What Is the Asian Development Bank (ADB)? Purpose & Role

On 23 April 2026, the Asian Development Bank (ADB) announced loan and grant commitments totalling US$9 billion (RM35.7 billion) to Southeast Asia for 2025. The top three recipients: the Philippines (US$6.81 billion), Indonesia (US$4.39 billion), Vietnam (US$1.96 billion). Malaysia? Just US$60.9 million - the smallest among the Southeast Asian nations involved.

These figures raise a lot of questions. What exactly is the ADB? Who owns it? Why does it commit billions of dollars without a clear commercial return? And why does Malaysia, as a founding member of the ADB since 1966, receive so little compared to its SEA neighbours?

This article answers all those questions, while also explaining the ADB''s relevance to Bursa Malaysia investors who pay attention to regional macroeconomic policy.

Quick Answer

The Asian Development Bank (ADB) is a multilateral development bank established on 19 December 1966 to reduce poverty and promote inclusive economic growth across the Asia-Pacific region. The ADB is owned by 69 member countries (49 from the Asia-Pacific region, 20 from outside the region such as the US and Europe), with Japan and the United States holding 15.6% each as the largest shareholders. Its headquarters are in Manila, Philippines, and it is currently led by Masato Kanda since 24 February 2025. The ADB funds projects in six main areas: education, environment/climate, finance sector, infrastructure, regional cooperation, and the private sector.

What Is the Asian Development Bank?

The ADB is an international financial institution modelled directly on the World Bank, but focused specifically on the needs of the Asia-Pacific. It provides loans, technical assistance, and grants to governments and the private sector across developing countries in the region.

Unlike commercial banks that lend for profit, the ADB functions as a multilateral development bank (MDB) - its primary goal is development, not maximum financial return. Loans are offered at lower interest rates than the market, with longer repayment periods.

Key facts about the ADB:

Established: 19 December 1966
Headquarters: Manila, Philippines
Members: 69 countries (49 regional + 20 non-regional)
Base capital: ~US$160 billion
Current president: Masato Kanda (Japan)
Tradition: ADB presidents have always been Japanese nationals

Who Owns & Manages the ADB?

The ADB uses a weighted voting system - similar to the World Bank. Votes are distributed in proportion to capital subscriptions, so the largest shareholders have the greatest influence over strategic decisions.

Largest shareholders:

Japan: 15.6% (15.6% voting power)
United States: 15.6% (15.6% voting power)
China, India, Australia, Indonesia: other major holders with smaller percentages

This is why the ADB president has always been a Japanese national - an unofficial tradition that has persisted since founding because Japan was the founder and largest capital contributor.

Current president: Masato Kanda took office on 24 February 2025. Previously, he was Japan''s top currency diplomat, well-known for leading major yen-buying interventions in 2022 and 2024. On 22 April 2026, Kanda announced his bid for a second term, which still requires endorsement from the ADB Board of Governors.

Main Purpose of the ADB

The ADB''s official mission is to eradicate poverty and promote a prosperous, inclusive, resilient, and sustainable Asia-Pacific. It focuses on six main areas:

Education - schools, skills training, student access
Environment, climate change & disaster risk management - renewable energy, disaster preparedness
Finance sector development - financial inclusion, capital market modernisation
Infrastructure - roads, bridges, electricity grids, water, telecommunications
Regional cooperation and integration - cross-border trade and transport
Private sector lending - financing for companies undertaking development projects

In the annual address, President Masato Kanda stated that the ADB supports the people of Southeast Asia through "programmes to ensure adequate and nutritious food, expand access to education and healthcare, and improve daily life through essential infrastructure and services."

ADB in Southeast Asia: US$9 Billion Commitment (2025)

Southeast Asia was the second-largest recipient of ADB assistance in 2025, representing 31% of total commitments. South Asia remained the largest recipient with US$9.7 billion (33%).

Breakdown of ADB commitments to Southeast Asia for 2025:

Country	Commitment	SEA Share
Philippines	US$6.81 billion	75.7%
Indonesia	US$4.39 billion	48.8% (overlap, gross figure)
Vietnam	US$1.96 billion	21.8%
Malaysia	US$60.9 million	0.7%

*Note: Individual country totals can exceed US$9B due to overlap in regional projects.*

Of the US$9 billion, US$7.3 billion went to the public sector and US$1.6 billion to the private sector. Beyond disaster recovery, the 2025 ADB focus areas were renewable energy, disaster preparedness, sustainable food systems, and the low-carbon economy.

