|Lou Jiwei confirms moves afoot to set up regional infrastructure funding bank
China has begun preparations to establish an Asian infrastructure investment bank that would offer financial support to boost regional infrastructure, Finance Minister Lou Jiwei (Pictured) said today in Beijing.
“China has just established the working group for the AIIB preparation in a bid to accelerate the process," said Lou in an exclusive interview with Xinhua.
With initial capital of US$50 billion, the new multilateral institution is expected to be funded by its members.
According to Lou, the first multilateral consultation meeting on the bank ended on January 24. Some participating countries declared their intention of being founding members. Bilateral discussions are under way.
“China welcomes more countries to join the AIIB as founding members and hopes that an inter-governmental memorandum of understanding on establishing the bank can be signed in the coming fall," he said.
The bank idea was put forward by state leaders, including President Xi Jinping and Premier Li Keqiang, during their visits to South East Asian countries in October 2013.
Funds in current multilateral development banks are limited and saving rates are relatively high in many countries in Asia, so it is necessary to consider establishing a new regional platform for investment and fund-raising to channel more funds into infrastructure, he said.
According to Lou, the bank will be a multilateral development institution in Asia and simulate other multilateral development banks in operational modalities and principles.
The fundamental mandate is to promote Asian economic development and regional economic cooperation by providing financing in infrastructure and other productive areas in Asian countries.
“If conditions become ripe, it may also expand its business beyond the region," Lou said.
He explained that the authorized capital will be paid by its members in installments and may grow following future business expansion, while "the final capital sizes and shares of various parties shall be settled by the AIIB founding members through consultation and negotiations.’’
In addition the bank has different priorities.
“The AIIB will mainly focus on infrastructure construction in Asia to promote regional connectivity and economic cooperation. The existing MDBs, such as the World Bank and the Asian Development Bank, meanwhile put their priorities more on poverty reduction," Lou said.
In view of the huge financing gap in the infrastructure sector, due to differentiated mandates and priorities, the relationship between the bank and existing MDBs will be complementary and cooperative rather than competitive, the minister added.