Nakao on the role of advanced technologies in Asia-Pacific's future

By Lean Alfred Santos 16 June 2016

Asian Development Bank President Takehiko Nakao visits an ADB-financed urban project in China. Photo by: ADB / BY-NC-ND

Asian Development Bank President Takehiko Nakao is urging countries in the Asia-Pacific region to incorporate advanced technologies in all of their development programs, particularly on infrastructure projects. That sophistication can help break the pattern that has often characterized rapidfire growth: quick building with less regard for sustainability.

“Asia has a challenge because Asia is growing,” he said. “Asia is now developing industries [but it] doesn't need to repeat the same kind of less clean or dirty systems” that were used in the West, during the industrial revolution, he said. “They can start using better technologies, cleaner energies. That is also an opportunity, not just a challenge.”

Nakao, who has been at the helm of the Manila-based ADB since 2013 and gunning for reelection this November, said technological improvements can allow countries to develop while still considering social and economic impact. For example, India and China, two of the fastest growing nations in Asia-Pacific for the past few years, are also the top two countries with highest number of deaths due to outdoor pollution in the region in 2008.

Some of the advanced technologies the ADB president mentioned include renewable energy, smart grid, carbon capture and storage. These are all very relevant given the goals set by the Paris climate agreement for a more sustainable energy future for all.

“When we build roads, for instance … we should try to incorporate better technologies,” he told Devex in an exclusive interview. “We must pay attention to [advanced technologies] in every part of our work.”

“Instead of doing business as usual, we should advise, encourage and support governments to go for cleaner options,” Nakao said.

Advanced technologies

Nakao said countries in the region — which are increasingly becoming middle-income — are generally supportive of using better technology, but they need support.

“[Countries] themselves want to go to the higher ladder of development in terms of technological level in industries and processes,” Nakao said. “We should support their general transformation … by supporting better quality and innovative infrastructure.”

This projection of a more middle-income Asia-Pacific is also the reason why the ADB chief merged the bank's two main financial instruments — the Ordinary Capital Resources and the Asian Development Fund — to have more lending capacity to countries in the region, particularly to support advanced technologies in development projects.

One way to encourage this, for example, could be through joint ventures between a country's local industry and foreign firms with advanced technology methods. Nakao said he has seen great enthusiasm from the private sector in Europe, for example, to engage with development projects in the Asia-Pacific region.

Choosing quality through better technologies up front can also reduce the cost of future maintenance, according to Nakao. “These initial savings may be illusory, as they do not account for other costs — often quite significant — such as maintenance and replacement [of equipments].”

Cost conundrum

One of the biggest obstacles to incorporating better technologies into development projects is simple: cost. That will require a mentality shift as much from lenders such as the ADB as from regional governments.

“Countries and ourselves [at the ADB] have been promoting the lowest cost options, and it's also very attractive for governments to go for lowest cost because we can have infrastructures anyway with low cost,” Nakao added. “But we should think ahead. We should promote the idea of better and cleaner technologies.”

Ramesh Subramaniam, director general of the bank's operations services and financial management department, explained that previously both cost and quality have factored into procurement decisions on consulting services, impacting the level of expertise and technology used to implement a development project.

“The norm used to be about 80 [for quality] and 20 [for cost] but in some cases, they went for lower ratio of quality. But now we see the shift to 90 on quality and 10 for cost,” he told Devex, adding that for civil works or goods, a least cost approach is used “as long as a bid is substantially responsive from a technical point of view.”

Advanced technologies, such as renewable energy sources, are still more costly than fossil fuels, despite multilateral institutions' willingness to provide financial and technical support to governments.

“For countries, it's a tough decision because most advanced countries like Germany, the United States and Japan rely on coal energy. Those are the realities,” Nakao said. “That's a tough decision and we cannot tell countries to totally clean [up] while other countries are still using it.”

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About the author

Lean 2
Lean Alfred Santos@DevexLeanAS

Lean Alfred Santos is a Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. Prior to joining Devex, he covered Philippine and international business and economic news, sports and politics. Lean is based in Manila.


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