How Much Did Malaysia Get? Why Just US$60.9 Million?

For many Malaysians reading the news, US$60.9 million looks tiny compared to the Philippines (US$6.81 billion) or Indonesia (US$4.39 billion). What''s the reason?

The answer lies in Malaysia''s economic classification within the ADB framework:

1. Malaysia is no longer a low-income country

The ADB prioritises countries that depend more heavily on development assistance. Malaysia is now classified as an upper-middle-income country by World Bank metrics, so the need for concessional ADB lending is lower compared to the Philippines, Vietnam, or Indonesia.

2. Malaysia has access to its own capital markets

Unlike some other SEA countries, Malaysia has mature sukuk and bond markets. The Malaysian government and corporations can raise funds via Bursa, Bank Negara Malaysia, and international capital markets without depending heavily on MDBs like the ADB.

3. ADB''s focus in Malaysia is targeted strategic investment

Of the US$60.9 million Malaysia received in 2025, US$60.3 million was a loan to Jingxing Holdings Malaysia Sdn Bhd - a paper supplier using the funds to expand its waste paper recycling capacity and packaging paper production in Selangor. This shows the ADB''s focus in Malaysia is now more on private sector initiatives related to the circular economy and environmental sustainability, rather than large-scale government infrastructure projects.

4. The "graduated" partnership approach

For countries like Malaysia, the ADB operates more as a knowledge partner and strategic investor. This relationship is called a "graduated partnership" - where the bank supports specific initiatives (especially environment and sustainability) rather than financing a major share of the country''s development spending.

Aerial view of an Asia-Pacific tropical metropolis at dusk — Asia-Pacific is the ADB''s working region - from the Philippines to Vietnam, the bank coordinates financing for over 240 development projects each year across the region.

History of Malaysia & the ADB: Founding Member Since 1966

Malaysia is a founding member of the ADB dating back to its establishment in 1966. In the early ADB era (1967-1972), ADB lending was concentrated in five main recipient countries: Indonesia, Thailand, Malaysia, South Korea, and the Philippines - which collectively received 78.48% of total ADB loans.

In that era, Malaysia was a developing economy that needed capital for:

Roads and bridges construction
Agricultural irrigation systems
Schools and health clinics
Modernisation of ports and airports

After Malaysia achieved upper-middle-income status in the early 2000s, the ADB''s role shifted from major lender to strategic partner for specific initiatives - especially in environment, sustainability, and private sector development.

ADB vs World Bank vs AIIB: What''s Different?

Investors often confuse the three major multilateral development banks active in Asia. Here''s a comparison:

Aspect	World Bank	ADB	AIIB
Established	1944	1966	2016
Capital	~US$223 billion	~US$160 billion	~US$100 billion
Members	189	69	105+
Leadership	US-led (always US president)	Japan-led (always Japanese president)	China-led
Largest shareholders	US (~15%)	Japan + US (15.6% each)	China (26.6%)
Geographic scope	Global	Asia-Pacific	Asia (mostly infrastructure)
Main focus	Poverty + comprehensive development	Inclusive Asia-Pacific development	Physical infrastructure
Headquarters	Washington DC	Manila	Beijing

What''s the strength of each?

World Bank: Global access, most mature policies, strictest ESG standards
ADB: Deep Asia market understanding, broad network in SEA + South Asia
AIIB: Faster lending process, sharp focus on infrastructure, "lean & clean" approach

More than half of AIIB''s approved projects are co-financed with the World Bank, the ADB, and other institutions - so all three often share roles in major projects.

What Are the Implications for Bursa Malaysia Investors?

While the ADB doesn''t directly affect daily share prices, it does have impacts at several levels relevant to investors:

1. Regional economic stability

When the ADB commits US$9 billion to SEA, it helps Malaysia''s neighbours (Indonesia, Philippines, Vietnam) finance infrastructure, environment, and disaster resilience. This supports regional economic growth, which ultimately benefits Malaysian exports, tourism, and cross-border supply chains.

2. Provision of billions to the MYR sukuk market

The ADB was the first foreign issuer of MYR bonds - making the Malaysian ringgit an international currency for development lending. When the ADB issues bonds/sukuk in ringgit, it adds depth to Malaysia''s capital market and provides an investment alternative for local institutions like pension funds and insurers.

3. Private sector financing that lifts certain companies

ADB loans to companies like Jingxing Holdings show ADB''s interest in circular economy and sustainability. Investors can monitor Bursa companies active in recycling, renewable energy, and water management as potential future ADB beneficiaries.

