The Asian Development Bank (ADB) willnot change its decision to admit China as a member despite
protests from founder member Taiwan, bank president Masao
Fujioka said.
    China's admission in March 1986 and the decision of the
bank to change Taiwan's name to 'Taipei, China' caused a
Taiwanese boycott of the ADB's last annual meeting in Manila.
    Fujioka told Reuters in an interview that Taiwan had been
invited to the bank's 20th annual meeting starting April 27 in
Osaka, "but the situation remains the same."
    "The bank's board agreed to change Taiwan's name to 'Taipei,
China'," Fujioka said.
    "We have tried to maintain our channels of communication
through the Taiwanese director, but we are not negotiating with
a view to changing our agreement with China," he said.
    ADB figures show China has the largest shareholding among
the bank's developing members, with 7.2 pct of its equity.
    Fujioka said a stalemate also continued with Vietnam, which
complained at last year's meeting that for several years the
ADB had unilaterally stopped advancing loans.
    An ADB spokesman said the last loan of 40.67 mln dlrs was
made to the then Republic of Vietnam (South Vietnam) in 1974.
    Vietnam said last year that only 23 mln dlrs of that loan
were disbursed.
    The bank's 1986 annual report said of 11 loans approved for
Vietnam, eight had been closed, two were suspended and only one
was under administration at the end of 1986.
    Cumulative disbursements to Vietnam at the end of 1986
totalled 25.3 mln dlrs, or 99.5 pct of the total amount of
effective loans, the report said.
    "The situation (in Vietnam) is not conducive to bank
operations," Fujioka said. "Vietnam continues to be a member. We
would like to help it, but new loans seem to be difficult."
    "It's not a question of political instability, the
environment has to be right for banking operations."
    He said with the first loans made to India in 1986, and
lending operations in China scheduled to start this year, the
ADB had now acquired a "truly Asian" character.
    Although China's finance ministry had gained five years of
experience in borrowing from the World Bank, ADB loans would be
routed through the country's central bank, Fujioka said.
    "It's been a very slow start," Fujioka said. "We identified
three projects (in China). One disappeared and we now have only
two left."
    He said the ADB might lend China between 200 and 300 mln
dlrs in 1987 for an investment bank and an energy project.
    He did not foresee an expansion of lending to India.
    The ADB in 1986 approved two loans to India totalling 250
mln dlrs.
    "There is a sort of agreement that our loans to India should
be modest and that the World Bank should be the major lender,"
Fujioka said. He did not give details.
    Fujioka said the ADB saw its lending to the private sector
serving as a catalyst. The bank's new private sector division
in 1986 approved three loans totalling 11.46 mln dlrs without
government guarantees.
    In addition, the ADB approved four equity investment
projects totalling 8.15 mln dlrs. This raised to 15.18 mln the
cumulative approvals since equity financing commenced in 1983.
    But Fujioka said the ADB should not compete with private
banks. "We have a narrow path to walk," he said.
    He said he was happy with the decision of the bank's donor
countries to increase the ADB's fund for soft loans.
    The fourth replenishment of the soft-loan window, the Asian
Development Fund , brought it to 3.6 billion dlrs, from 3.2
billion, Fujioka said. In particular the United States has
maintained its 16 pct share," said the ADB chief.
    He said there had been disagreements with the U.S., Which
holds 14.9 pct of the bank's equity, over lending policies. The
U.S. Complained in 1986 the ADB was granting bad loans in its
impatience to hit lending targets.
    "I suspect there is some arm-twisting," he said.
    "I find some developed countries are more interested in the
procurement side instead of the development side."
    Fujioka said he said he foresaw increased sectoral lending
and a gradual dilution of the ADB's project-tied lending.
    Fujioka said project lending was expected to drop to 63 pct
of total loans in 1987, from 66.5 pct in 1986 and 77.5 pct in
1985. He said sectoral lending was projected to rise to 20 pct
in 1987, from 12.8 pct in 1986 and 7.5 pct in 1985.
    He said the bank would try to reduce some of its liquid
assets by repaying borrowings carrying high interest rates.
    "On the other hand we must maintain our presence in major
financial markets," he said. "Why should we not take advantage of
historically low interest rates?"
 REUTER
