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ADB in Bangladesh: Who losses who gains

ADB in Bangladesh: Who losses who gains. www.equitybd.org. Introduction. A multilateral financial institution to support member developing countries for poverty reduction; In 1973, ADB started its activities in Bangladesh.

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ADB in Bangladesh: Who losses who gains

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  1. ADB in Bangladesh: Who losses who gains www.equitybd.org

  2. Introduction • A multilateral financial institution to support member developing countries for poverty reduction; • In 1973, ADB started its activities in Bangladesh. • During last 3 decades, ADB finance policies influenced most of the sectors in Bangladesh. • ADB influence: Sectors wise policy and strategy formation • ADB’s conditional (!) loan for poverty reduction, good governance, reducing corruption etc.

  3. ADB and its beginning - Processes of formation in March, 1963 in the Philippines • In 1966 ADB formally started its activities • 67 member countries; 48 from the Asia Pacific and rest 19 from other parts of the world.

  4. What ADB do? • Organize Policy dialogue, Loan support, Investment in share market, grantee and technical support etc. • In 2006 ADB provided 7.4 billion dollar loan support in Transportation, communication, fuel, law, public policy sectors. • 67 project through 80 loan contract

  5. What’s ADB really do? • From the beginning of last two decade ADB provided loan for • Agriculture and big infrastructure development. • Presently investing in export oriented industries. • Since 1990s, policy formation of poor countries (Like WB and IMF)

  6. What is real work of ADB? Since 1990, ADB included the following neo-liberal economic conditions in its financing agreement 1. Market infrastructure development, increase competition and price setting. 2. Privatization of state owned industries and institutions. 3. Formation of separate law and policy for different sectors 4. Liberalization of investment and industrial law for foreign investors. 5. Withdrawal of subsidy from public service sector. 6. Creating space for the MNCs for exploration and marketing of natural recourses 7. Reduce state role from the service sector.

  7. Owner’s of ADB The USA manages and controls all functions • Both the USA and Japan own 15% share each. • USA and other Europium countries play major role in decision making and policy formation. • In all cases ADB promotes the interest of the MNCs through • Privatization • Encouraging investment in privet sector

  8. How ADB defines Good Governance? Financial reform • Dismantling state owned institutions • Identifying process of Budget preparation. • Democratization, Human rights, standardize of wages, gender discrimination, environment etc. • Reduce corruption through privatization

  9. ADB’s formation and activities - ADB itself a undemocratic institution - Rich countries domination As per UN – 1 country 1 vote, But ADB practice 1 dollar 1 vote. - The rich countries possess 55% of votes

  10. Voting rights in ADB USA 12.9%, Japan 12.9%, Chain 5.5, India 5.4%, Indonesia 4.7%, Pakistan 2.1%, Bangladesh 1.1%, Myanmar 0.8%, Nepal 0.4%, Afghanistan 0.3%.

  11. Meaningless of Transparency and accountability: Researchers, CSOs, NGOs, even ADBs audit statement has proved that- • ADB activities are not transparent and accountable to the people. • No scope of participation in development planning. • Not democratic and transparent - In the name of inspection facilities ADB started its internal accountability system but failed - In 2003 ADB formed a new accountable working strategy 1. OSPF(Office of the Special Facilities) 2. The complacence Review panel.

  12. ADB is beyond any law and regulatory system: • As per constituency, ADB enjoys immunity facilities. - Poor countries are not entitle to file any case against ADB - But rich countries can get facilities for filing case.

  13. Influencing in state politics: As per constitution, ADB will not intervene in state politics But, In Bangladesh, ADB is making comments and advising state authority about political leaders and politics.

  14. ADBs destructive activities in Asia • Policy imposes for privatization. • Establishing Neo-liberal economics • Privatization of public commons Eco Park is an example.

  15. What about Development! • ADBs failed projects: • According to ADBs audit – - In Indonesia, 2002: 11 billion out of 16 billion was failed project loan. - In Pakistan: 2.6 billion (40%) out of 6.5 billion - In Srilanka: 1.2 billion (80%) out of 1.5 billion.

