For Asias top financiers, the recent formation of the
Asia Infrastructure Investment Bank in Beijing was a sign of
Chinas growing economic strength. Many assumed the young
AIIB and the well-established Asia Development Bank would be
rivals in financing the regions infrastructure
Its a notion that former Chinese vice finance minister
Jin Liqun, the founding chairman and president of AIIB, sought
to dispel this week by making it clear the two multilateral
banks are partners not rivals and have
formed a strategic alliance to begin chipping away at
Asias annual $1.7 trillion infrastructure funding need.
We do have challenges at the AIIB we are only
two and half a years old but we also have strong support
from the ADB and the World Bank, Jin said during the
opening of the Manila-based ADBs annual board meeting
this week in Yokohama, Japan. Jin also took the opportunity to
woo many skeptics at the summit, reminding them that hes
an ADB alum, having served from 2003 to 2008 as vice president
in charge of private sector and South, Central and West Asia
operations. I was a vice president at ADB for five years,
and in this respect, we have enjoyed smooth sailing.
The ADBs annual gathering this year is particularly
important as the 3,000-plus delegates attending will celebrate
the 50th birthday of the bank,
founded by Japan and the U.S. in 1967. Its always been
led by a Japanese president.
ADB President Takehiko Nakao confirmed that the two
multilateral banks have worked closely in the past few years,
and that he and Jin have met no fewer than nine times to
discuss cooperation. Founded in 2015, the AIIB provided $2
billion in financing for 12 projects, including co-financing
two projects with the ADB in 2016, its first full year of
Under Nakaos leadership, the ADB has ramped up lending,
especially in infrastructure, assisting countries that remain
economically vulnerable and politically volatile. Last year the
bank issued a record $31.5 billion in loans, grants,
co-financing, and financial technical assistance, up 16 percent
over 2015. The accelerating pace of lending, which included an
unprecedented $17.5 billion in loans and grants, compares with
the $267 billion in loans and grants that ADB has handed out
across the region since its founding in 1966.
Nakao, who was Japans vice minister of finance in
charge of foreign exchange and currency policies before he
joined ADB as president in 2013, says he and Jin have discussed
a wide range of cooperation.
We have discussed many topics, such as local currency
financing, using skills of the staff, Nakao said.
So there are many things we can cooperate on. From the
very beginning I have talked about cooperation with the
Asia needs $1.7 trillion in infrastructure investments a
year for the coming decade, according to a recent ADB study. At
present, Asia-based firms, including the two multilateral
lenders, can only finance as much as 10 percent of that need.
The financing need is so large, said Nakao.
The demand for infrastructure is so large that we
dont really compete.
Jin sees other benefits in working together.
There are certainly risks in financing infrastructure
country risk, bureaucratic policy risks but some
of these risks can be mitigated if we multilateral development
banks work together, he said.