Do the initial scepticism about AIIB hold true now as well? How has been its performance so far?

Published: March 5, 2018

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.

Initial Scepticisms:

  • 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.

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