ADB chief sees boon for Asia in AIIB collaboration, not competition

By Neil Jerome Morales and Karen Lema

MANILA (Reuters) - The Asian Development Bank wants to collaborate with the Asian Infrastructure Investment Bank (AIIB) to meet the region's growing investment needs and does not see the emerging China-led lender as a rival, the ADB president said on Thursday.

Addressing media on day one of the ADB's annual meeting in Manila, Takehiko Nakao said that although China was an important international lender and borrower, its rise and that of the AIIB would not be motivating factors behind any changes in the ADB's future strategy.

Nakao said the two institutions were different in many ways, which meant they could collaborate more effectively.

"AIIB, it's not the kind of threat to us," he said.

"We can cooperate with AIIB because we need larger investment in Asia and we can collaborate," he said

He said the AIIB had observed "very high standards" in terms of its programmes, and the AIIB and the ADB this year hoped to approve several projects which they would co-finance. He did not elaborate.

The two have so far jointly provided combined loans of more than $700 million for four infrastructure projects, three of them in South Asia.

WARNING ON PROTECTIONISM

Referring to U.S.-China tensions, Nakao said the ADB was concerned about protectionism and trade troubles as Asia would suffer, but there were so far no signs of that.

The ADB has forecast growth of 6.0 percent for developing Asia this year, fuelled by solid export demand, but it has warned that U.S. protectionist measures and subsequent retaliation could undermine trade.

"If trade is interrupted, it will have large damage to Asian countries as well as to other countries in the world. If this continues to escalate, it will have negative impact," Nakao said.

"At this moment it does not have impact on sentiment of people, investors and market players," he said

The May 3-6 meeting comes as the Japanese-led ADB, formed in 1966 to help pull millions of Asians out of poverty, is watching closely as China asserts itself internationally via its vaunted "belt and road" initiative, and pushes regional infrastructure plans with support of its state-owned banks and the AIIB.

Key topics to be discussed are free trade, globalisation, ageing populations, environmental degradation, gender equality, and the trend towards automation.

Nakao said he was optimistic that there were more opportunities in Asia to create jobs rather than lose them to machines and software, and said developments in technology are helping to boost equality among populations.

The ADB estimates developing Asia needs to invest $1.7 trillion per year in infrastructure until 2030 to maintain its growth momentum and the regional lender's targets on poverty and climate change.

Nakao said that along with infrastructure development and poverty reduction, there was a need to introduce social security and universal healthcare to Asian economies, and make progressive tax reforms.

(Writing by Martin Petty; Editing by Richard Borsuk)