functions of the Asian Development Bank is to provide technical assistance for the
preparation and implementation of development projects and advisory services.

3. Investment Promotion:
Firstly, the Asian Development Bank provides a lot of services to the member countries in the form of
investments. At the same time, they also provide some specific sort of investment facilities for
development purposes.

4. Support in Policies and Plans:

Plans and policies play an important role in any country. There are various domestic agencies providing
help to the authorities while framing various policies.

But there is a need for some international agencies at the same time for the same function. One of the
main functions of the ADB is to provide help to the member countries in framing policies and plans at
the international level.

PEST ANALYSIS:

Asian Development Bank PESTEL analysis is a strategic tool to analyze the macro environment of the
organization. PESTEL stands for - Political, Economic, Social, Technological, Environmental & Legal
factors that impact the macro environment of Asian Development Bank.

Political Factors:

Political factors play a significant role in determining the factors that can impact Asian Development
Bank's long term profitability in a certain country or market. Asian Development Bank is operating in Not
Applic in more than dozen countries and exposes itself to different types of political environment and
political system risks. The achieve success in such a dynamic Not Applic industry across various countries
is to diversify the systematic risks of political environment. Asian Development Bank can closely analyze
the following factors before entering or investing in a certain market-

 Political stability and importance of Not Applic sector in the country's economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in Not Applic sector.
 Bureaucracy and interference in Not Applic industry by government.
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulations & tariffs related to Not Applic
 Favored trading partners
 Anti-trust laws related to Not Applic
 Pricing regulations – Are there any pricing regulatory mechanism for Not Applic
 Taxation - tax rates and incentives
 Wage legislation - minimum wage and overtime
 Work week regulations in Not Applic
 Mandatory employee benefits.
 Industrial safety regulations in the Not Applic sector.
 Product labeling and other requirements in Not Applic.
Economic Factors:

The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign exchange rate
and economic cycle determine the aggregate demand and aggregate investment in an economy. While
micro environment factors such as competition norms impact the competitive advantage of the firm.
Asian Development Bank can use country’s economic factor such as growth rate, inflation & industry’s
economic indicators such as Not Applic industry growth rate, consumer spending etc., to forecast the
growth trajectory of not only sector but also that of the organization. Economic factors that Asian
Development Bank should consider while conducting PESTEL analysis are -

 Type of economic system in countries of operation – what type of economic system there is and
how stable it is.
 Government intervention in the free market and related Not Applic
 Exchange rates & stability of host country currency.
 Efficiency of financial markets – Does Asian Development Bank needs to raise capital in local
market?
 Infrastructure quality in Not Applic industry
 Comparative advantages of host country and Not Applic sector in the particular country.
 Skill level of workforce in Not Applic industry.
 Education level in the economy
 Labor costs and productivity in the economy
 Business cycle stage (e.g. prosperity, recession, recovery)
 Economic growth rate
 Discretionary income
 Unemployment rate
 Inflation rate
 Interest rates

Social Factors:

Society’s culture and way of doing things impact the culture of an organization in an environment.
Shared beliefs and attitudes of the population play a great role in how marketers at Asian Development
Bank will understand the customers of a given market and how they design the marketing message for
Not Applic industry consumers. Social factors that leadership of Asian Development Bank should analyze
for PESTEL analysis are -

 Demographics and skill level of the population

 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the Asian Development Bank ’s industry
 Culture (gender roles, social conventions etc.)
 Entrepreneurial spirit and broader nature of the society.
 Attitudes (health, environmental consciousness, etc.)
 Leisure interests
Technological Factors:

Technology is fast disrupting various industries across the board. Transportation industry is a good case
to illustrate this point. Over the last 5 years the industry has been transforming really fast, not even
giving chance to the established players to cope with the changes. Taxi industry is now dominated by
players like Uber and In-drive. Car industry is fast moving toward automation led by technology firm
such as Google & manufacturing is disrupted by Tesla, which has stated an electronic car revolution.

A firm should not only do technological analysis of the industry but also the speed at which technology
disrupts that industry. Slow speed will give more time while fast speed of technological disruption may
give a firm little time to cope and be profitable. Technology analysis involves understanding the
following impacts -

 Recent technological developments by Asian Development Bank competitors

 Technology's impact on product offering
 Impact on cost structure in Not Applic industry
 Impact on value chain structure in Not Applic sector
 Rate of technological diffusion

Environmental Factors:

Different markets have different norms or environmental standards which can impact the profitability of
an organization in those markets. Even within a country often states can have different environmental
laws and liability laws. For example in United States – Texas and Florida have different liability clauses in
case of mishaps or environmental disaster. Similarly a lot of European countries give healthy tax breaks
to companies that operate in the renewable sector.

Before entering new markets or starting a new business in existing market the firm should carefully
evaluate the environmental standards that are required to operate in those markets. Some of the
environmental factors that a firm should consider beforehand are -

 Weather
 Climate change
 Laws regulating environment pollution
 Air and water pollution regulations in Not Applic industry
 Recycling
 Waste management in Not Applic sector
 Attitudes toward “green” or ecological products
 Endangered species
 Attitudes toward and support for renewable energy
Legal Factors:

In number of countries, the legal framework and institutions are not robust enough to protect the
intellectual property rights of an organization. A firm should carefully evaluate before entering such
markets as it can lead to theft of organization’s secret sauce thus the overall competitive edge. Some of
the legal factors that Asian Development Bank leadership should consider while entering a new market
are -

 Anti-trust law in Not Applic industry and overall in the country.

