The founding members of the Asian Infrastructure Investment Bank (AIIB) have been finalised: the focus moves now to making it happen.
Business impact
- There is no doubting the huge infrastructure gap in Asia (estimates have put Asia’s overall infrastructure investment needs at US$8trn between 2010 and 20201), particularly in South and South East Asia, and the critical role of infrastructure investment in supporting sustainable economic development in the region.
- Outside of the political sphere, stakeholders in infrastructure development in Asia are keen to understand the role that the AIIB will play and the impact that it might have in helping to boost infrastructure investment in the region.
- However, additional funding is not all that is required to plug the infrastructure gap. In order to mobilise the private sector capital (debt and equity) that is available to invest, the AIIB’s mandate will hopefully extend to both supporting the work already in progress by institutions like the ADB to assist the public sector in establishing a pipeline of well-structured, bankable projects and the funding of those social infrastructure projects that struggle to attract private investment.
On 15 April 2015, China’s Finance Ministry revealed that 57 countries will comprise the founding members of the China-led AIIB (the full list is set out in appendix 12). This briefing considers the purpose, structure and target investments for the AIIB, and the impact that the AIIB might have on investment in infrastructure across Asia.
Purpose of the AIIB
The central mandate of the AIIB, according to the Minister of Finance, Lou Jiwei (Mr Lou), is to support investment in infrastructure and other manufacturing industries in Asia in order to promote economic development and regional co-operation across the region. If conditions permit, the AIIB may also explore investments in non-regional projects.3 The AIIB’s mandate does not currently appear to include poverty reduction, which differentiates it from other multilaterals such as the Asian Development Bank (ADB) and the International Finance Corporation (IFC).
From a Chinese perspective, it has also been suggested that the wider aims of the AIIB are to enhance the integration of China with neighbouring countries and to fast-track the openness of China’s capital account and the internationalisation of RMB.
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