July 15 (Bloomberg) -- From his office window overlooking Manila's skyline, Haruhiko Kuroda has a superb view of the gleaming skyscrapers and bustling shopping malls, all signs of the Philippines' 5 percent-plus growth rate.

Kuroda, 60, president of the Asian Development Bank, also can see sprawling tenement villages reminding him that a third of this nation's 86 million people live on less than 60 U.S. cents a day. The Philippines is hardly unique in Asia.

``It's important to remember that Asia has two faces -- the one that is growing rapidly and the one that isn't feeling the growth,'' Kuroda told me on July 13.

It's a point that many investors in New York, London or Tokyo pouring capital into Asia forget. Poverty doesn't figure readily into bond yields or stock valuations. It's not the first thing currency traders think about when placing bets. Nor do the world's most powerful central banks ponder the issue seriously.

Yet Kuroda offers statistics that investors ignore at their own peril: 700 million Asians, more than the population of sub- Saharan Africa, live on less than $1 a day. While Asia has made great strides since its 1997 financial crisis, 1.9 billion of its people still live on less than $2 a day.

Latest Frontier

What does all this mean for debt yields and stock values? Plenty. This region is the latest frontier for capitalism, and multinational companies are depending on its growing cities, swelling populations and emerging middle-class consumer sectors to pump up profits. Investors are making similar assumptions.

The trouble is, Asia will only be as strong as its weakest links. If poverty holds back developing economies, the biggest and wealthiest ones also will be held back in the long run.

Many Asian governments are cash-strapped and shackled by debt, leaving less to spend on education, health care and other social services. While $2 a day may put some food on the table, it doesn't go much further. That means large portions of Asia's future workforces aren't being adequately trained to compete in the age of globalization.

All of which gets us back to Kuroda's ``two faces'' view of Asia. ``On the one hand, Asia is growing very fast, and the growth is widely shared,'' he said. ``Asia's economies are integrating and that will bring about faster poverty reduction. And this is the bright side of Asia. On the other hand, there are so many poor people.''

Asian Focus

Kuroda chuckled when asked whether Bob Geldof and anti- poverty activists like him should focus more in Asia. After thinking it over, he said Africa, where starvation is a far bigger risk than in Asia, ``was naturally the focus'' of the recent Group of Eight meeting and ``Live 8'' concerts. ``But I still think the international community should continue to put more focus and support on Asia.''

It's not just poverty that threatens Asia's outlook, but HIV/AIDS, too. Sub-Saharan Africa is the epicenter of the crisis, yet Asia is seen as the future one. That should be a big concern for investors, given that this region is far more connected to the global economy than Africa.

Kuroda is ``reasonably sure'' the number of Asians living in extreme poverty can be cut by more than half by 2015. Yet that would still leave Asia with more than 300 million impoverished people, straining national budgets and boosting debt yields.

Regional Pride

Asia is booming at the moment and there's an unmistakable sense of dynamism and pride flowing through the region. It's a window of opportunity for leaders to shore up economies and for industrialized nations to help accelerate Asia's development, whether it's with increased aid, debt relief or technical assistance.

It's a good time to have someone like Kuroda, who joined the ADB in February, on the case. A former vice minister of finance in Japan, he is raising the stature of an organization at the core of efforts to improve Asian living standards.

Among Kuroda's priorities is putting the risks of poverty squarely on investors' radar screens. The idea is to nudge governments to make sure economic growth reaches the poor.

If investors, business executives and credit-rating companies voice concerns about poverty, officials in Beijing, Jakarta, Manila, New Delhi and elsewhere will find it harder to ignore the poor. All this may pressure leaders to stamp out the corruption and inefficiencies that squander growth.

There's a tendency in Asia to mask problems with headline growth rates. From Seoul to New Delhi to Beijing and here in Manila, governments use them as advertising and as a diversion. It gets investors' attention and helps paper over economic cracks, such as high poverty rates.

With lots of hard work and prodding by people like Kuroda, Asia can overcome the biggest risk to its prospects. It just needs to get moving fast, or suffer the consequences 10 years from now.

``Governments in this region,'' Kuroda said ``need to work on this, but the world needs to play a role, too.'' Who knows, maybe even Geldof and his rock star friends.

To contact the writer of this column: William Pesek Jr. in Manila, or through the Tokyo newsroom at wpesek@bloomberg.net, and.

Last Updated: July 14, 2005 17:03 EDT