BE2C2 Report — The Asian Infrastructure Investment Bank (AIIB) announced Thursday its board of governors had approved 13 applications to join the bank, including US’ close-ally Canada, seen as a coup for the Communist giant after Washington discouraged major Western powers from signing up.
The five regional prospective members approved by the bank include Afghanistan, Armenia, Fiji, Hong Kong (AIIB accepted Hong Kong’s application but not Taiwan’s) and Timor Leste.
The eight non-regional members approved include Belgium, Canada, Ethiopia, Hungary, Ireland, Peru, the Republic of Sudan and Venezuela. Canada’s membership approval will extend AIIB’s reach into North America and take its total membership to 70.
This is the first time the bank has welcomed new prospective members since its inception. Founded in January 2015, AIIB is a multilateral financial institution established to bring countries together to finance energy, transport and other infrastructure projects in Asia, and the bank started operations with 57 member countries and $100 billion in capital.
The expansion comes as the United States plans to cut funding for foreign development assistance.
Observers say, given Washington’s retreat, Beijing looks poised to expand its influence in development finance through AIIB.
“I am very proud that AIIB now has members from almost every continent, and we anticipate further applications being considered by our board of governors later this year,” Jin Liqun, president of the AIIB, said in Beijing.
Liqun added that the AIIB, which has developing countries as the majority shareholders, is different from existing international institutions (such as the US-led World Bank and the Japan-led Asian Development Bank), where the rules of the game are decided by developed countries.
The 13 new (prospective) members will officially join the bank once they complete the required domestic processes and deposit their first capital. The shares allocated to them come from an existing pool of unallocated shares — their voting weight will be based on how much money they contribute to the bank capital.
Headquartered in Beijing, AIIB aims to improve economic and social development in Asia by investing in high quality, financially viable and environmentally friendly infrastructure projects. The Asian Development Bank estimates that Asia requires $26 trillion in investment in infrastructure by 2030.
Analysts say a wave of anti-globalization sentiments in the West presents a chance for China to play a bigger role in global trade and finance, but AIIB needs to prove its worth.
Finance professor Zhao Xijun of Renmin University said AIIB’s focus on infrastructure investment is more targeted, which directly benefits countries in need.
“This is China’s chance, as well as everyone’s chance, to play a bigger role to jointly take the lead.”
But Mr Takamoto Suzuki, a senior economist at Marubeni Research Institute in Beijing, said: “There are still many who are wary of AIIB’s commitment to international cooperation. They think that the bank is prioritizing projects that Beijing wants to do.”
Wei Ling, director of Institute of Asian Studies at China Foreign Affairs University said that globalization has suffered setbacks in Europe and the United States. “The world badly needs new driving forces for globalization and regional integration.
“The AIIB can not only improve connectivity, but can speed up regional integration,” Wei added.
The AIIB will focus on three major tasks this year: sustainable infrastructure, cross-country connectivity and mobilization of private capital.
However, Chen Xulong, a researcher with China Institute of International Studies, cautioned that the bank must give due attention to the sustainability and profitability of its projects while meeting the infrastructure needs of developing countries.
Last year, the bank backed nine projects in seven countries, giving out US$1.76 billion (S$2.5 billion) worth of loans.
The bank is also providing investment, loan and equity financing on the $57 billion economic corridor (called CPEC for infrastructure and energy projects). It will connect China with Balochistan’s Gwadar port on the Arabian sea.
The bank has already approved loans for projects in a list of countries including Oman and Azerbaijan.