India urges AIIB to scale up lending to $40b by 2020
The third annual meeting of the Asian Infrastructure Investment Bank wrapped up yesterday with calls from one of its earliest champions, Indian Prime Minister Narendra Modi, to scale up its lending tenfold over the next two years.
"With a committed capital of $100 billion and huge need for infrastructure in member countries, I take this opportunity to call upon AIIB to expand financing from $4 billion to $40 billion by 2020," he said at the opening ceremony of the two-day event.
The event, styled "Mobilising Finance for Infrastructure: Innovation and Collaboration", kicked off on Monday, but due to scheduling conflict of Modi the opening ceremony had to be held yesterday.
By 2025 Modi would like the AIIB's lending to shoot up to $100 billion. But this would require simpler processing, faster approval, high-quality projects and robust project proposals, he said.
Since it began operations in January 2016, the AIIB has approved 26 projects in a dozen countries -- including Bangladesh (3), India (7) and Pakistan (2) -- with a total financing of over $4 billion.
"This is a good beginning," he said, while reiterating India and the AIIB's commitment to making economic growth more inclusive and sustainable.
India is the second largest contributor of capital to the AIIB after China; it has 8.72 percent stakes in the bank. "AIIB is poised to play a critical role in Asia."
Asia still faces wide ranging disparities in access to education, healthcare, financial services and formal employment opportunities.
Sectors such as energy and power, transportation, telecom, rural infrastructure, agriculture development, water supply and sanitation, environment protection, urban development, and logistics require long-term funds.
"The interest rates on these funds need to be affordable and sustainable," Modi said, adding that regional multilateralism through institutions such as the AIIB can play a central role in helping to raise resources.
Asian developing countries now account for 60 percent of global growth, while roughly two-thirds of global trade is part of value-chains passing through Asia, said Jin Liqun, president of the AIIB.
"Yet still today, 11 percent of Asia's population remains in poverty. It is against this backdrop that AIIB was formed."
Economic openness and investment in infrastructure drew Asia's growth in previous stages. "Now, much more needs to be done to ensure the future continues to brighten for all of Asia."
Between now and 2030, Asia's investment in infrastructure must rise to $2 trillion a year, or roughly triple what it has been in the past, he said.
"This is an enormous challenge. Where will financing for this investment come from?"
But money is a necessary but not a sufficient condition for covering the bottlenecks in infrastructure in many of the Asian countries.
"We also need innovation. We need collaboration," Jin said, while conveying his gratitude to the older multilateral lenders as most of the AIIB's lending so far has been in collaboration with them.
He also went on to express the AIIB's interest in synergising its investment with China's Belt and Road Initiative, in what can be viewed as a positive development for Bangladesh, which stands to benefit substantially from Chinese President Xi Jinping's pet initiative.
This year's the AIIB annual meeting saw the launch of the inaugural Asian Infrastructure Forum (AIF), a flagship event focused on creating business development opportunities for participants drawn from project sponsors, financiers, project delivery companies and governments.
As part of the AIF, six workshops were held yesterday. One of the workshops was on sustainable energy, which saw participation by Ahmad Kaikaus, secretary to the power division of Bangladesh's Ministry of Power, Energy and Mineral Resources.
Kaikaus informed on the leaps made by Bangladesh's energy sector.
Bangladesh, which was represented in the two-day summit by a team led by Economic Relations Division Secretary Kazi Shofiqul Azam, used the gathering to get a deeper understanding on how to address its infrastructure problems.
On the sidelines of the conference in Mumbai the four-member delegation met with high-ranking officials of Exim Bank, which agreed to faster disbursement of funds for projects under India's lines of credit.
The AIIB board of governors also approved the membership application from Lebanon yesterday to take the two-and-a-half-year-old development institution's total membership number to 87.
The fourth AIIB annual meeting will be held in July 2019 in Luxembourg, a founding member of the bank. "We want to thank the Government and people of Luxembourg for offering to host our annual meeting," said AIIB Vice President and Corporate Secretary.
"European countries have been strong supporters of the creation of the AIIB so it is particularly welcome to have this early opportunity to bring all of the bank's members to Europe," said its corporate secretary Sir Danny Alexander.