The 31st March was the official deadline for countries to apply for founding member status in the new Chinese-led Asian Infrastructure Investment Bank (AIIB). AIIB is intended to make up for the gap in funding the region needs, including the construction of roads, ports, railways and other infrastructure projects estimated at $800 billion by the Asian Development Bank (ADB).
Membership had become something of a test of diplomatic clout between China and the United States because the development bank is seen as a challenger to existing institutions like the World Bank and the ADB. The US had urged countries to delay until the AIIB it could show sufficient standards of governance and environmental, labour and social safeguards. However, recent positive statements from the IMF and the other multi-laterals on joint financing, suggest the international view is that as more countries join the bank, the more likely AIIB will have to follow international standards and the less likely China will be able to use a multilateral institution to wield influence in the region.
There are now a total of 57 prospective founding members (PFM), 37 in Asia and 20 outside the region. Only the United States and Japan, now remain conspicuously absent from the list. Founding members have the right to create governance and operating rules for the bank.
As might have been expected, Hong Kong was ahead of the pack in signing up. February’s Hong Kong Budget speech announced the SAR would actively pursue the possibility of joining AIIB. The SAR government submitted its letter of intent to join the AIIB on 31st March. Before attending the ExCo meeting on the same day, Chief Executive (CE) Leung Chun-ying said that “the SAR government would like to play its role in the AIIB. However, participation needs LegCo approval during the decision-making process” and, he urged lawmakers not to filibuster its progress.
Waters Economics agree that AIIB membership will benefit Hong Kong. As the CE suggests, as a global financial hub, Hong Kong has the experience and expertise to provide a full range of fund raising and other financial services. However it is insufficiently widely recognised that, as a long term member of the ADB (since 1969), 17 years before China (since 1986), Hong Kong also provides some of the leading economic, engineering, institutional and other development expertise in infrastructure project preparation and evaluation services across the wider Asian region from the Pacific to the Caucasus.
As will many organisations, we await with great interest how the politics and international relations play out in the formulation and in particular the governance of the new AIIB.
AIIB 57 Prospective Founding Members
