The Asian Infrastructure Investment Bank (AIIB), which launched a year ago to support major infrastructure development in Asia, said it approved nine major projects in its first year and lent US$1.7bn against an initial target of US$1.2bn.
The AIIB, which has 57 members including Germany, France and the UK, says it expects 25 more countries to join. Reports suggest Canada, Ethiopia, Ireland and Sudan are among the potential new members and several could be inducted at the bank’s annual meeting in June.
China, which has a 26% voting share, is regarded as the driving force behind the AIIB, which has so far been unable to attract the US as a member. The Obama administration was among those that regarded the new bank as a likely competitor to the World Bank and US opposition is unlikely to end given president Trump’s protectionist stance and declared ‘America first’ policy.
However, AIIB president, Jin Liqun, said at the recent World Economic Forum (WEF) meeting at the Swiss resort of Davos that he was unconcerned by Trump’s views. “I think free trade and free cross border investment is important for all of the countries and we don’t have to be too much worried,” he told reporters.
Liqun added that the AIIB had “close collaboration” with both the World Bank and the European Reconstruction and Development Bank (ERDB) rather than regarding them as competitors. “We are open, we are inclusive, regardless of the membership of the United States, we are working with American professionals,” he said. “In the future we really encourage American manufactures to participate.”
Funding provided by the AIIB in its first year of operations included US$165m for a power distribution system upgrade and expansion project in Bangladesh, US$216.5m to improve slum housing in Indonesia, US$27.5m for Tajikistan’s Dushanbe-Uzbekistan border road improvement project and US$100m for a section of Pakistan’s M-4 national motorway.
More recent loans approved last September included US$300m for a hydropower project in Pakistan and US$20m to a power plant in Myanmar. The AIIB also committed to US$301m for construction of maritime infrastructure at Duqm Port in Oman and preparation of the country’s first railway system.
Last month the AIIB approved a US$600m loan for construction of the Trans-Anatolian gas pipeline (TANAP), to connect Azerbaijan to Europe. In this deal, the bank partnered with the World Bank, which committed to a US$800m loan. The total cost of the project is estimated at US$11.7bn, with additional financing expected from other multilateral institutions as well as private finance.
Several of the AIIB’s loans are regarded as strategic in helping China to develop its so-called One Belt One Road (OBOR) policy, which seeks to create a Silk Road economic belt and 21st century Maritime Silk Road through increased connectivity between the region’s countries.
According to the Financial Times, the planned broadening of the AIIB’s membership – which would dilute China’s 26% stake – tallies with the staunch defence of globalisation made by Xi Jinping, China’s president, at the WEF’s Davos gathering last week. Xi warned of the dangers of protectionism and urged countries not to pursue narrow interests at the expense of others.