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1.1. The Asian Development Bank and development law

The Asian Development Bank (`the Bank'), a development finance institution owned by more than 50 countries, promotes the economic and social progress of developing countries in Asia and the Pacific. Since the late 1980s the Bank has increasingly changed its focus from support for physical infrastructure projects to supporting the development of an appropriate social, economic and legal framework in its developing member countries (DMCs).

The Bank explains its changing development objectives as follows[1]http://www.asiandevbank.org/law/law&devt/role.htm]:
The Bank's traditional role in the first twenty years of its operations was that of a project financing institution. Its forte was financing physical infrastructure projects. Over time, however, the realization has grown that for projects to be successful, they must be implemented and operated within a proper institutional setting. Sustainable development cannot be achieved by addressing only a country's physical infrastructure needs; it is necessary that the physical infrastructure (the "hardware") is complemented by a social and economic infrastructure (the "software") that will ensure the "hardware" is put to proper use. In addition, the needs for physical infrastructure in the Asia-Pacific region are so large that official development assistance alone cannot possibly meet such needs. Private investment and commercial lending must be attracted to bridge the gap. Private investors and commercial lenders, however, will not come to a country unless it can offer an attractive investment and lending climate, an important component of which is an effective and protective legal and regulatory framework.
In light of these realizations, since the late 1980s the Bank has increasingly supported the development of an appropriate social, economic and legal framework in its developing member countries (DMCs) to accompany more traditional loan and investment projects. The Bank has various instruments to assist its DMCs in developing a proper policy, legal and regulatory environment. ...
The Bank's emphasis on `governance and the law' is explained as follows:
The Bank's increasing attention to the policy and institutional environment in which economic activity takes place is, in particular, reflected in its Board policy paper on Governance: Sound Development Management[2]. The paper identifies "predictability" as an element of governance and specifies the following two areas of action which Bank operations should, in this respect, focus on: a. law and development; and b. the legal framework for private sector development[3]

The paper acknowledges that "[a] legal environment conducive to development is essential for all DMCs". It states that the legal environment should "... cover the traditional concept of rule of law... as well as law reform for economic development", and that it "would also imply effective and efficient administration of law"[4]. The paper also recognizes that "[p]romoting development of the private sector in general, and that of the financial sector and securities market in particular, requires an especially strong legal underpinning"[5].

There is also a new impetus for law and development from DMCs themselves:

These changing development objectives of the Bank reflect the development process unfolding in the Bank's DMCs, especially in the context of the new transition economies and economic liberalization in the non- transition economies, where the relevance of law to the development process is particularly pronounced.
This process has led not only to a flurry of legislation in some DMCs, particularly those which are in transition from a state-controlled to a market economy, but also to a demand-led growth for legal technical assistance in the form of specific requests to the Bank and other donors. Thus, for example, at the 27th Annual Meeting of the Board of Governors of the Bank in 1994, the Governor for Cambodia stated that, "We want a market economy, but we need to put laws in place. Without laws, we will have just a jungle economy....The international donor community should help us, advise us, push us to establish a transparent and enforceable legal system."
In addition to the particular law and development needs of transition economies, Bank DMCs which are liberalizing and moving towards a market economy need to meet the demand for greater efficiency of judicial systems, and to meet criticism of the manner in which state enterprises have been privatized and infrastructure projects awarded to the private sector through the development of transparent legal and regulatory mechanisms.

A detailed explanation of the Bank's approach to these matters is contained in Law And Development at the Asian Development Bank [6]http://www.asiandevbank.org/law/law&devt/law-adb.html].

These changes in the Bank's perceptions of its role, and the DMCs' perceptions of their needs from the Bank, particularly in the facilitation of the development of new laws to assist in the development of (and in some cases, transition to) a marked economy, and in the support of sound governance through legal reforms, are the context in which Project DIAL takes place and is to be understood. [1] This quotation and those following are taken from Law And Development at the Asian Development Bank - `The Bank's Role' on the Bank's web site at

[2] Asian Development Bank Governance: Sound Development Management (R151-95), approved 3 October 1995.

[3] Ibid, paragraph 52.

[4] Ibid, paragraph 80.

[5] .Ibid, paragraph 84.

[6] Available on the Bank's web site at

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