  16. ADB: toward increasing Corruption - ADB itself a corrupted institution. - Lobbing in favor of MNC for - Tender - Pricing Evident of corruption • In Indonesian: Health project to increase quality facilities • In Srilanka: In 1998-99 Rs 19.9 trillion in the name of poverty reduction which spent for election campaign • In Thailand, The loan money of water purifying project spent for land purchase For this project approved loan was 13.612 TB but expenditure was 22.995 TB. • In Bangladesh: In the name of Water, Forest, Power and Energy managementADB finance projects polluted water, caused deforestation, and damaged natural resources

  17. What’s ADB doing in Bangladesh Through Govt. - Up to 31st Dec 2006, ADB loan was 829.97 U$ through 176 project. - technical assistance of 17.95 U$ under 318 project Through others - 8 big project – 24, 22,80000 U$ ( Meghena Power plant and Grameen Phone Company)

  18. ADB Policy and Strategy in Bangladesh -Since 1980, working as financing institution to increase GDP - Playing role as a policy maker. - focusing to privatization - Opening market for MNC

  19. Promoting interest of the MNCs Dev. Project of ADB caused - Deforestation - Permanently water logging - Salination of drinking water sources - Destruction on natural aquatic systems To create investment space for MNC, - DestroyedJute, Still and other basic industries. -Disempowered govt. institutes. - Commercialized Education and Health sector - Helped MNC to establish control over country’s Oil, Gas and natural resources

  20. Unexpected interfere in the state policies - Interfered in the preparation of PRSP - Influencing in the formation of state laws and regulatory like revised energy law and regulatory law etc.

  21. ADBs loan: Increasing interest and condition - Decreased ADF in last decades - Introduced OCR loan. Statistic: Out of 310. 45 million committed loan during1999-2000 to 2006-2007; 39% was converted to OCR loan - 2006-2007 fy loan 50 million out of 59.85 million was OCR (84%) - In power sector 40 million dollars, out of 46.50 million, was OCR.

  22. Sector wise financing • As of end 2004, • Public sector lending was dominated by four sectors: • Energy (34%), • Transport and communications (25%), • Social infrastructure (20%), and • Agriculture and natural resources (19%). • Lending in the other sectors, including finance, governance, and multi sector operations remains relatively small, although these sectors have been given more prominence in recent years.

  23. Responsibility of the fail project • 54 loans (for 51 projects) were post evaluated. • 39% were classified as generally successful, compared with an ADB average of 56%. Over half (52%) were partly successful, • 9% were unsuccessful compared with ADB averages of 32% and 11%, respectively. • This figure clearly indicated that ADB projects in Bangladesh are mostly unsuccessful, • ADB will not take the responsibility of the fail projects

  24. ADB financing on Agriculture: Decreased productivity • Corporatization of agricultural sector • Replaced small farm/land holders. • Increased private intervention in agricultural input market, made farmers dependent on MNCs costly and non-quality agricultural inputs. • Small farm holders and landless day labor which constitute around 50 % of the population is the ultimate loser.

  25. ADB in Fuel sector Till date ¼ of ADB’s investment went to fuel sector • Main objective: To privatize this sector or dismantle state role over this sector • ADB is emphasizing on 1. Private investment 2. Including international investors and gas export through setting inter-country distribution pipeline • ADB finance policies resulted - Increasing Gas price (20 times during last 30 years) - Complete disempowering of state institutions like Petro Bnagla;

  26. Advocacy for Asia energy: Asia energy: If it implement open-pit coal mining in Fulbari, Dinajpur; will cause - Pollution of 6 districts, - Massive Deforestation, - Water pollution - Homeless of some 50,00 people - Damaging agricultural land - Affecting Sundarban In a result, Bangladesh will get 6% as royalty and 75% coal will be exported.

  27. ADB in Power sector: • Forcing privatization of power sector. - Since 1994, 3 contracts signed for technical assistance: U$ 34 million. Main objective: Separation of Management and distribution system. - 1991 – DESA, - 1996 – PGCB, PDB - 2002 gave 8.5 million loans for sector reform and privatization

  28. Railway ADB will give loan U$ 1200 million for railway privatization. - 110 million for staff termination. As per MOU between ADB and railway: 2 private companies will be formed for; 1. Passengers support 2. Transportation

  29. Water • To privatize the safe water distribution management system • To declare water as commercial good. • To increase water pricing

  30. Commercialization of Education system: 1. Primary Education - PEDP-2, From 2002 to 2008, now extended for 2009. 2. Secondary Education: - SECIP (ADB – No: 37307-01) 3. Higher Education: Commercialization of education: 20 years strategic plan is; - Increase number of private universities - Increase tuition fee

  31. Planning for Cittagong port “Dhaka – Chittagong Economic Corridor” By 2020, redesign all infrastructures and communication facilities. - increase production of power and gas - Privatization of taxation system.

  32. Roads & highway authority: Prepared policy, legal environment and its enforcement activities. As a result: - Privatizing roads and highway authority - Introducing user fees for roads and highways.

  33. Thanks www.equitybd.org

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