Brunei sign on to Asian Infrastructure Investment Bank
BRUNEI has signed on to a Chinese-backed initiative to create a $100 billion development bank to finance regional infrastructure projects, potentially rivalling the influence of established lenders such as the World Bank.
Twenty-one nations endorsed the creation of the Asian Infrastructure Investment Bank (AIIB) in Beijing on Friday during the Asia-Pacific Economic Cooperation Summit (APEC).
The memorandum of understanding signed by delegates authorised capital of up to $100 billion — with half coming from China and the rest from private lenders - and aims to establish the bank in Beijing by the end of 2015.
The World Bank estimates that USD $8 trillion in spending is required over the next 10 years to keep Asian economies growing. Only a tiny portion of that can be provided by the World Bank and Asian Development Bank (ADB), which have capital of $220 billion and $175 billion respectively.
Members of the new AIIB span a wide spectrum of development, ranging from economic powerhouses such as China and India, to smaller dynamic economies including Singapore, Vietnam and the Philippines.
Others taking part are Uzbekistan, Thailand, Sri Lanka, Qatar, Oman, Pakistan, Nepal, Bangla-desh, Brunei, Kazakhstan, Kuwait, Malaysia, Myanmar, Cambodia and Laos.
Notably absent from the AIIB are key Asia-Pacific nations - Japan, Korea, Australia and Indonesia - although they may enter at a later date if the venture proves a success.
Analysts claim the United States pressured allies Australia and Korea to keep out of AIIB, in a bid to counter China's rising soft power in Asia.
Washington has urged that any new financial institution meet international standards of good governance and transparency, but analysts say it sees AIIB as a challenge to the World Bank and Asian Development Bank (ADB), both multilateral lenders which count the US and its allies as their biggest financial backers.
China has limited influence and voting rights in these existing banks despite being the world's second-largest economy.
ADB President, Takehiko Nakao, said he doesn't welcome a rival which has a virtually identical aim.
“I understand it, but I don't welcome it,” he said ahead of the MoU signing.
The Manila-based ADB is owned by its 67 members with China owning roughly six per cent, while the United States and Japan have about 15.6 per cent each. It offers below-market interest rates on loans to lower to middle-income countries.
During the signing ceremony, Chinese President Xi Jinping assured participants that AIIB would complement existing institutions and follow international standards set by both ADB and the World Bank.
“In China we have a folk saying. If you would like to get rich, build roads first, and I believe that is a very vivid description of the very importance of infrastructure to economic development,” he said.
The Brunei Times