The view from the Asian Development Bank

Bambang Brodjonegoro, minister of national development planning, Indonesia

Q: Despite recent liberalisation, Indonesia still has major barriers to FDI. Will the government continue on its path to liberalise the economy by opening up to further FDI?

A: Clearly for the next five years, investment will be the key to economic growth and development. Even though for the previous five years economic growth has averaged 5%, that has not been enough to rescue people from poverty and unemployment. We need higher growth, and the only way to achieve this is through investment. Household consumption has been very stable at about 5%; we cannot push in that direction too much. Exports are still dominated by natural resources, and thus exposed to volatile market prices. In the end, we need investment.

However, I’m not buying into the idea of liberalising FDI totally, because the problem with FDI is not whether it’s liberal or not. The problem is that we are constraining the economy too much, not in a philosophical way, but in a more procedural way. That’s why improving the investment climate will be a higher priority than changing the so-called negative list [of sectors restricted to FDI]. Improving the investment climate is the ultimate way to attract FDI.

Benjamin Diokno, central bank governor, Philippines

Q: The Asian Development Bank's chief economist, Yasuyuki Sawada, says the Philippines has the potential to become the fastest growing economy in Asia. Do you agree with his assessment?

A: This assessment is correct. In fact, it seems that we have avoided the boom-and-bust cycle that has characterised our economy in the past. For the past 20 years we have not suffered from any recession, not even during the Asian financial crisis and the world recession. We are looking at a sustainable growth rate of 6% to 7%, and though inflation hit a bump in the first half of 2018, we expect it to go down to 3% this year and the following, with a deviation range of plus or minus 1%.

Q: You became governor after serving as a minister in the cabinet of president Rodrigo Duterte. Is this going to compromise the independence of the central bank?

A: The independence of the central bank is stated by law. On the monetary board there are no politicians except for the finance minister – that’s one of seven members, whereas in the past it was mostly made up by ministers. It means we are fairly independent in our affairs.

Shane Jones, minister for regional economic development, New Zealand

Q: The New Zealand government set up a $3bn fund to shore up development in the country’s provinces.  How are you going to invest the money?

A: It’s a $3bn fund distributed over a three-year period. The purpose of the fund is to re-enliven and improve infrastructure endowments in New Zealand’s provinces. As societies become more metropolitanised, there is more power and people in cities. Therefore we are using the fund to ensure we don’t [strip] our provinces of people and investment.

Q: After the Overseas Investment Act, which, among other things, banned FDI into existing real estate, the New Zealand government is planning to set up a 'national interest test' for future FDI. Can you elaborate on that?

A: Historically New Zealand hasn’t had a national interest test in its FDI criteria. Australians have a very robust test. We are now consulting with the private sector, and there is an appetite in the domestic community to ensure that certain industries are not lost. These are often enterprises that show monopoly characteristics, so we don’t want to create a situation where high value assets capable of huge profits fall into the wrong hands. At the same time, we also liberalised FDI in other sectors in an attempt to meet the challenges coming to the country’s economy from climate change. In this regard, we liberalised land ownership for foreign purposes. Overall, it’s incorrect to suggest New Zealand has been tightening up FDI access. On housing we did, because families are struggling to afford to buy houses [but] it’s a mixed bag: in some areas we liberalised, in others we tightened up.

Chimed Khurelbaatar, finance minister, Mongolia

Q: The Mongolian government is planning a major initial public offering [IPO] for giant coal mine Tavan Tolgoi. What are the latest developments on that?

A: After a few failed attempts to negotiate with different consortia of companies, this government launched an IPO. Preparation works are still going on. In terms of the money we are [hoping] to raise, people say it’s going to be about $3bn. Regardless, the main thing is that we should go ahead with the IPO.

Q: When are you expecting a final decision to be taken?

A: It will depend on the consultants and investment banks working on it. We hope to be in a position to take a final decision by the end of the year.

Q: There seems to be a mood within the public to renegotiate the terms regulating the development of Mongolia’s other iconic mine, copper mine Oyu Tolgoi, with mining powerhouse Rio Tinto. What is the government’s position on that?

A: Mongolia is a democratic country. There are many opinions regarding Oyu Tolgoi; many people support [any renegotiation], some have doubts, and some others say it’s not good for Mongolia. The government has not seen the report prepared by members of parliament on the issue. We would like to see the report and after that we will take a decision. We are not assessing the issue at the moment, we just didn’t see the report. When it is finished, we will look at it very carefully.

Ivane Matchavariani, finance minister, Georgia

Q: Georgia and Fiji have a thriving tourism industry in common. How are you meeting the sustainability challenge coming from growing inflows of visitors?

A: Fiji and Georgia share one common feature: tourism is a key driver of the economy. In the past several years, Georgia has been benefiting strongly from tourism. In 2018 alone the total number of visitors was twice as much as the country’s population. Tourism visits are posting double-digit growth, and it will continue in that way, but this also brings along challenges. There should be a healthy balance between tourism and environmental sustainability, and how to strike this balance will be one of my main takeaways from the annual meeting of the Asian Development Bank.

Another challenge is the diversification between mass tourism and niche tourism. People come to Georgia for different reasons, and we need a healthy portfolio. Last but not least, [we need to provide a stable environment]. Georgia is a stable country, but still we are in a quite turbulent region. We need to ensure domestic and regional stability, otherwise an element of political instability may ruin the whole industry.

Q: Prime minister Mamuka Bakhtadze recently broke ground on the country’s first electric car production facility. Are you willing to become a hub in the region for new-generation manufacturing?

A: Our number one priority is to diversify the economy. I hope we will become a hub for many things, perhaps even for the production of cars. But we also announced a strong initiative on education. That’s what we believe should be our main focus to avoid the middle-income trap that many countries similar to Georgia are facing. At least 6% of our GDP should be spent on education by 2022, and that should be the main focus. Then electric cars and other things will come naturally.