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Asian Infrastructure Investment Bank

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The Asian Infrastructure Investment Bank (AIIB) is an international financial institution proposed by China. The purpose of the multilateral development bank is to provide finance to infrastructure projects in the Asia-Pacific region. AIIB is regarded by some as a rival for the IMF[1], the World Bank and the Asian Development Bank (ADB), which the AIIB says are dominated by developed countries like the United States and Japan.[1]

History

The first news reports about the AIIB appeared in October 2013.[2] The Chinese government has been frustrated with what it regards as the slow pace of reforms and governance, and wants greater input in global established institutions like the IMF, World Bank and Asian Development Bank which it claims are dominated by American, European and Japanese interests.[1] The Asian Development Bank Institute published a report in 2010 which said that the region requires $8 trillion to be invested from 2010 to 2020 in infrastructure for the region to continue economic development.[1][3] In a 2014 editorial, The Guardian newspaper wrote that that the new bank could allow Chinese capital to finance these projects and allow it a greater role to play in the economic development of the region commensurate with its growing economic and political clout.[4]

In June 2014 China proposed doubling the registered capital of the bank from $50 billion to $100 billion and invited India to participate in the founding of the bank.[5][6] On October 24, 2014, a signing ceremony held in Beijing, formally recognized the establishment of the bank. 21 countries signed the bill, which included: China, India, Thailand, Malaysia, Singapore, the Philippines, Pakistan, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Laos, Myanmar, Mongolia, Nepal, Oman, Qatar, Sri Lanka, Uzbekistan, and Vietnam.[7] U.S. pressure allegedly kept Australia and South Korea from signing up as founding members, despite the fact that they had formerly expressed an interest in it.[8] Indonesia's joining was slightly delayed due to their new presidential administration not being able to review the membership in time.[9]

Negotiations for the bank’s articles of agreement will follow, and are expected to be completed by the end of 2015.[10][11]

Hong Kong's Financial Secretary John Tsang announced in his budget speech in February 2015 that the territory would join the AIIB.[12]

Member countries

China will stake major shares while other Asian countries like Malaysia, Thailand, India, Sri Lanka and Nepal, have agreed to sign the memorandum of understanding.[13] Bangladesh is going to sign an MoU with China on 24 October 2014.[14]

Founding members

Member countries Date of accession
 Bangladesh 2014
 Brunei 2014
 Cambodia 2014
 China 2014
 India 2014
 Indonesia 2014[9]
 Jordan 2015
 Kazakhstan 2014
 Kuwait 2014
 Laos 2014
 Malaysia 2014
 Maldives 2014[9]
 Mongolia 2014
 Myanmar 2014
   Nepal 2014
 New Zealand 2015
 Oman 2014
 Pakistan 2014
 Philippines 2014
 Qatar 2014
 Saudi Arabia 2015
 Singapore 2014
 Sri Lanka 2014
 Thailand 2014
 Tajikistan 2015
 United Kingdom 2015
 Uzbekistan 2014
 Vietnam 2014

Invited countries

The initial $50 billion was mostly provided by China, but Pakistan, India, Singapore and Vietnam were also signatories. However, There are a total of 27 signatories.[15] Japan, South Korea, Indonesia, and Australia were not in attendance, but China’s Ministry of Finance said "any country that signs and ratifies the articles can still officially become a 'founding' member" though they must first be accepted by the existing members.[10]

Reception

The president of the World Bank, Jim Yong Kim, has said that the need for infrastructure in developing countries is great so that the activities of new organizations would be welcome.[16] The president of ADB, Takehiko Nakao, said that there were "huge infrastructure financing needs" in Asia and said that the establishment of the AIIB is an understandable step. He said that when AIIB is established, ADB will be willing to consider appropriate collaboration and, at the same time, urged that AIIB adopt international best practices in such areas as procurement and social safeguards on lending arrangements.[17]

The United Kingdom has signed up to be a founding member of the bank ahead of a deadline at the end of March 2015[18]

The United States has not signed up. Its officials have expressed concerns about whether the AIIB would have high standards of governance, and whether it would have environmental and social safeguards.[19]

References

  1. ^ a b c d Branigan, Tania (13 March 2015). "Support for China-led development bank grows despite US opposition". http://www.theguardian.com. The Guardian. Retrieved 15 March 2015. {{cite web}}: External link in |website= (help) Cite error: The named reference ":0" was defined multiple times with different content (see the help page).
  2. ^ "An Asian infrastructure bank: Only connect", The Economist, 4 October 2013.
  3. ^ Bhattacharyay, Biswa N. (9 September 2010). "Estimating Demand for Infrastructure in Energy, Transport, Telecommunications, Water and Sanitation in Asia and the Pacific: 2010-2020". ADB. Retrieved 27 October 2010.
  4. ^ "The Guardian view on the Asian Infrastructure Bank: the US should work with it, not oppose it: It's no surprise that China is promoting a solution to the shortage of infrastructure capital in Asia". The Guardian. 27 October 2014.
  5. ^ Jamil Anderlini, "China expands plans for World Bank rival", The Financial Times, June 24, 2014.
  6. ^ Atul Aneja, "China invites India to join Asian Infrastructure Investment Bank", The Hindu, June 30, 2014.
  7. ^ "China, 20 other countries initiate new Asian bank", Mail Online, 24 October 2014.
  8. ^ "China launches AIIB in Asia to counter World bank","Affairscloud" , 24 October 2014.
  9. ^ a b c "Indonesia becomes 22nd founding member of AIIB". Xinhuanet.com. 27 November 2014. Retrieved 28 November 2014. Cite error: The named reference "indonesia_membership" was defined multiple times with different content (see the help page).
  10. ^ a b Murray, Lisa (27 October 2014). "China leaves door open for Australian turnaround on Asia bank". The Australian Financial Review.
  11. ^ "Three major nations absent as China launches W.Bank rival in Asia". Reuters. 27 October 2014. Retrieved 27 October 2014.
  12. ^ http://www.budget.gov.hk/2015/eng/budget17.html
  13. ^ Golam Moin Uddin, "BD going to be founding member of Asian Infrastructure Investment Bank in the offing", UNB, 19 October 2014.
  14. ^ Abdur Rahim Harmachi, "Bangladesh more interested in AIIB", bdnews24.com, 15 October 2014.
  15. ^ http://news.yahoo.com/china-21-other-countries-initiate-asian-bank-025611214.html
  16. ^ "World Bank welcomes China-led infrastructure bank", Reuters, July 8, 2014.
  17. ^ "Statement by Asian Development Bank President Takehiko Nakao", 24 October 2014.
  18. ^ "U.K. to Join China-Backed Development Bank".
  19. ^ Nicholas Watt, Paul Lewis and Tania Branigan (2015-03-15). "US anger at Britain joining Chinese-led investment bank AIIB". The Guardian.
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