[OPINION] To ADB: Make private corporate sector a follower, not leader, in people’s development

Ellenor Joyce Bartolome

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[OPINION] To ADB: Make private corporate sector a follower, not leader, in people’s development
'It is high time for the ADB to re-vision its concept of economic development and overhaul its program of all-out reliance on privatization as a solution to many social and economic problems'

In May 2023, the Freedom from Debt Coalition (FDC) attended the 56th Annual General Meeting of the Asian Development Bank (ADB) held in Incheon, South Korea. The FDC welcomed the efforts of the ADB organizers to open the meeting to a host of civil society organizations (CSOs). After all, the theme of the ADB’s meeting Rebounding Asia: Recover, Reconnect, and Reform – requires a whole-of-society development approach, one that involves all social sectors such as the trade unions, micro-small-medium businesses, farmers’ organizations, private corporations, and so on.  

We also welcome the efforts of the ADB’s social department to include the updating of the Social Policy Safeguards (SPS) of the Bank as a major item in the Incheon meeting. The NGO Forum on ADB, an Asia-wide network of CSOs, has been engaging the ADB on how the Bank and its partner governments and private builders can put people’s lives and interests’ priority considerations in the design and implementation of development projects such as roads, bridges, dams, and so on. 

As our FDC President, Dr. Rene E. Ofreneo, put it: the Bank should go beyond making rhetorical statements on the importance of labor, environmental, and social safeguards in the implementation of any Bank-supported project. There should be concrete policy guidelines in place such as having full, frank, and sustained consultation with the host communities affected by any project. The Philippines is replete with documented stories on how social safeguards were ignored by ADB-JICA-World-Bank-supported big dam builders as they wiped out whole villages and uprooted the indigenous peoples from their ancestral lands in pushing roughshod for their “approved” projects.

Another issue raised by the FDC is the failure of the ADB to align its lending operations fully or completely with the UN Framework on Sustainable Development Goals (SDGs) and the Paris Agreement on Climate Change (Paris Agreement), both of which were adopted by the Bank as its guide in the formulation of its Vision 2030. Accordingly, the “ADB’s vision is to achieve a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.” 

An example of the absence or lack of alignment in the visioning-implementation process was the failure of the ADB to stop the funding of the GHG-emitting power plants after it embraced the Paris Agreement, which the UN Member States adopted in 2015 as part of the UN’s campaign to stop global warming. And yet, in 2016-2020, the Bank was involved in the building of a number of big coal-fueled plants across Asia. In 2021, it declared an end to coal funding, only to shift its focus on the development of gas-fired power plants, which are equally damaging to the Planet in terms of GHG emissions. This is why the NGO Forum is asking: is the ADB’s “energy transition” program simply a transition from one GHG-emitting program to another?

Now that another ADB-led Asia Clean Energy Forum (ACEF) took place from June 13-16 here in the Philippines, another problem in their visioning-implementation process has been raised by FDC: the corporate-led transition in the energy sector is clearly a false solution amidst calls to stop support on fossil fuels and end the support for unsustainable carbon and resource-intensive energy projects. The Bank’s obsession not only to rely on the big private infra builders to finance and implement the various ADB-supported projects but also to allow the big corporate sector to take the leadership in the formulation, designing, planning, financing, and implementation of the various ADB projects. In fact, more and more “unsolicited proposals” advanced by the local business conglomerates and their foreign partners are being accepted by the Bank and their Asian government partners in the name of “public-private partnership (PPP).”

Through the decades, “development finance,” as propounded by the ADB, World Bank, and other international financial institutions (IFIs), has been reduced to a program of more and more reliance on private financing and implementation. Thus, not surprisingly, in the Incheon ADB meeting and in the World Bank’s spring meeting 2023, the focus of development finance is the all-out privatization of almost everything. The government and the broad citizenry have been transformed into passive witnesses in economic development that is now managed and controlled by the big private corporate sector.

The social downsides of extreme reliance on privatization are unmistakably huge. A classic example is the privatization of the Philippine power sector in 2001 based on the study and advice of the ADB and World Bank. The Electric Power Industry Reform Act (EPIRA) was enacted based on the promises of the authors that the “unbundling” of the sector and the “privatization” of the transmission, generation, distribution, and “spot marketing” of the sector would deliver cheaper, efficient, and sustainable power supply to the benefit of the citizenry, MSMEs, and the entire business community. Now, two decades after the enactment of EPIRA, the Philippines holds the distinction of having the most expensive electricity in Asia (in some years second to Japan), not to mention the unreliability of electric supply (which nearly damaged the operations of the NAIA this year) and failure of EPIRA to finish the electrification of the country (with many islands and remote provinces still relying on expensive diesel-run plants). 

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The major gainers in the EPIRA privatization program are the big private companies which are able to secure monopolies in the management of power transmission, generation, distribution, and “spot marketing” of the whole electricity system of the country. The high cost of power is the number one reason why the Philippines is unable to attract domestic and foreign investors in its stagnant manufacturing sector (note Vietnam’s power cost is at least 40% lower). Incidentally, the EPIRA privatization solution was simply a continuation of the terrible “privatization” solution launched by the government in the 1990s – the all-out reliance on a constellation of private “independent power producers” (IPPs), which were promised guaranteed returns and payments to the power that they generated then, whether used or not.  

To sum up, what the FDC is saying: economic development requires a whole-of-society approach, one that relies on the all-out support of the different sectors in the promotion and implementation of programs and projects based primarily on the advancement of people’s welfare. Yes, private businesses, including the big corporate actors, can participate in these projects. But they should not lead nor dominate in the crafting and implementation of economic programs and projects. The big corporate sector should be a follower, not a leader, in economic development, which entails the involvement of all social sectors.

It is high time for the ADB to re-vision its concept of economic development and overhaul its program of all-out reliance on privatization as a solution to many social and economic problems bedeviling its Asian government partners. People First! –

Ellenor Joyce Bartolome is Program Officer of the Freedom from Debt Coalition.

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