4. ESG standards that strengthen governance

The ADB requires strict ESG compliance for all its lending projects. Malaysian companies receiving ADB loans ultimately raise their internal governance standards - a positive factor for long-term valuation. This connects to the broader theme of how governance issues affect credit ratings tracked by institutions like Moody''s.

5. The 2026-2028 work programme

The ADB has announced its 2026-2028 work programme with total commitments of US$98.6 billion - US$78.7 billion for sovereign operations (government lending) and US$19.9 billion for non-sovereign operations (private sector). Around 240 projects per year, larger than recent years. Investors monitoring Malaysian infrastructure companies should watch for these expanding ADB financing opportunities.

ADB 2026-2028: Capacity Expansion

The ADB announcement also touched on important structural changes effective March 2026:

Additional staff and technical assistance to expand financing capacity
Removal of lending limits on ordinary operations - enabling the ADB to fund larger projects
Expansion of private sector operations from 20% to 27% of total commitments
Capital framework reform - enhancing ADB''s ability to leverage existing capital

For investors, this means the ADB can now be more aggressive in financing - especially for major projects in renewable energy, transit infrastructure, and climate initiatives. For Malaysian companies interested in MDB-type financing (large scale, low cost, long term), the window of opportunity is widening.

FAQ: Frequently Asked Questions on the Asian Development Bank

1. What''s the difference between the ADB and Bank Pembangunan Malaysia (BPM)?

The ADB is a multilateral development bank owned by 69 countries with an Asia-Pacific regional mission. Bank Pembangunan Malaysia (BPM) is a domestic development bank owned by the Malaysian government, focused on financing SMEs and local industry. The ADB is in Manila; BPM is in Kuala Lumpur.

2. Does Malaysia have to repay ADB loans?

Yes. ADB loans are not grants (except for those specifically classified as "grants"). They must be repaid with interest, although the rates and terms are typically more generous than commercial loans.

3. Can individuals or companies apply for ADB loans?

Sovereign ADB loans are only for member country governments. Non-sovereign loans can be granted to private sector companies (like Jingxing Holdings receiving US$60.3 million), but through a strict project evaluation process. Individuals cannot apply directly.

4. Does the ADB issue shares that retail investors can buy?

No. The ADB is not a listed company - it is a multilateral institution owned by member countries. ADB capital comes from country capital subscriptions (paid by member governments), not from retail investors. However, the ADB does issue bonds and sukuk that institutional investors can purchase.

5. Why is the ADB president always Japanese?

This tradition began at the ADB''s founding in 1966 because Japan was the largest capital contributor and primary sponsor of the institution. The tradition is unofficial - there is no legal requirement - but every Japanese candidate must still secure majority votes from the Board of Governors.

6. What negative impacts are associated with the ADB?

Critics argue that the ADB has at times financed projects that harm local communities (forced relocations for dams, environmental costs, etc.). The ADB has tightened its ESG standards in response, but specific project controversies still arise. ESG-conscious investors should be aware of this dynamic.

7. Does the ADB finance China''s Belt & Road projects?

The ADB operates separately from China''s Belt & Road Initiative (BRI). However, the ADB often co-finances specific infrastructure projects with the AIIB (China-led) in Asia. This is why China remains an ADB member despite leading the AIIB.

8. How often does the ADB lend to Malaysia each year?

Currently, Malaysia receives a few million to tens of millions of dollars per year, mostly for environment and specific private sector projects. Since Malaysia rose to upper-middle-income status, the volume of ADB lending to Malaysia is relatively small - but the strategic value of cooperation (knowledge, standards, networks) remains significant.

Conclusion

The Asian Development Bank is an institution often mentioned but rarely fully understood. As a multilateral development bank owned by 69 countries with ~US$160 billion in capital, the ADB plays an important role in financing Asia-Pacific development - especially for countries that depend more on development assistance like the Philippines, Indonesia, and Vietnam.

For Malaysia, the relationship with the ADB has evolved from major loan recipient (1960s-1990s) to strategic partner for specific initiatives - particularly in environment, sustainability, and private sector financing. The US$60.9 million in 2025 reflects Malaysia''s status as an upper-middle-income economy that no longer needs basic assistance, but still benefits from focused cooperation.

For Bursa Malaysia investors, understanding the ADB is important for macroeconomic context - whether you''re analysing regional prospects, MYR sukuk opportunities, or Malaysian companies active in sustainability and circular economy themes.

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What Is the Asian Development Bank (ADB)? Purpose, History & Role in Malaysia