KEN SAKAMOTO / STAR-BULLETIN
After many contracts with the Asian Development Bank,
Puongpun Sananikone of Pacmar Inc. has got
its system figured out.

Hopping the
ADB gravy train

Red tape and stringent oversight
discourage some Asian Development
Bank contractors

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By Lyn Danninger
Star-Bulletin

THE ASIAN DEVELOPMENT BANK doled out close to $6 billion in loans and about $170 million in technical assistance contracts last year.

With that kind of money up for grabs, hundreds of companies will be vying to secure a piece of the action when this year's ADB board of governors meeting takes place in Honolulu May 9 to 11.

But a product or service that meets ADB needs is just the beginning of a complex process for a company, once a contract is secured, say those who have worked with the organization. For hopeful businesses who hop on the ADB bandwagon, a capacity for paperwork and the ability to live within a set of complex rules and regulations could be the two most important assets.

"They have their own way of doing things, it's quite demanding to report to them and there isn't much flexibility," said Gerald Shea, managing director of The Graduate School, a self-sustaining part of the U.S. Department of Agriculture that focuses on training, technical assistance and skill-development programs.

Last year, the organization won an ADB technical assistance grant worth around $500,000 to teach performance-based budgeting skills in the Federated States of Micronesia, its first contract with the bank. But The Graduate School has long experience providing training assistance to various South Pacific governments, Shea said.

"For almost the last decade, we've had a major agreement to run the technical assistance for financial management there in Guam, American Samoa, the Marshall Islands, Palau and the Northern Marianas," Shea said.

The organization is no stranger to government bureaucracies and has a well-established network of contacts in place. But Shea was surprised about the demands of the ADB contract, which specified in great detail how the company was to operate.

"They tell you how much each person is to be paid, tell you how many person-days you're allowed, how many days of per diem, how many trips per person," he said.

Further, any unforeseen adjustments that need to be made during the contract period, as was the case for Shea when he needed to make some software revisions, must be reviewed and agreed to by ADB. The process can be time-consuming, he said.

Whether Shea's organization will make money on the ADB contract is also not certain.

"It's going to be close," he said. "We're not making as much money as we thought."

The ADB contract is scheduled to wrap up in July but the company has hopes of continuing the program for about another year.

If he were to sign another ADB contract, Shea said he would craft an agreement that would make it easier to live within its strictures.

"I'd be a little wiser before I signed again, so I'd ask for more flexibility and would better know in advance what the demands would be," he said.

Puongpun Sananikone's company, Pacmar Inc. has held dozens of ADB contracts over the years. His familiarity with the organization and an international background helped make his ADB experiences as a contractor a lot smoother than most. Sananikone also speaks six languages, which is a plus when working on a diverse range of projects all over Asia, he said.

But even Sananikone concedes it's not easy working with ADB.

"The upfront business development cost can be high, the bidding process is tedious and it's difficult to write a decent proposal without visiting the country. So for Hawaii firms used to bidding locally, doing it may not be easy," he said.

Sananikone first worked for ADB at its Manila headquarters from 1975 to 1978 as a loan operations officer. His background is in development economics, consulting and engineering.

After working at ADB, he also directed Asian operations for a large U.S. engineering firm for eight years.

To first get registered with ADB is a process in itself, Sananikone said

"Don't forget ADB is a massive bureaucracy in itself with virtually all different member countries represented, so you have a collection of multi-national bureaucrats," he said.

Moreover, Sananikone said, it may not always be lucrative at first to take on an ADB technical assistance contract, as The Graduate School's Shea found out.

In recent years, Sananikone's company has become more focused on what he calls the "private sector window" of ADB, where the bank partners with private groups on investment projects.

"It's aimed to promote private sector investment in order to mobilize private sector resources," he said. "It's more efficient from my perspective."

In such cases, private sector firms can take a project directly to ADB. If it meets ADB requirements, they then participate, sometimes co-financing the project or taking an equity stake, Sananikone said.

In one such project, Sananikone worked as the project development consultant advising the Chinese government on dealing with the ADB on a joint-venture Pearl River Power Plant project in Guandong province.

"That project was successfully completed by the Chinese," he said. "From our perspective, we found it professionally rewarding, especially in terms of experience."

But in spite of some drawbacks with ADB, Sananikone describes the experience as "a good start."

Francois Lisack, an ADB senior consulting services specialist, said it more a matter that new companies often lack the practice and experience in providing adequate information to ADB, rather than that the organization makes things difficult or complicated.

"We do not feel that the rules and regulations relating to technical assistance grants are especially strict or inflexible," he said. "But, again, all competing companies must be very careful not to miss any of the requirements which will, in the end, sort out the best consultant."

Lisack said the ADB will also be presenting a 20-minute video at the upcoming meeting in Honolulu for new companies who intend to do business with ADB.

"It contains many pieces of advice for newcomers," he said.

Moreover, videos directed to consultants, suppliers and contractors will be available for sale at the meeting, he said.

There will be another source of help available at the ADB meeting for companies considering doing business with ADB.

The U.S. Department of Commerce will take an active role to advise firms on doing business with the ADB, said Mike Murphy of the department's export assistance branch.

Department representatives will also take part in the Hawaii Business Forum, an event for local companies to network with representatives from ADB and other countries.

"For our program, we've underlined the good, the bad and the ugly," Murphy said. "We'll have two groups of panelists at the forum plus specialists who can talk one-on-one with anyone who is interested."

Both Shea and Sananikone's experiences with ADB are the kind of information firms contemplating doing with business with the ADB need to hear, Murphy said.

"It's an opportunity, but it has a price tag," Murphy said. "You've got to invest a bit of your time and effort, be willing to do paperwork and do your homework."

ADB members at a glance

When ADB was founded in 1966, 31 nations became charter members. Since then 28 countries have joined from within and outside the Asia-Pacific region.

Countries within the Asian and Pacific region: Afghanistan (1966) Australia (1966) Azerbaijan (1999) Bangladesh (1973) Bhutan (1982) Cambodia (1966) China, People's Republic of (1986) Cook Islands (1976) Fiji Islands (1970) Hong Kong, China (1969) India (1966) Indonesia (1966) Japan (1966) Kazakhstan (1994) Kiribati (1974) Korea, Republic of (1966) Kyrgyz Republic (1994) Lao People's Democratic Republic (1966) Malaysia (1966) Maldives (1978) Marshall Islands, Republic of the (1990) Micronesia, Federated States of (1990) Mongolia (1991) Myanmar (1973) Nauru (1991) Nepal (1966) New Zealand (1966) Pakistan (1966) Papua New Guinea (1971) Philippines (1966) Samoa (1966) Singapore (1966) Solomon Islands (1973) Sri Lanka (1966) Tajikistan (1998) Taipei, China (1966) Thailand (1966) Tonga (1972) Turkmenistan (2000) Tuvalu (1993) Uzbekistan (1995) Vanuatu (1981) Vietnam, Socialist Republic of (1966)

Countries outside the Asian and Pacific region: Austria (1966) Belgium (1966) Canada (1966) Denmark (1966) Finland (1966) France (1970) Germany (1966) Italy (1966) Netherlands (1966) Norway (1966) Spain (1986) Sweden (1966) Switzerland (1967) Turkey (1991) United Kingdom (1966) United States (1966)

Source: Asian Development Bank