 Discrimination law
 Copyright, patents / Intellectual property law
 Consumer protection and e-commerce
 Employment law
 Health and safety law
 Data Protection

Role of ADB in Developing Countries:

Asian Development Bank has contributed massively in elevating the third world countries in a number of
ways.

India:

To date, ADB has committed 589 public sector loans, grants, and technical assistance totaling $50.8
billion to India. Cumulative loan and grant disbursements to India amount to $36.9 billion. These were
financed by regular ordinary capital resources, and other special funds. ADB’s ongoing sovereign
portfolio in India includes 66 loans and 1 grant worth $15 billion.

In 2021, ADB committed a record $4.6 billion in sovereign loans to India. ADB also committed $36.51
million in technical assistance and $3 million in grants under the sovereign portfolio. The sovereign loans
included assistance under the vaccine access facility, in addition to the regular program supporting
urban development, transport, agriculture, finance, and skills building.

Pakistan:

To date, ADB has committed 723 public sector loans, grants, and technical assistance totaling $37 billion
to Pakistan. Cumulative loan and grant disbursements to Pakistan amount to $28.27 billion. These were
financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other
special funds. ADB’s ongoing sovereign portfolio in Pakistan includes 48 loans and 3 grants worth $8.42
billion.1 in 2021, ADB’s loan and grant disbursements to Pakistan amounted to $1.31 billion, comprising
$0.3 billion in program lending and $1.01 billion from project lending and $3 million from grants. ADB’s
support to Pakistan’s coronavirus disease (COVID-19) pandemic response in 2021 included a
$500 million loan in August to help procure and deploy safe and effective vaccine and a $603 million
loan—of which $3 million is from the ADF—for an integrated social protection program to strengthen
Pakistan’s flagship Ehsaas program. The loan is complemented by a $24 million grant from the Education
Above All Foundation.

Vietnam:

The Asian Development Bank (ADB) has approved a 4.6 million USD technical assistance to help the
Vietnamese Government to strengthen public-private partnership (PPP), private sector development,
and state-owned enterprise (SOE) reform.

The technical assistance will provide policy advice, assist in infrastructure project preparation, and
strengthen institutional capacity to enhance sustainable economic growth.

The financing includes a 2.7 million USD grant from the Government of Canada and a 1.9 million USD
grant from the Government of Australia, both to be administered by the ADB.

Malaysia:

To date, the Asian Development Bank (ADB) has committed 166 public sector loans and technical
assistance totaling $2 billion to Malaysia. Cumulative loan disbursements to Malaysia amount to $1.41
billion. These were financed by regular and concessional ordinary capital resources.

ADB resumed engagement with Malaysia in 2011. The partnership was laid out on a platform of
regional cooperation and integration, building institutional capacity, private sector engagement, and
knowledge partnership.

Singapore:

Since joining ADB as a founding member in 1966, Thailand has received $6.4 billion for 94 loans and
grants, with the greatest share historically going into the energy sector (36%), followed by transport and
communications (20%), finance (16%), and water supply and other municipal infrastructure and services
(9%). ADB has also provided a total of 181 technical assistance projects worth $70.3 million.

Current ADB operations in Thailand focus on selective interventions— predominantly technical

assistance involving upstream policy advice, capacity building, and other knowledge support—in
infrastructure, finance, climate change, and regional cooperation. ADB approved $1 million in technical
assistance to support the implementation of a new legal framework for promoting public– private
partnerships in Thailand, which is expected to enhance delivery of important public services. To address
inequality in Thailand, ADB supports access to finance—particularly microfinance, with a focus on the
poorer regions—and 2,000 transactions. The TFP works with 10 banks operating in Thailand and has
supported 156 transactions—exports to developing member countries—valued at over $49 million.
How Asian Development Bank Works:

Asian Development Bank was found to help countries of Asia-Pacific in financing development projects
to improve their respective economies by not just providing monetary assistance but also giving
knowledge and information in order to show them true picture of their economy and what are the
challenges in the modern globe and how they could compete in the world.

Shareholders:

As of 31 December 2020, Japan and the United States each hold the largest proportion of shares at
15.571%. China holds 6.429%, India holds 6.317%, and Australia holds 5.773%.

The Latest Figures of 2021 are as follows:

ADB's shareholders consist of 49 developing and developed members within Asia and the Pacific region,
and 19 members from outside the region.
Lending Criteria:

ADB determines the eligibility of developing member countries (DMCs) to borrow based on two main
criteria:

1) Per capita income

2) Creditworthiness

Other Operations:

Private Sector Investment:

ADB provides direct financial assistance, in the form of debt to private sector companies, for projects
that have clear social benefits beyond the financial rate of return. ADB's participation is usually limited
but it leverages a large amount of funds from commercial sources to finance these projects.

Cofinancing:

ADB partners with other development organizations on some projects to increase the amount of
funding available. In 2014, $9.2 billion—or nearly half—of ADB's $22.9 billion in operations were
financed by other organizations.