Do the initial scepticism about AIIB hold true now as well? How has been its performance so far?
Asian infrastructure investment Bank (AIIB) is a multilateral development bank (MDB) established in January 2016 headquartered in Beijing. The AIIB has an authorized capital of $100 billion earmarked to address Asia-Pacific’s acute infrastructural needs.
The vision of AIIB is “to improve economic and social development in Asia by investing in high quality, financially viable and environmentally friendly infrastructure projects”.
A study by the Asian Development Bank (ADB) in 2017 estimates that the Asia-Pacific region’s infrastructural need around $22.5 trillion over 15 years or about $1.5 trillion annually. AIIB can act as a catalyst of growth by assisting the nations of Asia pacific to augment their investments in the infrastructure.
Performance of AIIB:
- Augmenting Indian infrastructure development: Even though India is the second largest shareholder in AIIB. India was the highest loan recipient in 2017.
- AIIB has financed several projects in countries of central and Southern Asia.
- Commitment to the motto of lean, clean and green: AIIB emphasis on rules-based style of governance, transparency in procurement and other policies, and environmental and social safeguards.
- Complementary rather than competitive: AIIB is open to work with other multilateral development banks like World Bank, Asian Development bank etc.
- AIIB was announced at the same time of Chinese announcement about one belt one road initiative (OBOR). This created scepticism that AIIB is an instrument to fund China’s OBOR.
- China’s Economic Imperialism: China being largest donor also has a virtual veto with the decisions of the bank.
But its functioning has allied these scepticisms:
- AIIB is a true multilateral institution with representations from countries with diverse political ideologies like India, Indonesia, and Australia together with many African and European countries as members.
- AIIB has funded many projects which has no link with OBOR. Also India which is openly opposing OBOR was a largest loan recipient in 2017.
21st century is referred as Asian century. To realise this there is a need of large investment in the region. AIIB can play a constructive role in this regard. It is still in its nascent stage just two years from its inception. Therefore its too early to comment authoritatively on its functioning.
Do the initial scepticism about AIIB hold true now as well? How has been its performance so far? [Mint]
Published: March 5, 2018 | Modified:June 27, 2019