China-led development bank aims to swiftly approve loans

Sri Lanka’s return to seeking China’s financial assistance was further highlighted yesterday by Finance Minister Ravi Karunanayake taking part in the opening of the Asian Investment Infrastructure Bank in Beijing by President Xi Jinping, an initiative by China to rival the World Bank, IMF and the ADB.

The AIIB will promote infrastructure related investment and financing for the benefit of all sides, Xi said, keeping Asia’s enormous infrastructure development demand in mind.

China has pledged to put up most of the bank’s US$50 billion (S$71.98 billion) in capital and says the total will eventually be as high as US$100 billion. “AIIB will be a boost to the Asian economy, and become a platform for cooperation that will foster economic integration and inter-regional connectivity”, he said. Thus, it follows China and India, which have 26.06 and 7.5% of the vote respectively.

Statistics from the Asian Development Bank (ADB) show that between 2010 and 2020, around eight trillion USA dollars in investment will be needed in the Asia-Pacific region to improve infrastructure.

The United States and Japan have shunned the AIIB while U.S. allies – including Britain, France and Germany – have signed up as founding members. “It will serve to channel more resources, particularly private investment, into infrastructures projects”, Xi said.

Though China does not have formal veto power and holds less than one-third of the voting shares, it will still have considerable influence because the bank is headquartered in Beijing.

India’s election to the AIIB board of directors is expected to provide a significant role for it, as it is the forum that approves the loans for projects.

Finance Minister Senator Ishaq Dar, who represented Pakistan at the launching ceremony, hoped for more financial support under the new arrangement to develop the country’s infrastructure network.

The New Development Bank (NDB) of the BRICS nations comprising Brazil, Russia, India, China and South Africa which is based in Shanghai was also expected to begin lending later this year. The Secretary attended the inaugural meetings of the Bank as New Zealand’s Governor and addressed the other 56 founding members during the proceedings.

In a closed-door meeting with Jin Liqun, president of the AIIB, Korean Finance Minister Yoo Il-ho made a request for support for the nomination of a Korean vice president, the Finance Ministry said in a press release on Sunday.